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The short answer
Under section 11 of the Labour Act, minimum notice runs from one day (up to three months' service) to one month (five years or more), in writing if a week or longer, and pay in lieu is allowed. Section 20 sets redundancy duties: inform the union or workers' representatives, apply last in, first out subject to merit, and use best endeavours to negotiate redundancy pay. The Act fixes no redundancy amount, so the contract, any collective agreement and negotiation decide it.
Ending someone's employment is hard to do well from abroad. The Lagos manager handles the conversation, but the legal exposure sits with the company, and the National Industrial Court of Nigeria (NICN) has become more willing to look past the letter of a contract. This guide sets out the statutory floor, the redundancy rules and the points courts focus on. It is information, not legal advice; for any contested exit, use a Nigerian employment lawyer.
Minimum notice under the Labour Act
| Continuous service | Minimum notice (s.11(2)) |
|---|---|
| Three months or less | One day |
| More than three months, under two years | One week |
| Two years, under five years | Two weeks |
| Five years or more | One month |
- Notice of one week or more must be in writing (s.11(3)).
- Either party may waive notice or accept payment in lieu (s.11(6)).
- Pay in lieu is calculated on money wages, excluding overtime and allowances (s.11(9)).
- Wages due must be paid on or before the notice expires (s.11(7)).
These are floors. If the contract gives longer notice, the contract applies. Remember that the Act's definition of "worker" leaves out people in administrative, executive, technical or professional roles, so for managers the contract is usually the whole story.
A worked example
Example only. An employee with three years' service earns a monthly money wage of ₦400,000, and the contract is silent on notice. The statutory minimum is two weeks. Pay in lieu of two weeks is ₦400,000 × 12 ÷ 52 × 2 = ₦184,615 (rounded), plus wages already earned and any accrued leave the contract or policy pays out on exit.
Redundancy
Section 20 of the Labour Act defines redundancy as an involuntary and permanent loss of employment caused by an excess of manpower, and requires the employer to (summarised):
- Inform the trade union or workers' representatives concerned of the reasons for and the extent of the anticipated redundancy.
- Apply the principle of last in, first out within the category of workers affected, subject to factors of relative merit, including skill, ability and reliability.
- Use best endeavours to negotiate redundancy payments with the workers affected.
There is no statutory formula. In practice, the amount comes from the contract, staff handbook, a collective agreement or negotiation. Record the selection criteria, the consultation and the offer in writing.
Termination and dismissal: what courts look at
Templars' June 2023 review traces the shift. Supreme Court cases such as Chukwuma v Shell (1993) held that an employer could end a contract without giving reasons if it followed the contract. The NICN in Aloysius v Diamond Bank (2015) required reasons, relying on its constitutional jurisdiction over unfair labour practices and ILO Convention 158, while other decisions, including the Court of Appeal in Oak Pensions v Olayinka (2017), held that unfair labour practice cannot override the contract. The law is unsettled; giving a genuine, documented reason is the safer course.
For dismissal for misconduct, process matters. In Onitiju v Lekki Concession Company (NICN, 11 December 2018), the court held a dismissal wrongful where no real hearing was given, set aside the dismissal letter and ordered one month's pay in lieu of ₦742,625 plus ₦500,000 costs. Give a written query, a chance to respond and a decision that follows your own disciplinary code.
Fixed-term contracts
Adeola Oyinlade & Co., writing on Mondaq in October 2025, notes that a fixed-term contract generally cannot be ended early except for serious breach, and an employer who does so may owe compensation for the remaining term, unless the contract allows early termination by notice.
Money and tax on exit
- Severance tax: DLA Piper Africa's August 2026 payroll FAQ gives a tax-free threshold for severance of ₦50 million under the 2025 tax laws; amounts above it are taxable.
- Pension: under section 7(2) of the Pension Reform Act 2014, as summarised on Standard Bank's community blog, an employee who leaves and does not find a new job within four months may access 25% of their Retirement Savings Account.
- Final payroll: deduct PAYE and pension on final pay as normal, and update the PFA schedule.
Steps
- Check the contract, handbook and any collective agreement for notice and severance terms.
- For redundancy, inform the union or representatives and document selection under s.20.
- For misconduct, issue a written query and hold a hearing before deciding.
- Give written notice, or pay in lieu on money wages.
- Pay final wages by the end of notice; settle leave as the contract provides.
- Recover company property and remove system and bank access the same day.
For the contract itself, see employment contracts under the Labour Act; for remittances on final pay, pension remittances for staff.
Where Pryme fits
Final pay and settlement amounts can be paid from a Pryme Business account through payroll, with the Compliance agent preparing the exit checklist and statutory updates for a person to approve. A verifiable receipt of the settlement payment helps if the amount is later disputed.
Questions people ask
How much notice must I give staff in Nigeria?
Under s.11 of the Labour Act: one day up to three months' service, one week up to two years, two weeks up to five years, one month after that, unless the contract gives more.
Is redundancy pay compulsory in Nigeria?
The Labour Act sets no amount. Section 20 requires best endeavours to negotiate redundancy pay, and the contract or a collective agreement may fix it.
Can I sack an employee without giving a reason in Nigeria?
Older Supreme Court cases allowed it if the contract was followed, but the NICN has required reasons in some cases. Giving a documented reason is safer.
Is severance pay taxed in Nigeria?
DLA Piper's 2026 FAQ says severance is tax-free up to ₦50 million under the 2025 tax laws, with the excess taxable.
Sources
- Labour Act Cap L1, LFN 2004 (PLAC) · accessed Oct 2026
- Templars: Is termination of employment without reason still valid in Nigeria? (20 Jun 2023) · accessed Oct 2026
- NICN: Onitiju v Lekki Concession Co Ltd (11 Dec 2018) · accessed Oct 2026
- Mondaq (Adeola Oyinlade & Co.): Contract of employment in Nigeria, termination and remedies (29 Oct 2025) · accessed Oct 2026
- DLA Piper Africa: FAQs on payroll taxes and employer liability (28 Aug 2026) · accessed Oct 2026
- Standard Bank community blog: Highlights of the Pension Reform Act 2014 · 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.