Daily Law Tips (Tip 610) by Onyekachi Umah, Esq., LL.M, ACIArb(UK)
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FINES AND DEDUCTIONS FROM A WORKER’S SALARY ARE ILLEGAL.
All workers and employers in Nigeria, whether public sector (government) or private sector are all bound by the provisions of the Labour Act. The Labour Act is a federal law that has been in existence since 1st August 1971. Where an employer or a worker violates the Labour Act there is a punishment for it.
No employer is allowed to make any deduction from the salary of a worker or make any agreement with a worker for deductions from salary or make any regulation, direction, rule, culture or policy of deduction from salary except where such deduction is allowed by law. All deductions and fines made from a worker’s salary are illegal and unlawful, except for a deduction allowed by law. All existing rules, policies, documents or agreements allowing for deductions from salary of a worker or workers apart from deductions allowed by law, are illegal and must stop immediately. Examples of deductions allowed by law are shown below.
Furthermore, no employer and a worker can have an agreement (whether oral or written) to make deductions or allow fines, surcharges and subtractions from the salary of a worker apart from for deductions allowed by law. Not even a human resource policy, company policy, employment contract or any documents whatsoever can allow or authorise such deductions. Any document that attempts to allow such is illegal, unlawful and self destructive.
Examples of deductions allowed by law are: Taxes (Pay-As-You-Earn), Contributions for National Housing Fund (NHF) which is 2.5%, Contributions for National Health Scheme (NHS), deductions for the Contributory Pension Scheme which is 8% and then trade Union contributions with consent of the worker. Also, a worker’s salary may suffer a reasonable deduction for loss and injury caused his employer but with the written consent of an authorized Labour Officer from the Ministry of Labour. Also, where there is an overpayment in salary, such can be deducted from salary of a worker if the overpayment is discovered within three months of the mistake. Above all, with all the deductions allowed by law, the deduction from the salary of a worker cannot be more than one-third of his salary for a month.
Hence, all deductions and fines from a worker’s salary except deductions allowed by law are illegal and must be discontinued. Examples of such illegal deductions are: welfare dues, lateness levy, development levy, construction levy, cooperatives dues, association fee, annual levy, birth/death/wedding levies, caution fee, destruction penalties and any penalties. Even when a worker destroys any property of the employer or causes any damage, harm or loss to the employer, the worker’s salary cannot be deducted unless there is a written consent from an authorized labour officer from government (Ministry of Labour).
Illegal deductions and the existence any police or agreement for deductions is unlawful and punishable with fine of not more than Eight Hundred Naira (N800.00). There is need to amend the Labour Act of 1971 and increase the punishments therein to reflect the realities of our society.
My authorities are:
1. Sections 5, 21, 91 and 92 of the Labour Act, 1971.
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