Introduction

The determination of a contract of employment refers to the termination of the employment relationship between an employer and an employee. This usually occurs through termination or dismissal, depending on the specific facts of each case. Both processes may be governed by common law, statutory provisions, mutual agreements between the parties, or a combination thereof.[1] In certain situations, the terms regarding termination or dismissal are explicitly outlined in the contract of employment. In others, an employee may be protected from termination unless specific conditions are met, due to a special legal status.[2] Where the employment relationship is regulated by statutory or constitutional provisions, legal principles govern its termination.

For employment under statutory provisions, the relevant laws and regulations set out the terms and conditions for appointment, confirmation, promotion, and disciplinary actions. Compliance with these rules is mandatory. Therefore, where the law requires a particular procedure to be followed, any deviation renders the action null and void. In contrast, where employment is governed by common law or contractual agreement, termination must follow the agreed-upon procedures. However, failure to adhere to the agreement in such cases constitutes wrongful termination or dismissal, it does not render the action void or without legal effect. This distinction highlights the difference between wrongful and unlawful termination or dismissal, the latter of which can lead to remedies such as automatic reinstatement.

Ultimately, the method of ending an employment relationship depends on the specific terms of the contract and any applicable statutory provisions. The Labour Act of 2004 outlines the procedures for lawful termination of employment contracts.[3]

Key Legal Frameworks Governing Employment and Labor Relations in Nigeria

1. 1999 Constitution of the Federal Republic of Nigeria (as amended)
   The Constitution establishes the National Industrial Court (NIC) under Section 254C, granting it exclusive jurisdiction over employment-related disputes. This makes the NIC the primary forum for handling cases such as wrongful termination.
2. Labour Act (Laws of the Federation, 2004)
   The Labour Act is the foundational legislation regulating employment relationships in Nigeria. It outlines the rights, duties, and obligations of both employers and employees, as well as standards for fair labor practices.
3. National Industrial Court Act, 2006
   This Act supplements the constitutional provisions by defining the structure, powers, and operational framework of the NIC, ensuring its effectiveness in resolving labor disputes.
4. Employee’s Compensation Act, 2010
   This legislation mandates compensation for employees who suffer workplace-related injuries, illnesses, or death. Employers are required to contribute 1% of their total payroll to the Nigeria Social Insurance Trust Fund (NSITF), which administers these benefits.
5. NICN (Civil Procedure) Rules, 2017
   These Rules guide the conduct of proceedings in the National Industrial Court. They are primarily used by judges and legal practitioners to manage timelines, format of filings, and procedures for handling employment litigation.
6. Judicial Precedents
   Decisions from previous court cases play a vital role in shaping employment law. These judicial interpretations clarify and expand upon existing statutes, providing guidance in resolving future disputes.[4]

Ways of terminating a Contract of Employment

1. By Notice

Termination of an employment contract that has statutory backing is generally done through notice. Such contracts typically specify a notice period, during which either party may exercise the right to terminate the agreement, or alternatively, make a payment in lieu of notice.[5]

In cases where the employment is for a fixed term, early termination is not permitted unless the terminating party pays compensation equivalent to the remaining duration of the contract. The right to terminate by notice is mutual, either the employer or the employee may invoke it and there is no legal requirement to provide reasons for doing so.

However, under Nigerian law, only individuals classified as “workers” under the Labour Act are subject to the statutory notice provisions in situations where the contract itself does not stipulate a notice period.

2. By Expiration of Time

After a certain period, a fixed-term contract may come to an end. Such a contract is defined as one that is set to last for a specific, predetermined duration and generally cannot be terminated early, except in cases of serious breach by either party. However, it is not uncommon to find contracts labeled as fixed-term that include a clause allowing either party to terminate the agreement with notice. Since these contracts are not guaranteed to run for the entire specified period, they do not truly qualify as fixed-term contracts. Despite this, the English Court of Appeal ruled that a contract could still be considered fixed-term if it was set for a specific duration, even if it allowed for termination by notice from either party during that term.[6]

3. By Operation of Law

Regardless of the parties’ intentions, there are situations where an employment relationship must end because the law deems the contract to be terminated. In such cases, the contract of employment is brought to an end by operation of law. Termination by operation of law occurs when a subsequent legal event or a legal impossibility arises that the law recognizes. This means that the employment contract can no longer be performed due to these intervening legal events. Common examples include company liquidation, bankruptcy, dissolution of a partnership, or the assignment of obligations in personal service contracts.[7]

4. By Death of an Employee

An employment contract is a personal service agreement, meaning it comes to an end upon the death of either party. Since such a contract can only be fulfilled during the lifetime of the individual who entered into it, death brings it to an automatic close. Consequently, if a party dies, their executor cannot pursue a claim for breach of contract arising from obligations that became impossible due to the death.[8]

Wrongful Termination of Appointment

In matters of contract termination, a distinction exists between wrongful termination and unlawful termination, primarily in the remedies available for each. Termination that contravenes a relevant statute is considered unlawful and is therefore null and void. In contrast, under common law, parties may terminate an employment contract according to the terms they have agreed upon. If a party fails to follow the agreed procedure, this constitutes wrongful termination or dismissal, but it does not render the termination void. As a result, remedies for unlawful termination may include damages and/or reinstatement, whereas remedies for wrongful termination are generally limited to an award of damages.[9]

Remedies for Wrongful Termination

1. Reinstatement

In this context, specific performance or reinstatement refers to restoring an employee to their previous position when the court finds that the termination of employment was wrongful, particularly where the employment has statutory protection. While reinstatement is not commonly granted since an employee is generally not considered to have a proprietary interest in their job, recent decisions by the Supreme Court of Nigeria suggest a shift. In suitable cases, the court may now grant declaratory reliefs ordering reinstatement or issue injunctions preventing dismissal. This remedy is typically available to individuals employed in the public sector, whose appointments are governed by statutes under Nigerian labour law.

