Contract of employment in Nigeria is simply a legally enforceable agreement between an employer and employee under an employment, which established and specifies the rights and responsibilities between the parties to the employment contract. It also emphasizes the power and obligations of the employer to control the work of the employee.

Contract of employment is defined under section 91 of the Labour Act 2004 as “an agreement whether oral or written, express or implied whereby one person agrees to employ another as a worker and that person agrees to serve the employer as a worker”.

In Nigeria, with the requirement of the laws that guide employee/employer relationship, a contract of employment must be signed and agreed by parties to the contract, when signed it becomes binding on the parties. Where there is a breach of the contract, the aggrieved party can enforce his rights at the National Industrial Court within the jurisdiction of the aggrieved party.

The principal law that regulates employment and labour relations in Nigeria is the Labour Act Cap L1, Laws of the Federation of Nigeria 2004 (the Act). Other legislation regulating contract of employment includes;

  • The constitution of the Federal Republic of Nigeria
  • The Trade Unions Act 2004
  • The Trade Dispute Act 2004
  • The National Industrial Court Act 2006

Element of contract of employment

The contract of employment is dependent on the right and obligations of the employer and employee. In a contract of employment, an employer must give the employee a written contract within three (3) months of the commencement of the employment according to Section 7 of the Act.

A written contract of employment must contain the following according to the provisions of the Act.

  • It must contain the name of the employer or group of employers.
  • The name and address of the employee, the date and place of his engagement.
  • The nature of the employment.
  • If the contract is for a fixed term, it must state the date the contract expires.
  • The appropriate period of notice to be given by the party wishing to terminate the contract.
  • The rate of wages/salaries and method of calculation, the manner and periodicity of payment of wages.
  • Any terms and condition relating to; hours of work; holiday and holiday pay; incapacity to work due to sickness, injury and provisions for a sick day if any and insurance etc
  • And finally any special conditions of the contract.

A valid contract of employment must contain the follwoing elements.

  • The general reponsibilities of parties: it is fundamental that a contract of employment expressly provides a prospective employee with a clear understanding of the job requirements and the essential duties expected to be fufilled.
  • Duration of the employment: the contract must speify the lenght of time the employee is to work for the company, bearing in mind the interest of both parties. For this reason, the contract of employment must dictate and stipulate conditions applicable to the employer and employee to extend, reduce or terminate the contract term.
  • Salary and means of calculation: it is fundamental that all prospective employers ensure that a contract of employment defines, itemizes the salaries, wages and comission of employees.When salaries are negotiated by parties, the wage must be specified and dictate the method of payment either monthly, weekly or if by the commission, it must state the percentage rate.
  • Performance expectation and requirements: in a standard contract of employment, the performance review of the employee is usually inserted. These are performance measures for which the employer would hold the employee accountable. The production goals and revenue enhancement of the employer should also be included.
  • Confidentiliaty: a contract of employmen though not mandatory may contain a confidentiality clause or create a non-disclosure agreement seperate from the employment contract for this purpose.
  • Benefits and Severance: the employee benefits package should also be expressly spelt out where applicable, which includes but no limited to health, vacation,insurance offered, the percentage of benefit premium to be paid by the employee.
  • Termination of employment: the termination of the contract must be in compliance with Section 11 of the Labour Act. The contract of employment must make provisions of the intention of parties to terminate the employment on expiration or otherwise and the period of notice to be given. Thus, a notice of termination must be given by the party of the intention to do so. The Court may impose damages against an employer for wrongful termination of a contract of employment.

            The notice to be given according to the provisions of the law is:

  • one day, where the contract has continued for a period of three months or less;
  • one week, where the contract has continued for more than three months but less than two years;
  • two weeks, where the contract has continued for a period of two years but less than five years; and
  • one month, where the contract has continued for five years or more.

A contract of employment when signed by the employer and employee becomes binding on both parties, and where there is a breach, the aggreived party can institute an action in court to excercise his rights.

In conclusion, the purpose of having a contract of employment cannot be overemphasized. A well-drafted contract, which clarifies expectations, protects the parties in event of termination, resignation, wage dispute and the interest of the company.


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