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The short answer
The Labour Act defines overtime as hours worked beyond the normal hours fixed by agreement, collective bargaining or a wages board, but it does not set an overtime rate. The rate comes from the contract, the staff handbook or a collective agreement, so an employer and employee must agree it in writing.
What the Labour Act says
Section 13 of the Labour Act deals with hours of work and overtime. Normal hours are those fixed by mutual agreement, by collective bargaining in the organisation or industry, or by an industrial wages board where there is no collective bargaining. Hours a worker is required to work beyond those normal hours "shall constitute overtime".
The same section sets three related rules:
- A worker at work for six hours or more a day must have one or more rest intervals totalling at least one hour, with limited exceptions.
- Every worker is entitled to one day of rest of at least 24 consecutive hours in every seven days.
- If the weekly rest day is reduced, the worker gets equivalent time off within 14 days, or wages at overtime rates are paid instead.
What section 13 does not do is put a number on overtime. There is no statutory "time and a half". The law leaves the rate to agreement.
Who the Labour Act covers
The Act protects "workers" as it defines them. Section 91 excludes people exercising administrative, executive, technical or professional functions. A cashier, cleaner, driver or factory hand is clearly covered; a finance manager or software engineer may fall outside the Act and rely only on the contract. That does not mean managers cannot be paid overtime, only that the source of the right is the contract.
Where the rate comes from
- The written terms. Section 7 requires the employer to give a written statement within three months of the start of employment, including terms on hours of work and the rates of wages. Overtime belongs in that statement.
- A collective agreement. In unionised workplaces and sectors, the agreement usually sets the multiplier and when it applies (weekdays, rest days, public holidays).
- The staff handbook. If the contract refers to a handbook, its overtime policy can form part of the terms.
- Past practice. Where nothing is written but overtime has been paid at a set rate for a long time, a court may treat that as an agreed term.
Multipliers such as 1.5 times the hourly rate for weekdays and 2 times for rest days are common in Nigerian contracts and collective agreements, but they are not set by law. Check what your own documents say.
Worked example: calculating an overtime payment
Example only. A store assistant in Port Harcourt earns ₦150,000 a month. Her contract sets normal hours at 8 hours a day, 22 working days a month, and overtime at 1.5 times the hourly rate. In October she works 10 overtime hours.
| Step | Calculation | Result |
|---|---|---|
| Normal hours in the month | 8 x 22 | 176 hours |
| Hourly rate | ₦150,000 / 176 | ₦852.27 |
| Overtime hourly rate | ₦852.27 x 1.5 | ₦1,278.41 |
| Overtime pay | ₦1,278.41 x 10 | ₦12,784.09 |
| Gross pay for October | ₦150,000 + ₦12,784.09 | ₦162,784.09 |
Overtime is part of taxable pay: section 51(6) of the Nigeria Tax Administration Act 2025 requires tax to be deducted from any emolument, so PAYE is worked out on the higher gross for that month; see how to calculate PAYE. Note also that under sections 11(9) and 19 of the Labour Act, overtime is excluded when calculating pay in lieu of notice and leave pay, which are based only on the money wage.
What to check first
- Does the contract or handbook state normal daily and weekly hours?
- Does it state the overtime rate, and whether rest days and public holidays attract a higher rate?
- Who can authorise overtime, and how is it recorded? Unrecorded overtime is the usual source of disputes.
- Are timesheets kept? Section 75 requires records that show the Act is being complied with, retained for three years.
Public holidays and rest days
The Labour Act does not set a separate public-holiday rate either. Section 17 lists rest days and public holidays as days on which the employer is not obliged to provide work, which implies they are normally days off. Where staff do work them, the contract or collective agreement decides the rate. Many employers pay a higher multiplier for rest days and public holidays than for weekday overtime, or give a day off in lieu, and the weekly rest rule in section 13(7) means a reduced rest day must be made up within 14 days or paid at overtime rates.
Flat overtime allowances
Some employers pay a fixed monthly overtime allowance instead of an hourly calculation. That is lawful if agreed, but write down what hours it covers. Otherwise a worker who regularly works far beyond those hours may argue the flat sum does not reflect the agreement, and the employer may struggle to show what was intended.
Where Pryme fits
When salaries run from a Pryme Business Account, overtime can be added as its own line in the month's payroll so it shows clearly on each payslip and in your records. The Finance agent can prepare the overtime figures from approved timesheets for you to check before anything is paid; see Finance agent.
Questions people ask
What is the overtime rate in Nigeria?
There is no statutory rate. The Labour Act defines overtime but leaves the rate to the contract, handbook or collective agreement. Multipliers such as 1.5 times are common practice, not law.
Is overtime compulsory in Nigeria?
The Act talks of hours a worker is "required" to work beyond normal hours, so overtime can be a term of the contract. Rest intervals and one rest day in seven still apply.
Do managers get overtime pay in Nigeria?
Only if the contract says so. Section 91 of the Labour Act excludes administrative, executive, technical and professional staff from its definition of worker.
Is overtime taxed in Nigeria?
Yes. Overtime forms part of the month's emoluments, so PAYE is calculated on the total gross pay.
Sources
- Labour Act, Cap L1 LFN 2004 (PLAC Laws of Nigeria) · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (Act No. 5), ss.14, 28, 31, 51, 65, 101-107 · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.