What redundancy means
Redundancy is the job going, not the person failing.
The Labour Act describes it as an involuntary and permanent loss of employment caused by an excess of manpower. A department closes, a machine replaces a process, or the business contracts and the role is no longer required.
That distinction matters enormously to the employee. A redundancy says nothing negative about them, and it usually attracts entitlements a dismissal for misconduct would not.
How it is used
An employer identifies that roles are no longer needed, selects who is affected, informs the employees and, where a union is involved, the union, and then ends the employment with the applicable notice and payments.
Selection is where employers get into trouble. Choosing who goes has to be based on something defensible. Using redundancy as cover for removing somebody the employer simply wanted rid of is one of the more common claims heard at the National Industrial Court.
Key features
- Caused by the role becoming unnecessary, not by the employee's conduct
- Defined in the Labour Act as an involuntary and permanent loss of employment
- Requires informing the employee, and any relevant union, of the position
- The Labour Act refers to the principle of last in, first out in selection
- Redundancy pay depends on the contract, handbook or any collective agreement
How this works in Nigeria
The Labour Act sets out the framework, including the expectation that the employer informs the trade union or workers representatives, and the reference to last in first out in selecting who is affected, subject to factors such as merit and reliability.
On money, there is no universal statutory redundancy formula for every employee in Nigeria. What is payable usually comes from the employment contract, the staff handbook or a collective agreement. That is why employees should read those documents before accepting whatever figure is offered.
Redundancy vs dismissal vs termination
Dismissal responds to the employee's conduct. There is an allegation attached, and where it is summary there is no notice.
Termination ends the contract on its terms, with notice or payment in lieu, and implies no fault.
Redundancy is a specific kind of termination where the reason is that the role has gone. It carries no suggestion of fault, and it often attracts additional entitlements under the contract or handbook that an ordinary termination would not.
Employers sometimes label a dismissal as a redundancy to avoid a process, or label a redundancy as a termination to avoid the payments. Both are risky.
Limits and risks
Redundancy must be genuine. If the role is advertised again weeks later, or somebody else is doing the same work under a new title, the redundancy looks like a device and the employee has a strong claim.
Employees should also check what the handbook actually promises. Many Nigerian employers have redundancy provisions they do not volunteer, and an employee who never asked receives only the statutory minimum notice.
Worth knowing
Ask for the staff handbook and any collective agreement before signing anything on exit. Redundancy entitlements are often written down and rarely offered unprompted.
Questions people ask
What is redundancy under Nigerian law?
The Labour Act describes it as an involuntary and permanent loss of employment caused by an excess of manpower. In plain terms, the role is no longer needed, and the employment ends for business reasons rather than for anything the employee did.
Is there statutory redundancy pay in Nigeria?
There is no single universal formula covering every employee. What is payable usually comes from the employment contract, the staff handbook or a collective agreement, which is why those documents matter so much at exit.
What is last in first out?
A selection principle referred to in the Labour Act, under which employees with the shortest service are considered first for redundancy, subject to factors such as merit, ability and reliability. It is a starting point rather than an absolute rule.
Can my employer make me redundant and then hire someone else for my job?
That undermines the redundancy. If the role still exists under another name, or is advertised again shortly after, the redundancy looks like a device and the employee has a strong basis to challenge it.
Do I still get notice if I am made redundant?
Yes. Redundancy is a form of termination, so notice or payment in lieu applies as your contract provides, in addition to any redundancy entitlement in the contract or handbook.
Does redundancy affect my reference?
It should not. Redundancy carries no suggestion of fault, and employers generally state that the role was made redundant. That is a meaningful advantage over an exit framed as dismissal.
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