By Eloghene Adaka, Esq.
In Nigeria, it is very common for employers as a means of disciplinary measure or sanction to deduct from the wages of employees. This is meant to serve as a deterrent or a form of correction for misconduct carried out by an employee.
It is also very common to see this as a term in an employment contract.
This gives the employer the power to subtract from the salary of an employee for a wrong done especially when it involves a financial loss.
Though this is almost a norm, it raises the question of the legality of this act.
Does an employer, in the first place, have the power to deduct from an employee’s salary even if an agreement was signed to this effect?
The legality of unilateral reduction of wages in Nigeria
In Nigeria, as it relates to employment, the Labour Act is the principal legislation which regulates the relationship between the employer and an employee both in the public and private sector. In relation to the unilateral reduction of wages, the act is very clear in section 5(1) of the Labour Act.
It unequivocally provides that, “Except where it is expressly permitted by this Act or any other law, no employer shall make any deduction or make any agreement or contract with a worker for any deduction from the wages to be paid by the employer to the worker, or to any payment to the employer by the worker, for or in respect of any fines: Provided that, with the prior consent in writing of an authorized labour officer, a reasonable deduction may be made in respect of injury or loss caused to the employer by the willful misconduct or neglect of the worker”.
Section 5(2) further states that, “An employer may, with the consent of a worker, make deductions from the wages of the worker and pay to the appropriate person any contributions to provident or pension funds or other schemes agreed to by the worker and approved by the State Authority”.
This simply means that employers do not have the power and are not allowed to deduct an employee’s salary for any reason, unless
- such deductions are expressly permitted by law – a good example of deductions which are permitted by law can be seen with the deduction for the compulsory pension scheme which is 8% of an employee’s salary, and taxes such as the Pay As You Earn, National Health insurance Scheme, etc., which are permitted by law.
It should, however, be noted that where a deduction is not permitted or provided for by the law, such would however amount to an illegal deduction. An example can be seen with deductions made on an employee’s salary for lateness to work, or failure to submit time shift, caution fee, birth and death levies, welfare dues etc.;
- a reasonable deduction in respect of an injury or loss caused to the employer by WILLFUL misconduct or neglect of the worker with the prior written consent of an authorized Labour Officer. Emphasis is, however, placed on the prior consent in writing of an authorized Labour Officer before any reasonable deduction can be made for willful misconduct which leads to loss on the part of an employer;
- or, any deductions by an employer for a union contribution or scheme agreed by the worker and also approved by the State authority. Also, one should note that an employee always has the power to opt-out of any union contribution which they have opted into, and can withdraw consent for such deductions being made for any union contribution they have given consent to previously.
The National Industrial Court, further in the case of Chemical and Non-Metallic Product Senior Staff Association v Benue Cement Company PLC, stated the position of the law regarding deductions from salary this way.
It held that The law treats the issue of salaries with such sacredness and that except expressly permitted by law or the workers, no employer is permitted to make any deductions from a worker’s salary.
So when a deduction is made from workers’ salary, it must be applied for the intended purpose.
To this effect, any deduction which does not fall within this scope as provided by Section 5 of the Labour Act which is provided in an employment agreement, regulation of employment, and policy would be deemed as illegal.
It should also be noted that a person cannot enter into an agreement to authorize an act which the Labour Act has prohibited as such would amount to being illegal and unlawful.
Eloghene Adaka, Esq. is an Abuja based lawyer. She can be reached on her Email: adakaelo@gmail.com.