2. Damages

Given the unique nature of employment contracts with statutory flavour, the primary remedy available to an aggrieved party is usually the award of damages. However, courts generally do not grant general damages in such cases. The Court of Appeal has held that awarding general damages for wrongful dismissal under an employment contract is inappropriate. This is because any compensation awarded must be specifically proven as special damages, not presumed or generalized, and must reflect actual losses incurred by the claimant.[10]

3. Severance Pay

This lump sum payment serves as compensation for job loss, but it is usually awarded only when provided for in the employment contract or relevant regulations.

4. Unpaid Entitlements

Courts may order employers to compensate employees for any outstanding wages, unused leave, or other entitlements that are due.

Conclusion

The determination of a contract of employment in Nigeria is a multifaceted legal issue shaped by statutory provisions, contractual agreements, and common law principles. The legal framework governing employment relationships anchored in the Constitution, Labour Act, judicial precedents, and other relevant statutes clearly outlines the acceptable methods for terminating employment, whether by notice, expiration, operation of law, or death.

A key distinction in employment termination lies in whether it is wrongful or unlawful, as this determines the remedies available to the aggrieved party. While wrongful termination arises from a breach of contractual terms, unlawful termination violates statutory provisions and renders the termination void. Courts have recognized remedies such as reinstatement, special damages, severance pay, and unpaid entitlements, particularly for employment relationships with statutory backing.

Ultimately, employers and employees must understand the nature of their employment contract, whether purely contractual or statutorily flavoured, to ensure that terminations are carried out in compliance with the applicable legal standards. Doing so not only protects the rights of both parties but also promotes fairness, accountability, and due process in Nigeria’s labour and employment landscape.

Author

Felicia Ayeomoni & Olamilekan Fayemi

Associate         /           Associate

Email: [email protected]

____________________

Adeola Oyinlade & Co is a leading full-service law firm with a highly regarded employment and labour practice. The law firm advises multinational and local clients including both employers and employees on wide range of issues, from employment contracts, policy, compliance, employee benefits, and representation in disputes at the National Industrial Courts of Nigeria. You may reach out to us for more information and enquiries via [email protected] or call +234 802 686 0247 / +234 803 826 7683.

[1] UBN v. Ogbo (1995)2 NWLR (Part 380) 647, SC

[2]  Section 13 of the Federal Universities of Technology Act 1986 (as amended)

[3] Section 9(7) of the Labour Act 2004

[4] https://www.resolutionlawng.com/legal-remedies-for-wrongful-termination-of-employment-in-nigeria/

[5] Section 11(1) of the Labour Act 2004

[6] Dixon v BBC (1979) QB 546.

[7] Section 9(7) of the Labour Act

[8] Busari Morufu Salawu, Legal framework for the determination of employment contract under the Nigerian Labour law https://journal.ucc.edu.gh/index.php/ucclj/article/view/1723/815

[9] ibid

[10] New Nigeria Newspapers Limited v. Mr. Felix Atoyebi 2013) NGSC 2.

Introduction

The world of sports is filled with high-stakes competitions, lucrative sponsorships, and complex contractual agreements. With so much on the line, disputes are inevitable. In Nigeria, sports arbitration and dispute resolution play a crucial role in resolving conflicts and ensuring that the sports industry operates smoothly. This article provides an overview of the key aspects of sports arbitration and dispute resolution in Nigeria, including the Court of Arbitration for Sport (CAS), the regulatory framework for sports in Nigeria, and the role of the Nigeria Football Federation’s Player Status and Arbitration Committee (PSAC). We’ll also explore the relevant provisions of the Arbitration and Mediation Act (AMA) and how they impact sports arbitration in Nigeria. Whether you’re an athlete, coach, or sports administrator, understanding the ins and outs of sports arbitration and dispute resolution is essential for navigating the complex world of sports.

Regulatory Framework for Sports in Nigeria

Nigeria’s sports regulatory framework is a multi-faceted structure designed to promote and regulate sports development in the country.

1. Ministry of Youth and Sports Development: As the government body responsible for sports, it formulates policies to guide sports development, provides guidance and oversight to ensure effective implementation and oversees sports-related activities nationwide
2. National Sports Commission (NSC): The NSC plays a crucial role in regulating sports to ensure compliance with rules and regulations, promoting sports development through various initiatives and coordinating national sports events to showcase talent and promote unity.[1]
3. Sports Federations: These governing bodies are responsible for organizing and regulating specific sports at the national level, developing rules and guidelines for their respective sports and handling disciplinary matters and coordinating national team selections. Examples of sports federations in Nigeria include: Nigerian Football Federation (NFF), Athletics Federation of Nigeria (AFN), Nigeria Basketball Federation (NBBF) and Nigeria Tennis Federation (NTF)
4. National Institute for Sports (NIS): The NIS provides training and development programs for coaches, administrators, and athletes, opportunities for skills enhancement and knowledge acquisition and support for capacity building in sports.[2]
5. National Sports Policy: This policy serves as a guiding document for sports development in Nigeria, outlining: strategies for promoting sports development, objectives for talent identification, sports science, athlete welfare, and infrastructure development, and guidelines for effective implementation and monitoring.

By working together, these components aim to promote sports development, ensure compliance with regulations, and provide opportunities for athletes to excel in Nigeria.[3]

Dispute Resolution by the Nigeria Football Federation’s Player Status and Arbitration Committee (PSAC)

The FIFA’s Regulations on the Status and Transfer of Players (RSTP) have long recognized that instead of submitting employment-related disputes to FIFA or seeking redress before a civil court, parties may opt to submit such disputes to a national dispute resolution system, provided that it meets the minimum and fundamental procedural requirements. A national dispute resolution system for disputes between employees (players and/or coaches) and employers (clubs) is known as a national dispute resolution chamber (NDRC).[4]

I. Required Standards for a National Dispute Resolution system to be recognized to by FIFA

To gain recognition from FIFA, a national dispute resolution system, typically known as a National Dispute Resolution Chamber (NDRC), must fulfill specific requirements.

