Small business and Labour Law

Nigerian Labour law which can also be called employment law mediates the relationship between workers, employing entities (Employers), trade union and the government. It is the law that guides matter such as employment, remuneration, conditions of work, trade unions and industrial relations.

The intention of any government and other approved bodies who set regulations to run businesses are so that there can be an assurance of quality and level playing ground for all. This means that businesses especially those just starting up or running on a small scale must pay attention to these regulations so they aren’t on the wrong side of the law.

As we have heard over time in Nigeria, the employer is King. Many people hold on to this phrase and prefer to start up their own businesses and become an employer of labour without proper knowledge of the Nigerian Labour Law, most of such people end up being sued by their employees.

Small business owners must ensure that they follow best practices to prevent lawsuits. Although the labour law can seem too bulky to go through, this write up highlights a few laws to keep you away from trouble.


The contract of employment is an agreement between the Employer and the Employee that set out terms and condition of employment. The first thing every Nigerian should know about employment is that forced employment is illegal, it is very wrong to force anybody to work for you, as it can be tagged as forced labour.

The contract of employment should be written and all employees must have a contract of employment within the first three (3) months of employment. It should entails key terms such as name of employer and employee, type of employment (permanent, contract e.t.c), salaries or wages, hours of work e.t.c. The contract of employment is subject to change but must be with the consent of the employee.


This is the combination of salaries, wages and benefits that employees receive in exchange for them doing a particular job. It includes annual salary or hourly wages combines with bonus payments, benefits and incentives.

Employees are entitled to an agreed sum in the employment contract; they must be paid with cash or legal tender that can be converted to cash. They should also be paid within an agreed period of time usually one month. Employers are not allowed to deduct an employee salary without tangible reasons or without employee consent. Employees are also entitled to other benefits such as health insurance e.t.c.



Employees are allowed six (6) working days leave with full payment during the calendar year. Work leave can come in different forms,

Sick leave: If an employee is sick and absent from work, he/she is entitled to a paid twelve days sick leave during the calendar year with consent to be examined by a medical practitioner but an employer is not obliged to pay the employee after 3 months of being sick.

Maternity and Paternity Leave: Female employees are allowed at least twelve weeks of maternity leave which can be taken six weeks before and six weeks after or all at once depending on the employee. This leave is a paid leave of 50-100% of the employee’s salary.

The employee will be entitled to three hours off every workday for three months post maternity.

Unfortunately in the Nigerian Labour Law, there is no provision for paternity leave but the Lagos State allows male civil servant go for ten (10) days paternity leave.


The Labour Law does not allow for discrimination between workers on the ground of gender, religion, status or ethnicity. All employees should be treated fairly on the same ground under the provision of the law.

All employees are allowed fair treatment, equal pay for the same task, equal career opportunities e.t.c


Employers have the right to suspend, retire or terminate and employee for a good or bad reason as long as it is written in the terms and condition.

The Labour Act provides for minimum termination notice periods which vary from a day, a week, two weeks or a month depending on the period of time the employee worked for.


This write up is a wakeup call for a lot of small business owners as it reminds them that when it comes to employees a lot of things should be done right to prevent lawsuits.

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