contract of employment

contract of employment

If you’ve been previously employed or you know anyone who has, you would have likely come across a contract of employment. An employer is required to issue a Contract of employment not later than 3 (three) months after the beginning of a worker’s period of employment, in Nigeria. The reasons are not far-fetched, the employer is often the superior party in an employment relationship, and the law tries to protect the employee from a tyrannous employer by ensuring that the basic terms and conditions that would govern the employment relations are properly documented.

What is a contract of employment?

It refers to the agreement between an employer and employee that stipulates the terms and conditions of employment. It contains what the employer intends to bring to the table and the things expected of an employee.

The Labour Act in Nigeria defined a contract of employment under Section 91 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”.

Why do you need a contract of employment?

It is important to have a contract of employment because that is the only way the terms of the contract of employment can be clearly documented. It is not unusual to experience a conflict of interest in relationships between two entities, including employers and employees. That is why it is always important to create a reference point that the parties can work with.

1. The contract of employment is necessary to protect the rights of both the employer and the employee. This is more important when conflict arises.

2. There are expectations and obligations required of the parties to the contract. The major way in which the parties can unify these is by having them in black and white.

3. It is also necessary to ensure that the parties comply with the extant labour laws and regulations guiding the relationship between them.

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Types of contracts of employment

There are numerous ways in which a contract of employment between the parties could be constructed. This is usually based on the nature of the employment and the work the employee is expected to carry out. These include zero-hour contracts, freelance contracts, fixed-term contracts, executive contracts, permanent contracts, part-time contracts, casual contracts, union contracts and so on. The emphasis of this article will be on the following types of contracts.

1. Permanent contract

This refers to a long-term employment agreement between the parties where there is no end date in the contemplation of the parties. The employment relationship is designed to continue as long as the parties are able to keep working together. In addition to establishing a continuing employment connection, it gives the employee job security and stability. In a bid to end an employment relationship, the parties are usually expected to serve valid notice based on the provisions of the contract of employment or the extant laws in the jurisdiction.

2. Fixed-term contract

This applies in situations where the contract of employment between the parties provides a fixed duration after which the employment relationship will come to an end. This is usually used for seasonal works such as construction projects.

3. Part-time contract

This is a form of contract characterized by the engagement of employees for fewer hours compared to permanent employees. In most cases, they do not enjoy the employment benefits which come with a permanent contract and the remuneration is majorly based on the work done or work hours.

The essential clauses in a contract of employment

1. Personal information and contact details of both parties

This is necessary in a bid to ensure that the identity of the parties to the contract is not in dispute. The information to be contained basically include the name and address of the parties.

2. Job title, description, and duties

All employees are employed to carry out specific duties and these are to be contained in the contract of employment, in addition to the job title and rank in the organisation (where applicable). Beware of terms that give the employer unrestrained power to add more duties to the ones provided in the contract.

3. Compensation and benefits

This clause mainly provides for the basic salary and other additional benefits such as HMO, leave allowance, wardrobe allowance etc.

4. Working hours and leave policies

You don’t want to be shocked when you resume and your employer mentions a working hour you cannot cope with. This clause gives the details of the hours you are expected to work, the break periods and the company’s leave policies.

5. Confidentiality and non-disclosure agreements

This is often used where the employer intends to restrict the kind of information the employee is allowed to disclose to third parties. This is often used where the employee will have access to trade secrets or classified information in the course of the employment.

6. Grievance and dispute resolution procedures

Most organisations have an internal dispute resolution procedure to resolve conflicts between two or more employees and in situations where an employee has a claim against the organisation. The goal is to ensure a speedy resolution of such disputes before exploring judicial remedies.

7. Termination and notice provisions

The goal of this clause is to ensure that the parties are well acquainted with the method by which the contract of employment could be brought to an end. Where the parties make provision for a notice period, they are obliged to comply with it in terminating the contract.

However, in the absence of a notice period in the contract of employment, the Labour Act provides that the following will apply.

  • 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.

9. Non-compete clause/restrictive covenants (where necessary)

The essence of this clause is to prohibit an employee from taking a job or starting a business similar to that of his employee. The clause usually provides a specific time duration and, in some cases, geographical limits of application of the clause. There are several cases on the legality of the clause, however the court will be ready to apply it as long as it is reasonable and not excessive.

10. Governing law and jurisdiction

Just like other contracts, a contract of employment is usually governed by the laws operating in a particular jurisdiction. The essence of this clause is to know the law that will be applied in interpreting the contract of employment.


The article has provided a detailed overview of the meaning of a contract of employment and related terminologies. In addition, it has examined some of the important terms that every employee and employer should look out for in a contract of employment. You are encouraged to contact a legal practitioner to review your contract of employment before you sign, to avoid been a party to clauses you had no intention of accepting. You can contact our team of lawyers through the email address contained here. You can some samples of a contract of employment to have an idea of what it looks like.

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