1. Establishment by Member Association: The NDRC must be established by the relevant member association (e.g., a national football federation) as a formal body for resolving disputes. The member association can choose a different name for the body, but its purpose and function should align with the NDRC framework.
2. Recognition in Statutes: The NDRC or its equivalent must be officially recognized in the statutes of the member association. This ensures that the NDRC’s role and authority are formally acknowledged and integrated into the governance structure of the association.

• Compliance with FIFA Principles and Regulations: The NDRC must comply with FIFA’s National Dispute Resolution Chamber Recognition Principles and the Standard Regulations annexed to these principles. These guidelines set out the procedural and substantive requirements for the NDRC to ensure fairness, consistency, and transparency in resolving disputes.

1. Publication of Regulations and Decisions: The NDRC is required to publish its applicable regulations, procedural rules, and decisions. This promotes transparency and accountability. However, decisions may be subject to redactions to protect sensitive information or maintain confidentiality where necessary.

By meeting these criteria, an NDRC can ensure that it operates in a manner consistent with FIFA’s expectations, providing a fair and effective mechanism for resolving disputes related to players, coaches, and clubs within the national football context. This recognition enables the NDRC to handle disputes that might otherwise be addressed by FIFA’s dispute resolution bodies or national courts.[5]

1. Status of the Nigeria Football Federation’ Player Status and Arbitration Committee (PSAC)

The Nigeria Football Federation (NFF) has established the Player Status and Arbitration Committee (PSAC) to handle disputes related to player status, transfers, and contractual obligations between players and clubs.

Key Features of the PSAC

1. Responsibilities: The PSAC is responsible for deciding on employment-related disputes, reviewing evidence, hearing from parties, and issuing binding decisions.
2. Enforceability: The PSAC’s rulings are enforceable within Nigerian football, ensuring that decisions are implemented and respected by clubs and players.

• Appeal Structure: Decisions made by the PSAC can be appealed directly to the Court of Arbitration for Sport (CAS) in Switzerland, providing a clear and established pathway for resolving disputes at the international level.

While the PSAC currently serves as a de facto National Dispute Resolution Chamber (NDRC), its ad hoc nature means it only convenes when disputes arise. This can lead to limitations in terms of consistency and accessibility.

The PSAC plays a crucial role in resolving player-club disputes in Nigeria, delivering binding decisions that meet national and international standards. While it currently serves as a de facto NDRC, establishing a permanent, statutory NDRC would further strengthen the governance of football in Nigeria, providing continuous access to justice, transparency, and consistency for players and clubs alike.[6]

Relevant provisions of the Arbitration and Mediation Act 2023 to Sports Arbitration in Nigeria

The Arbitration and Mediation Act (AMA) provides several key provisions that are particularly relevant to the sports industry.

1. Enforcement of Arbitration Agreements: The AMA enforces arbitration agreements, even if they are not explicitly written, as long as there is evidence of the agreement in any form, including electronic communication. This flexibility is beneficial for sports contracts and agreements, which are often conducted electronically.
2. Third-Party Funding: The AMA allows third-party funding for arbitration, enabling external support for disputing parties. This is particularly beneficial for athletes and local sports bodies with limited financial resources, as it enables them to access justice and pursue their claims without being hindered by financial constraints.
3. Interim Measures: Arbitral tribunals can make interim orders to protect parties’ urgent interests during arbitration proceedings. This is crucial in sports, where time-sensitive decisions are often necessary, such as ensuring an athlete’s participation in a major event or preventing a club from taking action that could harm a player’s career.
4. Electronic Communications: The AMA recognizes electronic formats, such as email and social media, as valid means of communication and agreement. This facilitates virtual proceedings and agreements, making it easier for parties to enter into arbitration agreements, conclude third-party sponsorships, and conduct virtual proceedings without the need for physical contact.
5. Stay of Proceedings: Courts must stay proceedings when a valid arbitration agreement exists, except in cases where the agreement is void or inoperative. This ensures that disputes are resolved through arbitration, as agreed upon by the parties, rather than through the courts.

The AMA provides a framework for resolving sports-related disputes that is flexible, supportive, and efficient, addressing the unique needs of the industry.[7]

The Court of Arbitration for Sport (CAS)

The Court of Arbitration for Sport (CAS) mirrors the Nigerian court system in its structure, where cases typically originate in a lower division and may be appealed to a higher division. The CAS is comprised of three main divisions:

1. The Ordinary Arbitration Division: handles first-instance commercial disputes between sporting stakeholders, focusing on disputes that are financial or contractual in nature, rather than disciplinary or regulatory issues within a specific sport.
2. The Anti-Doping Division: hears first-instance anti-doping cases
3. The Appeals Arbitration Division:As the name suggests, this division serves as the court’s final authority, hearing appeals from initial decisions made by sports governing bodies and acting as an appellate body to review and adjudicate on those decisions.[8] It hears appeals from bodies such as
4. Federation of International Football Association (FIFA)

The Federation of International Football Association (FIFA) is a common source of disputes before the CAS, particularly appeals from FIFA’s Internal Judicial System decisions. These disputes often involve contract terminations, player transfers, and related compensation issues between clubs.

1. World Anti-Doping Agency

The World Anti-Doping Code 2021 mandates sanctions for athletes who use prohibited substances, including disqualification of results and forfeiture of medals, points, and prizes. The Court of Arbitration for Sport (CAS) has sole authority to hear appeals related to these anti-doping rule violations.

Scope of disputes governed by the court of arbitration for sports

The Court of Arbitration for Sport (CAS) has a wide-ranging jurisdiction, covering various types of disputes in the sports industry, including:

1. Commercial Disagreements: Disputes related to sponsorship deals, endorsements, and other business arrangements.
2. Contractual Issues: Conflicts arising from contracts between athletes, clubs, sponsors, and other parties.
3. Doping Allegations: Cases involving athletes accused of violating anti-doping regulations.
4. Sanctions Imposed by Governing Bodies: Disputes related to penalties, fines, or other disciplinary actions imposed by sports governing bodies, such as FIFA or the International Olympic Committee (IOC).

