Work and Wages

Minimum Wage

National minimum wage in Nigeria is determined by the Government. Government is empowered to set up "industrial wages boards" for specific sectors or geographical areas where it considers wages to be "unreasonably low" or where there is no adequate collective bargaining machinery for the effective regulation of wages or other conditions of employment of those workers. The boards, tripartite in nature, may make recommendations on wage rates, which the Government may make binding on the employers and employees concerned. Legislation provides for both National Wages Board and Area Minimum Wages Committees. Other than wages, an industrial wages board may, on the permission by the Minister, make a recommendation for a condition or conditions of employment other than wages. 

Generally, the wage rate is determined by the applicable collective agreement or the agreement between the worker and the employer.

There is no preset criterion to determine the minimum wage. The national minimum wage rate is applicable to every worker except part-time workers (working fewer than 40 hours per week); workers paid on commission or piece-rate basis; workers in seasonal employment such as agriculture; workers in merchant shipping or civil aviation; and those working in an establishment employing less than 50 workers.

In-kind payment is also allowed if prescribed by the law or collective agreement or arbitration award.

Minimum Wage compliance is regulated by the Labour Inspectorate. In case of non-compliance, an individual can complain to labour inspectorate. Employer, in the case of non-payment of the minimum wage, is liable to a fine up to N 20,000 and in case of continues offence, a fine of N 100 adds up for each day. A court may also order the employer to pay such sum, in addition to the fine to make up the shortfall in wages below the minimum rate. The National Minimum Wage Act further clarifies that an agreement for the payment of wages less than the national minimum wage is void and of no effect.

National Minimum Wage Act 1981 exempts the following establishments from the obligation to pay the national minimum wage: an establishment in which less than 50 workers are employed; an establishment in which workers are employed on a part-time basis (those working for less than 40 hours per week); an establishment at which workers are paid on commission or on piece-rate basis; workers in seasonal employment (as agriculture); and seamen or crew members of an aircraft.

Source: National Minimum Wage Act, of 1981 (Official Gazette, 1981) as amended to 2000, Act No. 1 (Official Gazette, 2000), National Minimum Wage Act amendment 2011; Wages Boards and Industrial Council Act, 1974

Regular Pay

Wages are the remuneration or earnings (however designated or calculated) capable of being expressed in terms of money and fixed by mutual agreement or by law which are payable by virtue of a contract by an employer to a worker for work done or to be done or for services rendered or to be rendered. Wages and other payments entitled to the employee are paid in the legal tender, i.e., Naira or by prior consent, in a form of cheque or postal order.

The wage payment period must not exceed one month. The wage payment period varies between a day to one month, depending on the period specified in the employment contract. Employer cannot force the worker in employment contract about where and how to spend his wages. In accordance with the Labour Act, employer must provide every worker (not later than 3 months after the commencement of employment) a written statement which should specify, among other things, the rate of wages, the method of wage calculation, the manner and periodicity of wage payment. The wage payment period cannot exceed one month unless the written consent of the state authority has been obtained for this purpose. Section 15 of the Labour Act states that wages shall become due and payable at the end of each period for which the contract is expressed to subsist (daily, weekly or at such other period as may be agreed upon) provided that where the period is more than one month, the wages become due and payable at intervals not exceeding one month.

Wages must not be paid in the premises used for the sale of liquor or for the retail sale of goods, except in case that the worker is employed on such premises. Employer may make a maximum advance of one month’s wages to a worker. The minimum period for recovery of this advance is three months. Labour Act prohibits deductions from workers’ wages except in cases specified. With the consent of labour officer, an employer may make a reasonable deduction from a worker’s wages in respect of injury or loss caused to the employer by the willful misconduct or neglect of the worker. An employer is allowed to deduct income tax and pension contribution from the wage with the consent of worker. Similarly, union contribution can be deducted from workers’ wages however workers can opt out of it. Any other kind of deduction, without prior consent, is not allowed except in cases specified by the law.  

Source: §1-7 & 15 of the Law of the Labour Act (Cap L1 LFN 2004)