Gratuity

Where it exists, gratuity is set out in the employment contract, the staff handbook, a collective agreement, or a scheme the employer established. The document says who qualifies, usually after a minimum number of years, and how the sum is calculated.

Disputes arise when an employer stops paying it, changes the formula, or argues that an employee who resigned rather than retired does not qualify. The answer nearly always sits in the wording of the scheme.

The National Industrial Court has dealt with gratuity repeatedly, and the pattern is that where an employer created an expectation through its contract, handbook or consistent practice, the Court is willing to enforce it.

That matters because employers sometimes treat gratuity as discretionary while their own handbook describes it as an entitlement. Employees should keep the version of the handbook that applied to them, since documents get quietly revised.

Pension is the statutory scheme under the Pension Reform Act, funded by monthly contributions from employer and employee into a retirement savings account. It is not optional for covered employers.

Gratuity is a lump sum for long service, paid by the employer at exit, and in the private sector it exists only where the contract or scheme provides for it.

Severance is compensation for losing a job, typically on redundancy. It responds to the manner of leaving rather than to length of service alone. An employee can be entitled to all three, or to none, depending on their terms.

No general Nigerian statute grants private sector employees gratuity, so an employee whose contract and handbook are silent usually has nothing to claim.

Qualifying conditions also bite. Schemes commonly exclude employees dismissed for misconduct, and many require a minimum number of years that an employee leaving early will not reach.