The following parties can bring disputes before the CAS, Individual Athletes, Clubs, Sports Federations, Sponsors and Media Companies. By providing a platform for resolving sports-related disputes, the CAS helps to maintain fairness, stability, and order in the sports industry.[9]

Conclusion

Sports arbitration and dispute resolution play a vital role in the sports industry, providing a framework for resolving disputes in a fair, efficient, and effective manner. The Court of Arbitration for Sport (CAS) is a key institution in this regard, offering a platform for resolving sports-related disputes at the international level. In Nigeria, the regulatory framework for sports is multi-faceted, with various components working together to promote sports development and ensure compliance with regulations. The Nigeria Football Federation’s Player Status and Arbitration Committee (PSAC) is a crucial mechanism for resolving player-club disputes, and the Arbitration and Mediation Act (AMA) provides a supportive framework for sports arbitration. By understanding the intricacies of sports arbitration and dispute resolution, stakeholders in the sports industry can navigate disputes effectively and ensure that the industry continues to thrive. With so much on the line and clarity that disputes are inevitable in sports, it highly important that experienced sports Attorneys are consulted when considering sports arbitration and dispute resolution in resolving conflicts and ensuring that the sports business operates smoothly.

Author

Olalekan Fayemi

Associate

Email: [email protected]

 

____________________

 

Adeola Oyinlade & Co is a leading full-service law firm in Nigeria with a highly regarded sports law practice representing professional athletes, sports betting companies, sport ownership groups including clubs, sports entrepreneurs (small and medium-sized companies), IP licensees and licensors, sponsors and more. You may reach out to us for more information and enquiries via [email protected] or call +234 802 686 0247 / +234 803 826 7683.

[1] https://www.sports.gov.ng/about (accessed on August 20, 2025)

[2] https://nis.gov.ng (accessed on August 20, 2025)

[3]https://trustedadvisorslaw.com/sports-arbitration-dispute-resolution-innigeria/#:~:text=Typically%2C%20disputes%20arising%20from%20sporting,mandatory%20mechanism%20for20resolving%20disputes   (accessed on August 20, 2025)

[4]https://inside.fifa.com/transfer-system/ndrc  (accessed on August 20, 2025)

[5]  https://inside.fifa.com/transfer-system/ndrc (accessed on August 20, 2025)

[6]https://www.linkedin.com/posts/abiodun-sonaike-esq-a8a78419a_is-the-nffs-psac-qualified-as-an-ndrc-dispute-activity7363149500963524608Z4QC?utm_source=share&utm_medium=member_android&rcm=ACoAAAqDQlIBLNolj5K0HFqQ3PheSO57Jzn-6pw  (accessed on August 20, 2025)

[7] https://www.goldsmithsllp.com/arbitration-dispute-resolution/

[8] https://www.tas-cas.org/en/general-information/history-of-the-cas.html

[9] https://www.tas-cas.org/en/general-information/frequently-asked-questions.html

1 Introduction

According to the International Labour Organization (ILO), nearly 2.3 million workers die annually worldwide from occupational accidents and diseases, with tens of millions more suffering non-fatal injuries.[i] Nigeria is not exempt from this troubling reality. From factory mishaps and construction site collapses to stress-induced breakdowns in office environments, the frequency of workplace accidents raises a pressing legal question: how well does Nigerian law protect employees when the unexpected happens?

Workplace accidents remain an unfortunate but recurring feature of Nigeria’s labour environment. From industrial sites to corporate offices, employees are exposed to varying degrees of risk. These risks not only raise human and economic concerns but also implicate the legal obligations of employers.

This article critically examines the remedies available to employees under Nigerian law, focusing on the Employee Compensation Act, 2010, the Labour Act 2004 and the Factories Act 2004, while also considering common law actions, constitutional safeguards, and relevant case law.

 

2 Statutory Compensation Under the Employee Compensation Act, 2010 (ECA)

The Employee Compensation Act, 2010 (ECA) is the primary legislation governing remedies for workplace accidents and occupational diseases in Nigeria. It repealed the former Workmen’s Compensation Act and introduced a modern framework based on a no-fault liability principle. This means that employees who suffer injury, disease, or death in the course of employment are entitled to compensation without the need to prove that the employer was negligent. The scheme is administered by the Nigeria Social Insurance Trust Fund (NSITF), which manages contributions and disbursements.

2.1 Coverage and Compensable Events

The Act applies to all employers and employees in both the public and private sectors (excluding armed forces in active service).[ii]Compensation is payable for:

• Injuries sustained in the course of employment or while commuting;
• Occupational diseases, including those listed in the First Schedule
• Mental stress arising from sudden traumatic events or chronic work conditions;
• Disabilities, whether permanent or temporary
• Fatal accidents, with benefits payable to dependants.

2.2 Procedural Requirements

Procedurally, the Act requires employees to notify employers of any injury within 14 days, while employers are in turn obliged to report such incidents to the NSITF within 7 days. Claims should generally be made within one year of the incident, though extensions may be granted in meritorious cases.

2.3 Benefits and Funding

To fund the scheme, employers contribute 1% of total monthly payroll into the Employees’ Compensation Fund, ensuring that the system is collectively financed.

The benefits payable under the Act include medical treatment, rehabilitation services, periodic disability payments (sometimes up to 90% of wages in cases of permanent disability), and dependants’ benefits where death occurs. One of the ECA’s most significant features is that compensation is guaranteed regardless of fault, thereby reducing the burden of litigation on injured workers. Nonetheless, employees retain the right to pursue alternative remedies, such as negligence claims, if they elect not to receive statutory benefits

 

3. Civil Remedies: Negligence and Breach of Duty

The statutory scheme under the ECA does not completely exclude the role of the courts. Nigerian employees retain the option to pursue civil remedies in negligence or breach of statutory duty, particularly where they seek damages beyond the standard ECA package.

Employers owe a common law duty of care to their employees: to provide a safe workplace, adequate supervision, competent colleagues, and suitable equipment. Failure in any of these respects may result in liability if injury occurs. In Ola Suleiman v. Hongzing Steel Co. Ltd,[iii] the National Industrial Court stressed that employers are under both statutory and common law duties to maintain safe systems and equipment, with specific reference to obligations under the Factories Act.

