Validity of Salary Deduction
Legal Nuggets
- Parties to an employment contract are bound by the terms of the contract, and where the terms of the contract are clear and unambiguous, the parties cannot move out of them in search for more favourable terms or greener pasture.
- Under Nigerian law, an employee must be informed about any deduction to be made from his remuneration, and some form of consent be obtained by the employer prior to making the deduction. To this end, the National Industrial Court in Chemical and Non-Metallic Products Senior Staff Association v Benue Cement Company Plc (2006) has held that the law treats the issue of salaries with such sacredness that, except expressly permitted by law or the employee, no employer is permitted to make any deduction from an employee’s salary.
- However, a deduction in an employee’s salary may be made in the following circumstances, where:
- It is within the ambit of the employee’s contract of employment;
- it is expressly permitted by the law such as personal income tax, pension contributions;
- the consent of the worker has been sought and given;
- as indemnity to the employer, in respect of injury or loss, caused by the wilful misconduct or neglect of the worker;
- as union fare to unions as check off dues;
- as repayment of salary advance; or
- There has been an overpayment of wages.
- The Company is also prohibited from using salary deductions as a punitive measure against its employees. An employee may validly file a civil suit against his/her employer challenging its failure to pay the agreed salaries in full, and claim restitution of the unlawfully deducted amount in court, on the evidence of pay slips or bank statements showing the deduction, provided the application is lodged not later than six (6) years after the unlawful deduction.