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The short answer
Retention in Lagos rests on contract terms, not statutory protection. The Labour Act's minimum notice for workers is short (from one day up to one month by length of service) and excludes professional and managerial staff, so agree longer contractual notice. Retention bonuses work best paid in instalments with a written repayment clause, but the Act caps total monthly deductions at one-third of wages. Non-competes are tightly limited: the FCCPA exemption covers restraints in contracts of service of up to two years, and courts strike down wide ones.
Good developers, accountants and support leads in Lagos are recruited constantly, by local firms and by overseas companies hiring remotely. A UK owner who has trained a team cannot stop people leaving, but can make leaving less abrupt and staying more rewarding. The tools are contractual notice, retention payments and, within narrow limits, restrictions after departure.
Notice: what the law sets and what the contract adds
Section 11 of the Labour Act sets minimum notice for either side, based on continuous service:
| Continuous service | Minimum notice (Labour Act s.11) |
|---|---|
| Three months or less | One day |
| More than three months, less than two years | One week |
| Two years, less than five years | Two weeks |
| Five years or more | One month |
Notice of a week or more must be in writing, and either party may waive notice or pay in lieu, calculated on money wages excluding overtime and allowances. Note the gap: the Act's definition of "worker" excludes people performing administrative, executive, technical or professional functions. For many of the staff a UK company hires in Lagos, the contract is the only source of notice. Agree a period that gives you time to hand over work, for example one to three months for senior roles, and state it in the written terms the Act requires within three months of starting. See the Labour Act for UK employers.
Retention bonuses that hold up
A retention bonus pays for staying through a period or a project. The design choices are timing and what happens if the person leaves early.
- Pay in stages. Instalments at, say, 6 and 12 months keep the incentive alive through the period.
- Put the conditions in writing. Who qualifies, the dates, and what counts as leaving (resignation, dismissal for cause).
- Prefer forfeiture to clawback. Unpaid instalments lapse if the person resigns, which needs no recovery.
- If you use clawback, plan recovery. Section 5 of the Labour Act bars deductions not permitted by law and caps total deductions in any month at one-third of that month's wages, so you may not be able to recover a large bonus from final pay alone.
Worked example (illustrative)
Example: a team lead earning ₦900,000 a month is offered a retention bonus of ₦2,400,000 in two instalments of ₦1,200,000 at 6 and 12 months. She resigns at month 8, after the first instalment. Under a forfeiture design she simply does not receive the second ₦1,200,000. Under a clawback design requiring repayment of the first instalment, deductions from her final month's pay could not exceed ₦300,000 (one-third of ₦900,000), leaving ₦900,000 to recover by agreement or claim. Bonuses are taxable employment income, so tax applies through payroll in the usual way.
Training bonds
Where you pay for expensive training or certification, a bond requiring repayment if the person leaves within a set period is common. The IBA's 2024 review of Nigerian cases reports that the National Industrial Court enforced a four-year training bond in Overland Airways v Jam (2015). Keep the bond proportionate to the real cost of the training and the period.
Non-competes and non-solicits
The Federal Competition and Consumer Protection Act 2018 prohibits restraint agreements but, under section 68(e), exempts restrictions in contracts of service on where a person may work, for no more than two years. The courts go further and test reasonableness. Cases summarised by SCP Law and the IBA include:
- Interswitch v Esumeh (2022)
- A one-year worldwide bar was unreasonable; the court favoured three months.
- iROKOtv v Ugwu (2020)
- A two-year bar introduced after employment began was unenforceable, with no legitimate interest shown.
- 7th Heaven Bistro v Desphande (2018)
- A three-year bar on working for any Nigerian employer was described as an unfair labour practice.
- Lacasera v Gangahharan (2016)
- A five-year restraint on a former senior executive was excessive.
Narrow restrictions are more likely to stand: a short bar on joining a named competitor, or a non-solicitation clause protecting clients and staff, tied to a real interest such as confidential information.
Garden leave and handover
A longer notice period is only useful if you can manage it. For senior staff, the contract can let you ask the person to stay away from work and clients during notice while still being paid, so they cannot take relationships straight to a competitor. Pair that with a handover clause listing what must be documented and returned before the last day: credentials, files, client contacts and work in progress. Section 11(6) of the Labour Act allows either party to waive notice or accept pay in lieu, so agree in the contract which side may choose.
Beyond the contract
- Pay on time, every time; late pay is a common reason people leave.
- Review pay against currency movements; see salary in naira or dollars.
- Offer equity where you can; see share options for Nigerian staff.
- Give a clear path to promotion and visible work with the UK team.
Where Pryme fits
Retention payments and salaries can run from a naira balance through payroll on a Pryme Business Account, and the Finance agent can schedule bonus instalments for a person to approve on each date. Staff with Pryme Personal Accounts can put part of a bonus into a Savings Box in naira.
Questions people ask
What is the notice period for employees in Nigeria?
Labour Act s.11 sets minimums from one day to one month by length of service, but excludes professional, technical, executive and administrative staff, whose notice comes from their contract.
Can I claw back a retention bonus from a Nigerian employee?
Only if the contract provides for it, and Labour Act s.5 limits deductions from wages to one-third of a month's pay. Forfeiting unpaid instalments is simpler.
Are non-compete clauses enforceable in Nigeria?
Only narrowly. The FCCPA exempts restraints in contracts of service of up to two years, and courts strike down wide or long ones, as in Interswitch v Esumeh.
Are training bonds legal in Nigeria?
They can be enforced. The National Industrial Court enforced a four-year bond in Overland Airways v Jam (2015), as reported by the IBA.
Sources
- Labour Act Cap L1 LFN 2004 (PLAC) · accessed Oct 2026
- IBA (Dentons ACAS-Law): Employment agreement and non-compete clauses in Nigeria (27 Aug 2024) · accessed Oct 2026
- Mondaq (SCP Law): Navigating non-compete agreements in Nigeria (23 Apr 2025) · accessed Oct 2026
- Mondaq (Adeola Oyinlade & Co): Personal income tax under the Nigeria Tax Act 2025 (5 Jan 2026) · 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.