Introduction

Employment law rarely moves in a linear fashion, and Nigeria has been no exception in 2026. Some long-standing questions now have clearer answers, while other developments have changed the consequences of familiar employment decisions.

The clearest example is that of termination in private employment. The law has travelled out and back, although not quite to where it began. A line of decisions from the National Industrial Court of Nigeria (NICN) departed from the common law rule and required employers to give a valid reason for termination, drawing support from international labour standards. The NICN has now returned to the common law rule, following later decisions by the appellate courts. As it stands, an employer that complies with the terms of engagement need not state a reason for termination. If a reason is given and challenged, however, the employer must prove it.

Awards of damages have followed a different path. Decisions of appellate courts have confirmed that contractual notice pay is not the ceiling for wrongful termination claims, especially in relation to unfair labour practices. The courts may have returned to common law on the issue of providing a reason for termination; they have not done so on damages.

In 2026, courts have also addressed post-employment restraints, the continued use of former employees’ personal data, training bonds, and the liability of a new employer that knowingly induces a breach.

The statutory changes are fewer. The Nigeria Tax Act 2025, effective from 1 January 2026, changes personal income tax rates, reliefs, benefits in kind and rules relevant to cross-border employment and termination payments.

Policy developments also point to the questions ahead. The National Industrial Relations Policy 2025 launched in 2026 reinforces social dialogue and collective bargaining. For newer forms of work, the ILO Convention No 193, adopted in June 2026, is the first international labour standard devoted to the platform economy. It is also consistent with the direction taken through Nigeria’s National Employment Policy 2025, which recognises digital, remote and platform-enabled work.

There has been no wholesale rewrite of Nigerian employment law in 2026. Something more interesting has happened. Some boundaries have become firmer, some old assumptions have fallen away and the next set of employment questions is beginning to come into view.

This article follows these trends and developments.

Must Employers Give Reasons for Termination in 2026?

The clearest statement in 2026 on this question is that an employer does not have to give a reason when terminating private employment, provided the employer follows the terms of employment. However, if the employer gives a reason, it must prove it.

The present position took time to emerge. In 2015, the NICN moved away from the common law rule in cases like Aloysius v Diamond Bank Plc [2015] 58 NLLR (Pt 199) 92 and maintained that terminating employment without a valid reason was contrary to international labour standards and international best practice. It did so by relying on Section 254C of the Nigerian Constitution, which empowered it to consider international best practices and standards, as well as the International Labour Organization’s Termination of Employment Convention, 1982 (No 158), although Nigeria has not ratified the Convention.

The Court of Appeal continued to apply the common law rule. The NICN’s decisions, however, were subsequently divided: some followed the appellate decisions, while others maintained that international labour standards required employers to give a valid reason for termination.

The position became much clearer following two Supreme Court decisions. In Ovivie v Delta Steel Company Limited (2023) 14 NWLR (Pt 1904) 203, the Supreme Court held that an employer may terminate ordinary employment for any reason or no reason, provided the terms of the contract are followed. It also applied that approach in Damisa v United Bank for Africa Plc (2025) 19 NWLR (Pt 2021) 409, decided on 17 January 2025.

Recent decisions of the NICN now point towards a more settled line. In Abiodun Adedokun v UBA Pensions Custodian Limited (unreported, Suit No NICN/LA/141/2022, judgment delivered on 28 January 2026), the Court held that ILO Convention No 158 did not impose a binding duty to give a reason where the contract was silent. The termination was nevertheless held wrongful on the separate ground that the employer had not followed its disciplinary procedure or afforded the employee an opportunity to respond. In Dastu Plems Tenmang v UNIJOS Consultancy Limited (unreported, Suit No NICN/JOS/27/2025, judgment delivered on 23 April 2026), the employer observed the contractual notice provision, paid salary in lieu and did not base the termination on misconduct. The Court upheld the termination.

Takeaway

The cases now draw a clearer line. Where an employer relies on its contractual right to terminate, and complies with agreed terms, the absence of a reason will not ordinarily make the termination wrongful.

Where a reason is given, however, the employer must prove it. The Courts are also likely to look beyond the letter where discrimination, retaliation, union activity or another unlawful ground is alleged.

For employees, the absence of a reason is no longer the strongest point on its own. The better questions are whether the employer complied with the contract and policies, departed from an applicable procedure or concealed an unlawful ground behind a neutral termination letter.

Damages for Wrongful Termination in 2026

Damages have followed a different course. The traditional rule limits recovery for wrongful termination of ordinary private employment to accrued benefits and contractual notice payments. Recent decisions establish that this remains an important starting point, but not an inflexible measure in every case.

Section 254C(1) of the Nigerian Constitution gives the NICN jurisdiction over unfair labour practices and international best practices in employment and labour relations. Section 14 of the National Industrial Court Act 2006 empowers the Court to grant the legal and equitable remedies necessary to determine a dispute completely, while Section 19(d) permits it to award compensation or damages in matters within its jurisdiction. These provisions expand the Court’s remedial powers, but they do not prescribe a fixed measure of damages.