3.1 Principle of Election.

The courts have clarified that the ECA creates a principle of election. In Amina Hassan v. Airtel Networks Ltd & Anor, [iv]  the Court held that section 12 ECA gives employees the choice of either pursuing compensation under the statutory scheme or suing in negligence but not both. Where a claim is framed as a negligence action, it can proceed directly in court without first applying to the NSITF.

In practice, negligence actions can yield substantial awards. For instance, in Mr. Anthony Godwin Utibe v. Jiuxing Integrity Industries Ltd,[v] the Court awarded ₦30 million in damages to an employee who sustained grave workplace injuries. The Court affirmed that the ECA does not extinguish negligence claims, and that contributory negligence merely affects apportionment, not the right to sue.

These decisions confirm that while the ECA provides a quick statutory remedy, civil suits remain an important avenue for more robust compensation and accountability.

4. The Factories Act (CAP F1 LFN 2004)

The Factories Act is principally concerned with prevention of accidents. It imposes a wide range of duties on employers and factory occupiers to maintain safe working conditions. These include requirements on cleanliness, ventilation, lighting, and space, as well as strict obligations to fence dangerous machinery, provide protective equipment, and maintain safe systems of work.

The Act also mandates accident reporting, medical examinations, and record keeping. Inspectors are empowered to enforce compliance, and breaches may attract criminal sanctions including fines and imprisonment.

By focusing on prevention, the Factories Act complements the ECA’s remedial structure, ensuring that employers are not only liable after harm occurs but are also compelled to reduce the likelihood of accidents in the first place.

 

5. The Labour Act (CAP L1 LFN 2004)

The Labour Act primarily regulates contracts of employment, but it also contains provisions relevant to workplace injury. Section 7 requires employers to provide written terms of employment, including sickness and injury benefits. Section 16 provides for paid sick leave where an employee is incapacitated, ensuring continued income security.

Importantly, section 12 abolishes the old “common employment defence,” which allowed employers to escape liability where injury was caused by a fellow worker. By removing this defence, the Act strengthens the accountability of employers for all workplace injuries. Although not as detailed as the ECA, the Labour Act underscores the contractual dimension of workplace protection, ensuring that terms relating to illness and injury are expressly provided and enforceable.

 

6. Criminal Liability for Workplace Accidents

Beyond civil and statutory compensation, Nigerian law also contemplates criminal liability for workplace accidents where negligence or deliberate non-compliance causes injury or death. This adds a deterrent dimension to the country’s occupational safety framework.

(a) Factories Act

The Factories Act (Cap F1 LFN 2004) does not only impose preventive obligations; it also creates a range of criminal offences. Employers and factory occupiers who fail to fence dangerous machinery, provide protective equipment, maintain safe systems of work, or comply with inspectors’ directives may face fines and imprisonment. Failure to report accidents or occupational diseases is likewise punishable. These provisions make it clear that disregard for workplace safety is not merely a civil wrong but a crime against public welfare.

(b) Criminal Code and Penal Code

General criminal law provisions also apply to workplace accidents. The Criminal Code imposes a duty on persons in charge of dangerous things or machinery to take reasonable care to preserve human life. A breach of this duty leading to death may amount to manslaughter by negligence. Similarly, the Penal Code criminalises causing death by negligence, classifying it as culpable homicide not punishable with death. In less severe cases, negligent acts causing bodily harm are also punishable.

(c) Sector-Specific Regulations

In highly regulated sectors such as oil and gas and mining, additional criminal sanctions exist under industry-specific legislation. Operators who fail to comply with mandatory safety protocols may face prosecution, in addition to regulatory penalties.

(d) Constitutional Dimension

Although the 1999 Constitution (as amended) does not itself create workplace offences, the right to life and dignity of the human person underpin these protections. Where systemic neglect of safety leads to injury or death, state authorities may rely on constitutional guarantees in framing criminal responsibility.

7. International Standards

Nigeria is a member of the International Labour Organization (ILO) and has ratified key conventions on occupational safety and health, including ILO Convention 155 (Occupational Safety and Health, 1981) and Convention 187 (Promotional Framework for Occupational Safety and Health, 2006). These standards have influenced domestic reforms and are sometimes referenced by Nigerian courts in interpreting labour statutes.

By aligning with these international instruments, Nigeria signals its commitment to global best practices, even if enforcement at the domestic level remains a challenge.

 

8. CONCLUSION

The global statistics on workplace accidents underscore the urgency of effective protections. With over 2.3 million work-related deaths annually worldwide, Nigeria cannot afford weak enforcement or unclear remedies.

The Nigerian framework rests on three interlocking pillars: the Employee Compensation Act, 2010, which guarantees compensation without proof of fault; the Labour Act and common law, which enforce accountability through contract and negligence actions; and the Factories Act, which imposes preventive duties on employers.

For employees, awareness of their rights under these regimes is vital. For employers, compliance is both a legal duty and a risk management strategy. Ultimately, workplace safety is not only a statutory requirement but also a foundation for sustainable economic productivity and industrial peace in Nigeria.

Author

Felicia Ayeomoni

Associate

Email: [email protected]

____________________

Adeola Oyinlade & Co is a leading full-service law firm with a highly regarded employment and labour practice. The law firm advises multinational and local clients including both employers and employees on wide range of issues, from employment contracts, policy, compliance, employee benefits, and representation in disputes at the National Industrial Courts of Nigeria. You may reach out to us for more information and enquiries via [email protected] or call +234 802 686 0247 / +234 803 826 7683.

[i] <https://webapps.ilo.org/static/english/osh/en/story_content/external_files/fs_st_1-ILO_5_en.pdf > Accessed 5^th of August, 2025.

[ii] Section 2-3 of the Employee Compensation Act, 2010.

[iii] NICN/LA/73/2011, judgment 26 Feb 2015.

[iv]  ((2015) 58 NLLR (Pt 201) 443).

