Nigeria
Breach of termination procedure (case law)
Impact date: 23 June 2025 The National Industrial Court held that the claimant’s dismissal was unlawful, as it breached the contract of employment, company policy, and established labor standards. The Court found that the termination process lacked fair hearing and due process, rendering it invalid.
Employer implications/action needed Employers must strictly comply with principles of fair hearing when conducting dismissals and ensure that termination processes align with company policies, contractual terms, and statutory requirements.
Employer risk Failure to provide fair hearing or follow due process exposes employers to significant damage, reinstatement orders, and reputational harm.
Non – remittance of statutory deductions and wrongful termination (case law)
Impact date: 25 June 2025 The National Industrial Court upheld the claimant’s allegations of wrongful termination and failure by the employer to remit pension contributions. The Court found that the first defendant did not comply with statutory obligations under the Pension Reform Act and also failed to follow the proper procedure for termination of employment.
Employer implications/action needed Employers are required to promptly and accurately remit all statutory deductions, including pensions and taxes. In addition, terminations must strictly comply with both contractual provisions and statutory requirements to avoid legal challenges.
Employer risk Failure to meet statutory obligations or to follow due process in termination exposes employers to damages, penalties, and reputational harm.
Court upholds employees' claims based on the terms of their contract of employment (case law)
Impact date: 16 July 2025 The National Industrial Court of Nigeria (NICN) held in favour of the former employees, ruling that they were entitled to their terminal benefits in accordance with the provisions of their contracts of employment and the staff manual. The Court found that the employer failed to issue proper notice and to provide the full terminal entitlements as stipulated in the binding employment documents. The Court rejected the employer’s reliance on a subsequent communique purporting to reduce benefits, noting that the employees were neither parties to that document nor had they given their consent. Accordingly, the Court affirmed that the original staff manual remained valid and enforceable, and directed the employer to honor its obligations. This judgment reinforces the principle that an employer cannot unilaterally vary or reduce the terms of an employment contract without the express consent of the employee.
Employer implications/action needed Employers must comply with the terms of employment contracts and staff manuals, as these are binding legal obligations. Any changes to such terms must be clearly documented and consented to in writing by the affected employees, as consent cannot be assumed or implied. To avoid disputes and minimize legal risks, employers should implement such changes only after consultation and written consent its by employees.
Employer risk Failure to obtain valid employee consent to revised terms of employment leaves the original contract fully binding and enforceable. This exposes employers to continued legal and financial liability, including the obligation to honor benefits under the prior terms.
Court invalidates dismissal of an employee (case law)
Impact date: 18 July 2025 The National Industrial Court set aside the dismissal of the claimant on the grounds that the employer failed to comply with due process. The Court found that the disciplinary committee responsible for the dismissal was improperly constituted and that the statutory procedures governing employment termination were not followed. As an alternative remedy, the Court converted the dismissal to retirement, thereby entitling the claimant to receive all statutory retirement benefits.
Employer implications/action needed Public sector employers must ensure full compliance with disciplinary procedures and statutory protocols before effecting termination. In particular, disciplinary committees must be properly constituted in accordance with applicable regulations.
Employer risk Non-compliance with established procedures can render dismissals invalid, exposing employers to reinstatement orders, financial liabilities, and reputational risks.
President signs four new tax laws to unify Nigeria’s tax framework
Impact date: 1 January 2026 On 26 June 2025, President Bola Ahmed Tinubu assented to four new statutes aimed at harmonizing Nigeria’s tax regime: the Nigeria Tax Act, 2025, the Nigeria Revenue Service (Establishment) Act, 2025, the Nigeria Tax Administration Act, 2025, and the Joint Revenue Board (Establishment) Act, 2025. These laws are scheduled to effect from 1 January 2026. This marks a major reform towards a more cohesive and transparent national tax framework.
Employer implications/action needed The Nigeria Tax Act, 2025, introduces a progressive personal income tax regime with rates ranging from 0% to 25%. Notably, individuals earning ₦800,000 or less annually are exempt from personal income tax. Additional reforms include enhanced deductions, such as a 20% rent deduction (capped at ₦500,000), designed to ease housing costs for employees and low-income earners. Employers will need to adjust payroll systems to reflect the new rates and ensure compliance with updated withholding tax obligations.
Employer risk Non-compliance with the new regime may result in penalties, interest on unpaid taxes, reputational risks, and potential audits by the restructured Nigeria Revenue Service. Employers who fail to correctly implement the revised personal income tax framework could face employee disputes and regulatory sanctions.
Non-executive directors (case law)
The Court of Appeal recently held that company Non-Executive Directors (NEDs) may be classified as employees and thereby significantly altering established corporate governance principles and employment law practices.
Employer implications/action needed: A further appeal to the Supreme Court may be pending for a final and definitive determination and in the meantime, employers must urgently review and revise NED contracts to clarify the nature of the relationship, expressly stating that the role is not one of employment. Corporate governance policies should also be updated to mitigate legal risks associated with the appointment and removal of NEDs. Boards must be mindful that NEDs may now bring claims for wrongful termination before the National Industrial Court of Nigeria (NICN).
Employer risk: Companies may face wrongful termination lawsuits from NEDs, with potential for significant financial damages. Additionally, the ruling may compromise the independence of NEDs, who could become less willing to challenge management for fear of jeopardizing their newly recognized “employee” status and benefits.
Contact
© Eversheds Sutherland. All rights reserved. Eversheds Sutherland is a global provider of legal and other services operating through various separate and distinct legal entities. Eversheds Sutherland is the name and brand under which the members of Eversheds Sutherland Limited (Eversheds Sutherland (International) LLP and Eversheds Sutherland (US) LLP) and their respective controlled, managed and affiliated firms and the members of Eversheds Sutherland (Europe) Limited (each an "Eversheds Sutherland Entity" and together the "Eversheds Sutherland Entities") provide legal or other services to clients around the world. Eversheds Sutherland Entities are constituted and regulated in accordance with relevant local regulatory and legal requirements and operate in accordance with their locally registered names. The use of the name Eversheds Sutherland, is for description purposes only and does not imply that the Eversheds Sutherland Entities are in a partnership or are part of a global LLP. The responsibility for the provision of services to the client is defined in the terms of engagement between the instructed firm and the client.