In Sahara Energy Resources Limited v Oyebola (2020) LPELR-51806(CA), the employee was dismissed following allegations of dishonesty and bribery. The employer failed to prove the allegations or follow the disciplinary procedure incorporated into the employment relationship. The Court of Appeal affirmed an award equivalent to two years’ salary.

The Supreme Court adopted a similar approach in Skye Bank Plc v Adegun (2024) 15 NWLR (Pt 1960) 1. The employee had been dismissed on the basis of allegations for which he had previously been disciplined. The Court upheld an award equivalent to two years’ salary. It nevertheless cautioned that substantial damages cannot be awarded by rule of thumb. The employee must plead and establish the circumstances showing that the loss was suffered.

To be clear, the position is not that every wrongful termination attracts substantial damages. In Dangote Cement Plc v Ager (2024) 10 NWLR (Pt 1945) 1, the Supreme Court still limited the employees’ recovery to the salaries and benefits due, because notice pay was appropriate compensation and the facts and reliefs did not support a larger award.

In other cases, the courts have exercised their discretion in awarding substantial general damages. In Emeka Godson Egbulugha v Maydon Pharmaceutical Limited and Anor (Appeal No CA/LAG/CV/395/2024, judgment delivered on 8 July 2026), the employee was detained for 40 days during an investigation into the kidnapping of one of the respondents’ directors. The respondents stopped paying his salary following his arrest and detention and, after his release, refused to allow him to resume work. He was eventually forced to resign, although no fault was attributed to him. The NICN held that the employee had been constructively dismissed but awarded one month’s salary as damages. The Court of Appeal increased the damages to NGN10 million and held that the case went beyond a simple failure to observe the contractual terms for ending employment. The employee had lost his work and source of livelihood, had been incarcerated, was prevented from returning to work and had been forced to resign without any fault on his part. Those circumstances made one month’s salary inadequate.

NICN continues to maintain a similar stance in cases like Offor Vivian Chekwube v African Foundries Limited (Suit No NICN/IB/111/2020, judgment delivered on 1 June 2026), where it awarded over NGN4 million, equal to two years’ salary, as general damages and another NGN4 million as exemplary damages because the employer had condoned the harassment, failed to provide a safe workplace and acted recklessly after receiving the complaint.

Takeaway

While notice pay remains the primary contractual remedy for wrongful termination, it is no longer an absolute ceiling. Where a claimant establishes a denied hearing, unproved allegations, workplace stigma, retaliation, constructive dismissal, or other unfair labour practices, courts routinely look beyond contractual notice pay to award substantial general damages.

These general damages are also not automatic. Claimants must still plead and prove their claims. The court will then consider the nature of the breach, the employer’s conduct and the injury or loss established by the evidence. Two years’ salary recurs in several decisions, but it is not a formula. The award of damages will always remain discretionary, and special losses must be strictly pleaded and established by evidence.

Limits on Restraint of Trade

The governing test in 2026 remains reasonableness. Nigerian courts still enforce restraints that protect a legitimate and identifiable business interest, but the duration, scope, purpose and actual effect must be shown to be reasonable.

While Section 68(1)(e) of the Federal Competition and Consumer Protection Act 2018 (FCCPA) provides a statutory benchmark by exempting post-employment restraints of up to two years from its general prohibition on restrictive agreements, recent decisions show that duration is only one of the factors considered in the reasonableness test.

The Court of Appeal in MTN Nigeria Communications Limited v Theodore Nwabueze Ikpa (Appeal No CA/LAG/CV/319/2021, judgment delivered in July 2026) upheld the finding that a four-year restraint was unreasonable, but in La Casera Company Plc v Prahlad Kottappurath Ganghadaran (Appeal No CA/L/1059/2016, judgment delivered on 9 July 2025) upheld a five-year restraint.

These decisions suggest that reasonableness remains the ultimate test, with the FCCPA’s two-year benchmark serving as a guide rather than a mechanical ceiling. A restraint of trade under two years may still fail if it protects no legitimate business interest, while any restraint exceeding two years, though carrying a far heavier burden of justification, may still be held reasonable.

Prospective employers face a related risk when they recruit someone who remains subject to a training bond or other contractual obligation. In Overland Airways Limited v Wasiu Durojaiye Hussain and Dornier Aviation (AIEP) Limited (unreported, Suit No NICN/LA/601/2018, judgment delivered on 3 March 2026), the NICN enforced training bonds against an aircraft engineer who left before the agreed service periods expired. Even though the new employer was not liable for the bond debt because it was not a party to the agreements, it was nevertheless ordered to pay damages for inducing the breach. The Court did not find that recruiting an employee from a competitor was unlawful by itself. The problem was that the new employer continued to employ him despite being aware of his existing contractual obligations.