[v] SUIT NO: NICN/OW/43/2023

Introduction

On 26 June 2025, the Federal Government of Nigeria enacted a landmark tax reform package comprising four key statutes: the Nigeria Tax Act, 2025, Nigeria Tax Administration Act, 2025, Nigeria Revenue Service Act, 2025, and the Joint Tax Board (Establishment) Act, 2025. These laws, which take effect from 1 January 2026, modernise Nigeria’s tax architecture, replacing overlapping and outdated frameworks with a streamlined and technology-driven regime.

These laws repeal outdated and overlapping tax legislation and introduce a streamlined, modern tax system. The aim is to improve compliance, expand the national tax base, and align Nigeria’s tax administration with international best practices.
This article provides a concise breakdown of the new regime and highlights key implications for individuals, businesses, and tax advisers.

 

Overview Of the Four Reform Acts

1. Nigeria Tax Act, 2025

This consolidates all major federal tax laws; Companies Income Tax, Personal Income Tax, Value Added Tax (VAT), Capital Gains Tax, and Petroleum Profits Tax into a single legislative instrument. It simplifies tax incentives, eliminates redundant exemptions, and clarifies what constitutes taxable income and allowable deductions.

2. Nigeria Tax Administration Act, 2025

The NTA harmonises tax administrative procedures and introduces a unified digital compliance system.

3. Nigeria Revenue Service Act, 2025

This Act establishes the Nigeria Revenue Service (NRS), replacing the Federal Inland Revenue Service (FIRS). The NRS is charged with tax collection, taxpayer registration, and automation of all federal tax functions. It also supervises taxpayer compliance through digital monitoring tools and nationwide coordination with state tax authorities.

4. Joint Tax Board (Establishment) Act, 2025

The JTB is now formally established as a statutory body with authority to drive inter-agency harmonisation. It ensures consistency in enforcement, facilitates joint audits, and manages a central database linking federal and state taxpayer records.

 

Key Changes for Individuals

1. Exemption for Low-Income Earners
   Individuals earning less than ₦800,000 annually are fully exempt from Personal Income Tax.
2. Rent Relief Deduction
   Salaried individuals may now deduct up to ₦200,000 in annual rent from taxable income.
3. Updated Personal Income Tax Bands
   Rates remain progressive but with adjusted thresholds to reflect inflation.
4. Simplified Filing for Salaried Workers
   Individuals earning only salary and allowances under ₦5 million per annum are covered under an automatic simplified returns scheme.
5. VAT on Streaming and Digital Content
   Subscription services such as Netflix, Spotify, YouTube Premium, and other foreign-hosted digital platforms are now subject to Nigerian VAT.
6. Mandatory UTIN for All Taxable Individuals
   Every taxpayer must now register for a Unified Taxpayer Identification Number (UTIN), which will be used across employment, investment, rent, and other income types.

These measures simplify compliance for low-income earners while extending tax liability to users of digital and foreign-based services, reflecting global VAT enforcement trends.

 

Key Changes for Businesses

1. Small Business Exemption with Asset Limit
   Businesses with an annual turnover below ₦100 million and total assets not exceeding ₦250 million are fully exempt from:

• Companies Income Tax
• Capital Gains Tax
• Development Levy

2. Lower Corporate Income Tax Rate
   For medium and large companies earning above ₦100 million, the rate is now reduced from 30% to 25%.
3. Development Levy Introduced
   A 4% Development Levy now applies to taxable profits of large companies. This levy consolidates multiple previously uncoordinated levies, including:

• Industrial Training Fund (ITF)
• National Information Technology Development Levy (NITDA Levy)
• Tertiary Education Tax
• NASENI Levy

Businesses will now have to deal with a single consolidated levy, reducing administrative burden and potential overlaps in remittances.

4. Minimum Tax Rules for Loss-Making Entities
   A statutory minimum tax now applies to companies even where they report a loss, this discourages base erosion and artificial tax avoidance schemes.
5. Compulsory VAT Compliance for Digital Businesses
   Any local or foreign business providing digital goods or services (including e-commerce, digital ads, e-learning, and logistics) must:

• Register with the NRS;
• Collect and remit VAT;
• File monthly returns electronically.

6. Virtual Asset Service Providers (VASPs) Reporting Obligation
   Any company involved in the exchange, custody, or management of virtual assets (crypto, NFTs, etc.) must now submit detailed monthly returns to the tax authority, including:

• Customer details (name, phone, email, NIN, Tax ID);
• Counterparty information where applicable
• Description and type of virtual asset service provided;
• Date, value, and sales price of each transaction;

In addition, the NRS is empowered to automate tax administration processes, including assessment and information gathering using digital tools.

MSMEs are encouraged to formalise their operations through generous exemptions. However, larger and digital-native companies are now subject to stricter compliance, especially in the virtual asset and e-commerce sectors.

 

Conclusion

The 2025 tax reforms reflect Nigeria’s shift towards a digitally enforced, compliance-driven tax regime. They aim to make taxation fairer, simpler, and more transparent while boosting government revenue. Businesses must now adjust their internal systems, pricing, and reporting frameworks to meet new standards. Individuals especially users of digital services must be aware of their VAT obligations and registration requirements.

With the Nigeria Revenue Service (NRS) set to commence full operations by 1 January 2026, all stakeholders, employers, entrepreneurs, investors, and tax consultants should take proactive steps to align with the new framework.

Tax compliance is no longer optional. It is enforceable, digital, and closely monitored.

As a multinational corporation, a local start-up, a family-owned enterprise, or an

investor, recording continued business success depends on understanding these reforms and preparing accordingly.

It is highly recommended that tax professionals in Nigeria with a sound understanding of the

terrain of the law, offering full-spectrum tax advisory and legal support tailored to the needs of clients from compliance audits and tax restructuring to dispute resolution and regulatory

engagement be consulted to act decisively, stay ahead of compliance challenges, and

strategic position of your business for the future.

