1.1 The National Minimum Wage Act, 2019 (“the Act”) is the principal legislation that prescribes the National minimum Wage for all workers or employees across the Federal Republic of Nigeria, except as provided under the Act. In view of the innovations introduced by the Act, offences created thereunder together with the penalties thereof and the obligations placed on persons bound by the Act, it is therefore necessary for organisations to take cognizance of some salient provisions in the Act.
2.0 National Minimum Wage
2.1 S.3 (1) of the Act mandates every employer , except as exempted under the Act, to pay a wage not less than the sum of ₦30,000.00 (National Minimum Wage) per month to every worker under his establishment. The above stated wage shall be the minimum total amount of money an employer of labour is required to pay the lowest paid worker or employee monthly in his establishment.
3.0 Exemptions under the Act
3.1 It is important to note that the Act is not applicable to all classes of employees and employers in that the Act excuses certain employers and employees from being liable and entitled to benefit thereunder respectively. The Act does not apply in the following circumstances:
1. Establishments in which workers are employed on part-time basis. This provision is without prejudice to the rights of fulltime employees in organizations making use of fulltime and part-time employees to be paid the minimum wage;
2. Establishments in which workers are paid on commission or on piece-rate;
3. Establishments employing less than 25 persons;
4. Workers in seasonal employment such as agriculture;
5. Any person employed in a vessel or aircraft to which the laws regulating merchant shipping or civil aviation applies.
3.2 It must be noted that the definition of a part-time work or worker is now markedly different from the previous definition under the repealed Act. It is no longer enough that a person works for less than 40hours a week to be a part-time worker. The focus is now on the normal work time for full-time employee in the same sector.Under the Act anyone who works for a shorter time than the full-time employees in a sector or occupation is a part-time worker. This shows that Nigeria has embraced the The International Labour Organization’s Part-Time Work Convention, 1994 (No.175) after which the new regime was modelled.
What this means in practical terms is that the threshold for determining part time work is now sector or occupation specific. An employee working 40 hours in a certain sector where fulltime hours is 50 hours will be classed as part time whereas another employee doing the same 40 hours in an industry where the working hours is 40 hours will be classed as full time.
4.0 Employer’s Obligations under the Act
4.1 Employers have two heads of obligations under the Act. Section 9(1) of the Act compels an employer to pay its workers a wage not less than the National Minimum Wage subject to statutory deductions. An employer who is bound to pay but fails to pay the National Minimum Wage commits an offence and is liable on conviction to (i) pay a fine not more than 5% of the offenders’ monthly wage, (ii) pay outstanding arrears of the workers’ wages and (iii) pay an additional penalty at the prevailing Central Bank of Nigeria’s lending rates on the wages owed for each month of continuing violation.
4.2 Pursuant to Section 10 of the Act, an employer is required to keep the records of wages or conditions of employment as would show that it complies with provisions of the Act as it relates to its employees and retain such records for at least three years. Failure to keep the mandatory records amounts to a crime and is punishable on conviction by a fine not exceeding N75,000.00 and an additional sum of N10,000.00 for each day the offence continues.
5.0 Powers of the Minister under the Act.
5.1 The Minister of Labour and Employment (the “Minister”) is empowered by Section 11 to authorize any member of the civil service of the Federation to monitor compliance with the Act and this he can do by issuing any such person with a letter of his authority and identification when he visits an employer’s premises which he should produce to the employment or anyone holding a responsible position of management. An officer so authorized by the Minister may take any of the following decisions:
i. Require the production of wages sheets pay roll and conditions of employment for the purpose of inspection and may copy any part thereof;
ii. Order anyone that contravenes the Act to take remedial action within a specified time;
iii. Make recommendation for the prosecution of erring persons;
iv. Institute an action on behalf of and in the name of a person entitled to the national minimum wage but who was not paid for the recovery of such sum.
6.0 Monitoring Compliance and Enforcement of the Act
6.1 The Act vests the duty to monitor the implementation of the provisions of the Act on the Federal Ministry of Labour and Employment together with the National Salaries, Incomes and Wages Commission who are expected to collaborate in line with the Labour Act and the National Salaries, Incomes and Wages Commission Act. The Minister upon receipt of a report of non-compliance from an authorized officer is required to activate the machinery for enforcing compliance within 30 working days.
6.2 Section 13 of the Act empowers an aggrieved worker by himself, Trade Unions and the Minister to enforce the National Minimum Wage. An aggrieved worker may take out an action at the National Industrial Court or file a formal complaint with the Minister. Trade Unions may also demand for compliance with the Act on behalf of their members provided that they shall upon receipt of the workers’ complaint take the claim to the National Industrial Court not later than 30 days of receiving such complaint.
6.3 An authorized officer is required to serve a notice of enforcement stating (i) the amount owed the worker, (ii) period to which the payment applies, and (iii) time limit for the payment. An employer is entitled to appeal the notice to the Minister who shall resolve the matter within 30days of receiving such appeal.
7.0 Other Offences and Penalties under the Act
7.1 Section 15 of the Act provides that notwithstanding the provisions of the Act, a person, commits an offence and is liable on conviction to a fine not exceeding ₦250,000 or to imprisonment for a term not exceeding six months or to both, where the person:
a. refuses or neglects to furnish the means required by an authorized officer as being necessary for any entry in the exercise of his powers under this Act;
b. hinders any authorized officer in the exercise of his powers under this Act;
c. refuses or neglects to produce any document or to give information which any authorized officer in the exercise of his powers under this Act requires him to produce or give;
d. makes, or causes to be made, or knowingly allows to be made, any wage sheet or record of wages or record of conditions of employment which is false;
e. produces or causes to be produced, or knowingly allows to be produced, any such wages sheet or record to an authorized officer in the exercise of his powers under the Act, knowing the wage sheet or record to be false;
f. furnishes any information to any authorized officer in the exercise of his powers under this Bill, knowing the information to be false.
8.0 Conclusion and takeaways
8.1 It is our view and counsel that employers should acquaint themselves with the obligations expected of them under the Act with a view to avoiding the contingent civil and criminal liabilities for non-compliance. Very importantly, employers making use of “part-time” workers need to determine their status under the present regime for clarity.
8.2 From the definition of employer under the Act, organizations that use manpower outsourcing companies for certain categories of employees have to ensure that such outsourcing companies, if they have more than 25 employees, are compliant with the provisions of this Act. As best practice this may have to form part of the due diligence carried out before contracting manpower outsourcing companies.
Thank you The Law Crest LLP *The information contained herein is general in nature and is not intended, and should not be construed, as legal advice or opinion provided by The Law Crest LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader’s specific circumstances or needs. The reader should contact a member of The Law Crest LLP Employment and HR practice team or other solicitors prior to taking any action based upon this information.