Takeaway

The starting point remains reasonableness and duration remains one of the factors considered. A restraint should correspond to an identifiable business interest and should not restrict more work, territory or time than that interest requires.

Where a candidate discloses a training bond or another restriction, or the former employer gives notice of it, the obligation cannot just be ignored. The terms, remaining period and possible breach must be examined before the recruitment proceeds. Ordinary competition for employees remains lawful. Knowingly inducing an employee to breach an existing obligation may expose the new employer to separate liability.

Protection of Employee Data

Employers must process employee personal data in accordance with the Nigeria Data Protection Act 2023 and the Nigeria Data Protection Act General Application and Implementation Directive 2025. These obligations apply throughout the employment relationship and may continue after the employment ends.

Two decisions in 2026 illustrate how these obligations apply. In Kehinde Adeniyi Johnson v Lafarge Africa Plc (unreported, Suit No NICN/LA/60/2022, judgment delivered on 17 February 2026), the employer continued using a former employee’s name and contact details in purchase orders and supplier communications. The NICN found that this was a breach of his data and privacy rights and awarded damages.

Another is Dr Uchenna Jerome Orji Esq v Mr Daniel Okereke and Others (unreported, Suit No NICN/ABJ/40/2025, judgment delivered on 18 May 2026), where the Court held that circulating a promotion appeal report to relevant university officials for an employment decision did not breach the employee’s privacy.

Takeaway

The decisions do not create a general exemption for the internal circulation of employee information or a blanket prohibition on its use after employment. The lawfulness of the data processing will depend on:

• its purpose;
• the information involved;
• who receives it;
• whether the use is necessary; and
• how long the information is retained.

An employer’s responsibility for employee data therefore extends across the employment cycle and may continue after the employee leaves.

Tax Changes in 2026

The developments in 2026 have not been confined to case law. The new tax regime, effective from 1 January 2026, also changes the treatment of employment income, benefits, cross-border work and exit payments.

• Personal income tax and benefits in kind – The Nigeria Tax Act 2025 introduced new personal income tax bands and revised the available reliefs and treatment of benefits in kind. Where an employer provides accommodation in Nigeria rent-free or below its annual rental value, the resulting benefit is treated as additional employment income.
• Residence and cross-border employment – Nigerian tax residence is not determined by physical presence alone. An individual may be resident by reason of domicile, a permanent place available for domestic use, substantial economic and immediate family ties, or presence in Nigeria for at least 183 days within a 12-month period. A Nigerian resident is, in principle, taxable on income arising inside and outside Nigeria.
• Exit payments and tax returns – Compensation or damages for loss of office or employment are exempt from chargeable gains up to NGN50 million. Only the excess is taxable.
• Under the Nigeria Tax Administration Act 2025, employees remain responsible for filing annual returns covering income from all sources, including employment income, while employers must file an annual return by 31 January showing each employee’s salaries, allowances, benefits in kind, deductions, and tax deducted for the preceding year.

What Is on the Employment Law Horizon?

Several developments point towards the next phase of Nigerian employment regulation, including the following.

• The ILO Decent Work in the Platform Economy Convention, 2026 (No 193) was adopted by the International Labour Conference in June 2026. It is the first international labour standard devoted specifically to work through digital labour platforms. Nigeria has not ratified the Convention but its principles may influence policy and subsequent legislation, especially since Nigeria’s National Employment Policy 2025 has also recognised remote work as a feature of Nigeria’s changing labour market.
• The National Industrial Relations Policy 2025 was also formally launched in May 2026. The policy promotes social dialogue, strengthening collective bargaining and fostering industrial harmony. It is expected that this policy will shape the future approach of government, employers and organised labour to industrial relations.

Conclusion

The developments of 2026 do not remove every difficult edge from Nigerian employment law. They do, however, make the direction of travel easier to see.

For private employment, an employer that complies with the agreed terms need not ordinarily give a reason for termination. Where a reason is given and challenged, however, it must be proved. Wrongful termination may still attract general damages.

The same balance appears elsewhere. Post-employment restrictions must protect a real interest without preventing more work than is necessary. Training bonds remain capable of enforcement, while a new employer may face liability for knowingly interfering with an existing obligation. Employers must also account for obligations that continue after employment, including the proper use and retention of former employees’ personal data.

Employees, in turn, have more meaningful remedies where the manner of termination is unfair, their reputation is damaged or a restriction effectively prevents them from earning a living.

The next chapter of the story is already forming. Nigeria’s National Employment Policy 2025 and ILO Convention No 193 point towards clearer rules for platform work and workers who do not fit comfortably within traditional employment categories. The challenge will be to preserve the flexibility that allows new forms of work to develop while extending appropriate protection to the people who perform them.

That is a promising position for businesses entering or expanding in Nigeria. The landscape looks clearer, with firmer guardrails for responsible employers and more credible protection for workers. The world of work will continue to change and Nigerian employment law is beginning to meet it there in its new surroundings.