An extract from The Employment Law Review, 13th edition

Basics of entering an employment relationship

i Employment relationship

An employer is required to provide an employee with a written employment contract within three months of the employee commencing work. The contract must contain:

  1. the name of the employer, or group of employers;
  2. the worker's name, address, position and date of engagement;
  3. the nature of the employment;
  4. the date of expiry, if a fixed-term contract;
  5. the notice period for termination;
  6. wages, including frequency of payment and method of calculation;
  7. hours of work, holiday pay and conditions for incapacity owing to sickness and injury; and
  8. any special conditions of the contract.30

Generally, the contract must be signed to make it legally binding, as the employee's signature indicates acceptance of terms. The NICN may ignore express contractual terms if they are inconsistent with the reality of the relationship between the parties.31

Fixed-term contracts are permissible and must specify the above-mentioned terms. If the contract is terminated before the agreed term has expired, the employer must pay the employee the full salary he or she would have earned for the period of the fixed term.32

The Labour Act allows parties to change or amend terms after execution, requiring the employer to inform the worker of the nature of the change by a written statement not more than one month after it is made.33 If a copy of the statement is not left in the worker's possession, he or she must be given reasonable access to it during the course of employment.

ii Probationary periods

Probationary periods in employment contracts are permissible, and the duration and length of notice to terminate is subject to agreement between the parties. The notice requirement may also be waived.34 Industry practice is usually for probation to last for three months. Failure to confirm or terminate the employment after probation could be deemed 'confirmation by conduct', where the employer continues to use the services of the employee at the end of the probationary period.35

iii Establishing a presence

For a foreign company to hire employees to carry on business in Nigeria, it must establish its presence36 by incorporation under the Companies and Allied Matters Act (CAMA). It cannot own a place of business before incorporation, except for receiving correspondence, notices and other documents preliminary to incorporation. The CAMA37 empowers the Minister of Industry, Trade and Investment, on application by a foreign company, to grant exemption from incorporation in limited circumstances.38

The Minister of Labour and Productivity may permit 'fit and proper persons' to recruit citizens in Nigeria for employment outside Nigeria (for 12 months from the date of issue).39 An unincorporated company may engage an independent contractor strictly to carry out a specific task or contract and not to carry on any business in its favour. A joint venture between a foreign company and an indigenous company would allow for employment of persons, with the local company (having legal status) hiring the employees.

The Personal Income Tax Act, as amended, obliges the employer to ensure monthly remittance of employees' taxes. The Pension Reform Act 201440 requires the employer to make monthly deductions of a minimum of 8 per cent from its employees' salaries, plus a minimum contribution of its own of an additional 10 per cent, and remit the same to the employees' RSAs. The employer must also maintain a group life insurance policy for each employee for a minimum of three times the total annual salary of the employee and the premium must be paid not later than the date of commencement of the cover.