Edozie O.N is an HR generalist with a background in labour law, technical recruitment, and communications. He currently leads content strategy and workforce solutions at Africa’s leading job platform, MyJobMag. In this exclusive interview with Anchor News Online, Edozie explains why certain salary deductions are unlawful, the consequences for employers, and how HR professionals can protect their organisations from costly mistakes.
You recently raised concerns about salary deductions under the Nigerian Labour Act, describing them as a “silent trap” for employers and HR managers. Can you explain what you mean by this?
Before I began working as a labour law consultant, I was an employee at different points in my career. That experience gave me an insider’s view of how workplace policies are designed and enforced. I noticed that many practices, especially regarding salary deductions, were not only widespread but also technically unlawful. What struck me was that these policies were often implemented by HR professionals and managers who genuinely believed they were doing the right thing but simply weren’t aware of what the law permits. So, when I refer to salary deductions as a “silent trap”, I mean that many employers and HR professionals adopt these practices with good intentions—usually to enforce discipline or manage staff behaviour—but end up violating the Labour Act in the process. The law is strict about what can be deducted from an employee’s wages. These deductions may appear routine and harmless until one employee challenges them legally, leaving the organisation exposed to serious risk. We have seen employers pay millions in damages for mistakes like this.
From your experience, how common is the misuse of salary deductions among Nigerian employers, and what are the most frequent mistakes you see?
It’s extremely common—worryingly so. A large number of organisations, especially in the private sector, routinely deduct salaries for reasons not supported by law. The most frequent mistakes include deductions for lateness or failure to meet performance targets. Employers assume they can enforce these because such rules are documented in the staff handbook. However, the Labour Act overrides internal policy whenever there’s a conflict.Another common error is making deductions without the employee’s consent or without the approval of the Minister of Labour, which is legally required in certain circumstances.
Can you break down the exact deductions the Labour Act allows, and why practices like deductions for lateness or damages are risky?
The Labour Act allows only specific deductions. These include statutory deductions such as PAYE (tax), pension contributions, and National Housing Fund contributions. It also allows court-ordered deductions, trade union dues, and deductions for overpayments or salary advances, but only with the employee’s clear consent. This means deductions for issues such as lateness or damages are risky because they don’t fall under any of these legally recognised categories. They also don’t align with global standard workplace practices. In most cases, courts rule in favour of employees, and the employer is ordered to refund the deducted amounts.
What are the possible legal consequences for organisations if such practices are challenged at the National Industrial Court?
The consequences can be very serious. The National Industrial Court has consistently ruled that unauthorised deductions are unlawful. Many employers have been ordered to refund all deducted sums, often with interest or additional damages. For example, in AdebusolaAdedayo Omole v. Mainstreet Bank Microfinance Bank (Suit No: NICN/LA/341/2012), the court ruled that the unilateral reduction of Adebusola’s salary breached both the Labour Act and ILO Convention No. 95. Similarly, in Mrs. Evelyn Ugochi Okaranwolu v. Clear Essence California Spa & Wellness Resort (Suit No: NICN/LA/613/2014), the court ordered the employer to refund around ₦3 million for unauthorised deductions. The ruling emphasised that such reductions require documented employee consent or legal authorisation.
Should organisations review their employment contracts and staff handbooks to stay compliant?
Absolutely. Regular reviews are essential. Any clause that imposes deductions outside the scope of the Labour Act should be removed or reworded. HR policies must state clearly that deductions will only be made in line with the law and with proper employee consent where necessary.For example, instead of stating “₦5,000 will be deducted for lateness”, a better approach would be to link disciplinary measures to non-financial sanctions. Contracts should also include indemnity clauses to guard against misinterpretation of salary agreements.
What practical steps should HR managers and payroll officers take to audit and correct their payroll systems?
Firstly, any deduction not legally permitted should be removed or suspended immediately. Training HR and payroll staff is equally important to ensure they understand which deductions are lawful and which are not.Employment contracts and staff handbooks should be updated to reflect only what the law permits. Where there is doubt about a deduction, organisations should seek legal guidance before taking action.
How can HR managers enforce discipline effectively without resorting to salary deductions?
Discipline doesn’t have to mean financial punishment. HR can implement structured disciplinary processes, including verbal warnings, written warnings, and—if necessary—termination.
Another lawful option is adopting pay-by-the-hour arrangements where permitted, which allows for legitimate loss of earnings if an employee doesn’t work. Additionally, performance management systems can be used to link rewards to positive behaviour. For instance, instead of punishing lateness with deductions, you reward punctuality with bonuses or recognition. These measures are both effective and legally safer.
Finally, if you could give one urgent piece of advice to Nigerian employers and HR professionals on payroll compliance, what would it be?
Don’t assume. Always check what the law actually allows.