 

Authors

Felicia Ayeomoni

Associate, Adeola Oyinlade & Co

Email: [email protected]

 

Adeola Oyinlade & Co is a full-service law firm headquartered in Lagos, Nigeria offering full-spectrum tax advisory and legal support tailored to the needs of local and international clients. The firm offer a range of services, including tax advisory, compliance, litigation, and planning for various taxes related matters.

You may reach out to us for more information and enquiries via [email protected] or call +234 802 686 0247 / +234 803 826 7683.

INTRODUCTION

Nigeria’s persistent energy crisis marked by frequent national grid failures, high electricity tariffs, and rising fuel costs has intensified the need for alternative power solutions. In response, the solar energy sector has experienced significant growth, emerging as a viable and increasingly attractive option for both residential and commercial consumers. This development has created substantial economic potential within the renewable energy space, offering opportunities for sustainable investment, job creation, and contributions to national GDP.

As demand for solar solutions continues to rise across various market segments, the sector presents a strategic entry point for entrepreneurs and investors seeking long-term value. However, participation in this industry requires strict adherence to regulatory protocols. Establishing a solar energy business in Nigeria involves compliance with corporate registration procedures, the acquisition of industry-specific certifications, and the observance of legal and environmental regulations. This guide provides a comprehensive overview of the processes involved in setting up a solar business in Nigeria, with a focus on registration, certification, and regulatory compliance.

 

REGULATORY STEPS FOR REGISTERING A SOLAR BUSINESS IN NIGERIA

Like all businesses operating in Nigeria, a solar energy company must undergo the standard corporate registration process prescribed under Nigerian law before commencing operations. This process is governed by the Corporate Affairs Commission (CAC), the statutory body responsible for the regulation and management of companies pursuant to the Companies and Allied Matters Act (CAMA) 2020.

1. Determine the Appropriate Business Structure

Prospective business owners must first decide on the most suitable legal structure for their operations. Common options include Sole Proprietorship, Partnership, and Limited Liability Company (Private or Public). For solar businesses intending to engage in large-scale installations, partnerships, or those seeking investment, a Private Limited Liability Company (Ltd) is generally the most viable option due to its legal recognition, investor confidence, and scalability.

2. Name Reservation and Availability Check

After selecting a business structure, the next step is to conduct a name availability check at the CAC. A legal practitioner can assist with this process. If the proposed name is approved, it will be reserved for 60 days, during which time the company must complete its registration.[1]

3. Preparation and Submission of Incorporation Documents

The following documents must be prepared and submitted for incorporation:

• Form CAC 1 (Availability check Search and Reservation Result)
• Form CAC 1.1 (Application for Registration)
• Duly stamped Memorandum and Articles of Association (MEMART) detailing business objectives such as solar energy installation, sales, and consultancy
• Valid identification of directors, shareholders, and the company secretary
• Stamp duty receipts and evidence of payment to CAC

4. Payment of Statutory Fees and Document Stamping

Applicable CAC registration fees must be paid based on the company’s share capital. The incorporation documents must also be stamped at the Federal Inland Revenue Service (FIRS) for taxation and validation purposes.

5. Issuance of Certificate of Incorporation

Upon successful processing, the CAC issues a Certificate of Incorporation, which includes a unique RC (Registration Certificate) number. This serves as legal proof of the company’s existence and authorizes it to commence business operations in Nigeria.

6. Foreign Participation

Foreign individuals or entities seeking to establish a solar business in Nigeria must fulfill additional regulatory requirements. These include:

• Registration with the Nigerian Investment Promotion Commission (NIPC)
• Obtaining a Business Permit from the Ministry of Interior
• Securing an Expatriate Quota for foreign staff
• Obtaining Resident Permits

 

OBTAINING AN IMPORT AND EXPORT LICENSE

Many solar energy components such as solar panels, inverters, batteries, and charge controllers are not manufactured locally and must be imported. Businesses must obtain the relevant import licenses and register with the Nigerian Customs Service through the Nigerian Trade Hub. Exporters of locally manufactured solar equipment must also obtain an export license. This involves obtaining a Tax Identification Number (TIN) and registering on the Nigerian Trade Hub portal.[2]

 

CERTIFICATION OF SOLAR PRODUCTS BY THE STANDARDS ORGANISATION OF NIGERIA (SON)

The Standards Organisation of Nigeria (SON) is the primary regulatory body tasked with standardizing and ensuring the quality of goods in Nigeria. Established under the SON Act No. 14 of 2015, its mandate includes developing standards for products, services, materials, and processes, as well as enforcing compliance.[3]

For businesses involved in manufacturing or importing solar products, obtaining SON certification is critical to ensure compliance with Nigerian Industrial Standards (NIS) and to guarantee the quality and safety of products.

• Mandatory Conformity Assessment Programme (MANCAP):

This program applies to locally manufactured products. It ensures compliance with NIS through product testing, quality control inspections, and factory evaluations. Businesses engaged in the assembly or production of solar panels, batteries, or related components must obtain MANCAP certification. This enhances credibility, facilitates access to funding, and enables participation in government or donor-funded projects.

Upon successful evaluation, SON issues a MANCAP certificate, which is valid for three years, subject to periodic compliance audits.[4] This certification not only legitimizes the business operations but also enhances the credibility of the solar products in the eyes of distributors, financiers, and end users, particularly in public procurement or donor-funded renewable energy projects.

• Standards Organisation of Nigeria Conformity Assessment Programme (SONCAP):

SONCAP is a mandatory scheme for imported products, ensuring they conform to applicable standards prior to entry into Nigeria. Under SONCAP, goods intended for import which are on the list of regulated products must undergo a products conformity assessment in their country of origin.[5]

Adhering to these certification processes not only facilitates compliance with Nigerian regulations but also enhances consumer confidence in the quality and safety of solar products available in the market.

 

APPLICATION PROCESS FOR NIGERIAN ELECTRICITY REGULATORY COMMISSION LICENSING

The commission issues licenses and authorizations to companies seeking to operate in the Nigerian electricity supply  industry (NESI).[6]

To obtain a clearance certificate for generator or solar set importation, applicants must provide:

• Company name and equipment quantity
• Technical specifications including noise level (below 35 decibels), emissions control, make/model, origin, and purpose[7]
• CAC Certificate of Incorporation
• Three-year Tax Clearance Certificate
• VAT Registration Certificate
• SONCAP Certificate
• Environmental compliance evidence (e.g., NESREA certification)
• Commercial or pro forma invoice

 

The certificate is valid for six months and may be renewed for another six months and application for renewal of a certificate which has lapsed shall be within 30 days of the expiration of the initial certificate.[8]

The fees associated with obtaining the clearance certificate vary based on the size or capacity of the generators. For instance, as of recent guidance, units below 100 kVA attract a fee of ₦3,500 per unit, while those above 100 kVA incur a fee of ₦25,000 per unit.[9] The processing time for the certificate is not fixed and largely depends on how promptly and accurately the applicant submits the required documentation, as well as the Commission’s satisfaction with the overall application.

 

INCENTIVES AVAILABLE FOR SOLAR BUSINESSES IN NIGERIA

1. Funding and Grants

• $500 Million Renewable Energy Fund: In partnership with a United Nations agency, Nigeria aims to mobilize $500 million to expand access to distributed renewable energy, including solar home systems and mini-grids. Entrepreneurs can benefit by positioning their businesses to qualify for technical assistance, grants, or concessional financing.[10]
• CBN Solar Intervention Fund: ₦140 billion low-interest loan facility for solar projects, targeting homes, MSMEs, and solar developers.
•  Nigerian Electrification Project (NEP): Funded by the World Bank and AfDB, this initiative provides grants and financing for off-grid solar solutions.
• REA Solar Power Naija Program: Targeting 25 million Nigerians with solar power access. Offers grants and incentives to solar companies expanding in rural areas.

2. Pioneer Status Incentive: Solar energy companies may qualify for tax holidays of up to five years under the Pioneer Status Incentive program. This applies to foreign investors and local firms setting up renewable energy projects.
3. Import Duty Waivers on Solar Equipment: To lower equipment costs, the Nigerian government grants import duty exemptions (0%) on solar panels, batteries, inverters, and charge controllers.[11]
4. Feed-In Tariffs: Approved in 2015, the feed-in tariff regulation encourages investment in solar and other renewable energy sources by guaranteeing fixed payments for electricity generated from renewable sources.[12]

 

CONCLUSION

Setting up a solar energy business in Nigeria offers tremendous opportunities for innovation, profitability, and social impact especially in a nation with such an urgent need for reliable electricity. From initial corporate registration and obtaining import licenses to achieving industry-standard certifications and leveraging government backed incentives, the solar sector offers a well-defined yet rewarding path for entrepreneurs and investors.

By adhering to regulatory frameworks, meeting quality standards, and capitalizing on available financial support, solar entrepreneurs can build resilient, future-proof businesses that help bridge Nigeria’s energy gap while contributing to sustainable development goals.

As the transition to clean energy accelerates, those who invest early armed with the right knowledge and compliance will be well-positioned to lead Nigeria’s renewable energy revolution.

Written by Felicia Ayeomoni for Adeola Oyinlade & Co

Email us: [email protected]

Telephone Number: +234 803 826 7683 / +234 802 686 0247

_________

Ranked as a top law firm in Nigeria, Adeola Oyinlade & Co provides legal services to national and multi-national companies and clients for their corporate and commercial law matters with specialty in renewable energy law. Our services have earned us the Nigeria Law Firm of the Year Award at the Lawyers Global 2024 Annual Legal Awards and the prestigious International Law Firm of the Year in Nigeria of Corporate INTL Global Awards for the years 2022, 2023, 2024 and 2025 (4 years in a row) among others.

[1] Section 32 (2) of the Companies and Allied Matters Act, 2020

[2] https://www.haul247.co/resources/blog/nigeria-import-export-license-what-is-it-and-how-do-i-get-it#:~:text=1.,food%20and%20drug%2Drelated%20products) accessed April 9, 2025.

[3] https://www.iso.org/member/1982.html? Accessed April 9, 2025.

[4] https://www.618bees.com/article/154-how-do-i-register-my-product-with-the-standards-organization-of-nigeria-son accessed April 9, 2025.

[5] https://www.sgs.com/en/-/media/sgscorp/documents/corporate/brochures/sgs-gis-pca-triptych-nigeria-a4-en-16-02.cdn.en.pdf?utm_source accessed April 9, 2025.

[6] https://nerc.gov.ng/resource-category/regulations/ accessed April 10, 2025.

[7] Guideline 7 of the Guidelines for Obtaining Clearance Certificate for the Importation of Generating Sets and Related Matters, see https://nairametrics.com/wp-content/uploads/2012/01/Guidelines_GenSet-Import-Clearance-Certificate_Final.pdf accessed April 10, 2025.

[8] Guideline 6 of the Guidelines for Obtaining Clearance Certificate for the Importation of Generating Sets and Related Matters, see https://nairametrics.com/wp-content/uploads/2012/01/Guidelines_GenSet-Import-Clearance-Certificate_Final.pdf accessed April 10, 2025.

[9] https://energydayng.com/2022/01/20/nerc-and-the-importation-of-generating-sets/?utm_source accessed April 10, 2025.

[10] https://www.power-technology.com/news/nigeria-un-distributed-renewable-energy/?cf-view accessed April 10, 2025.

[11] https://www.pvknowhow.com/nigerian-customs-declare-solar-panels-duty-free/#:~:text=The%20Nigeria%20Customs%20Service%20has%20reaffirmed%20that%20solar%20panels%20remain,work%20without%20additional%20financial%20burdens. Accessed April 10, 2025.

[12] Dugeri, Michael, Promotion of Renewable Energy in Nigeria Through Feed-In Tariff Schemes: A Legal Analysis (December 25, 2019). Available at SSRN: https://ssrn.com/abstract=3509510 or http://dx.doi.org/10.2139/ssrn.3509510  accessed April 10, 2025.