How to Calculate Leave Pay for Contract Staff in Nigeria

The Nigerian Labour Act 1990 provides that employees in Nigeria are entitled to paid time off work in a year to rest, engage in personal development, go on vacation, or whatever they deem fit. Employers, on the other hand, are required to pay their employees their full salary as well as leave bonuses whenever the employees go on leave. In this article, we’ll be discussing how contract staff in Nigeria can calculate the leave pay entitled to them during their time off work. Additional key insights on what leave entails in Nigeria would be explored in this article.  

How to Calculate Leave Pay for Contract Staff in Nigeria

How to calculate leave pay for contract staff in Nigeria would be discussed below: 

  • What is the Duration of Leave a Contract Staff is Entitled to in Nigeria

Employees in Nigeria are entitled to go on a minimum of 6 days’ leave if they’ve worked convectively for twelve months, according to the Nigerian Labour Act, whether as a permanent employee or as a contract staff. The Act further states that employees who are teenagers or working as apprentices are entitled to a minimum leave duration of 12 days if they fulfill the requirement. 

In the situation where an employee does not feel like going on leave after working for twelve consecutive months, he may choose to accumulate the duration he would have spent on leave with their next annual leave. However, if such an employee fails to go on the accumulated leave in the second year, he cannot carry over the accumulated leave to the third year. In simpler terms, two years is the maximum an employee can accumulate their annual leave. 

The Nigerian Labour Act specifies that approved public holidays, such as New Year’s Day, Good Friday, National Day, Christmas Day, and Eid, I’d el Kabir, cannot be counted as part of an employee’s leave in Nigeria. Additionally, when an employee goes on sick leave during ill health, such time off work cannot be deducted from an employee’s annual leave. 

  • What is the Procedure for Applying for Annual Leave as a Contract Staff in Nigeria? 

When a contract staff has fulfilled the requirement of working for a continuous period of twelve months, he becomes eligible to apply for annual leave. There are, however, some procedures a contract staff must follow to make a formal request for annual leave.   

The first step is for the employee to formally approach his immediate supervisor through a written application requesting annual leave. Going through the supervisor ensures that the organization is not affected by a shortage of manpower due to the absence of the contract staff during time off. When the supervisor is okay with the employee’s application for the leave, it will be endorsed and sent to the Human Resources department. 

Upon receipt of the endorsed application for leave, Human Resources will approve the employee’s annual leave in writing, stating the date the leave is to start and the resumption date. Employees are usually expected to state where they would be spending their annual leave so employers can easily reach out should there be any operational exigency requiring the contract staff to be present.

The HR-approved leave application would be copied to the employee’s direct supervisor and also to the Finance and Account department for processing the leave allowance payment. The copy of the employee approval letter will be kept in both the employee’s file and the HR file. 

  • How to Calculate Leave Pay for Contract Staff in Nigeria 

The Nigerian Labour Law Act mandates employers to pay their staff leave bonuses along with their full salary whenever they go on leave. However, the law strictly forbids employees of organizations to be provided monetary compensation in place of their entitled leave holiday. Only when monetary compensation can be provided in lieu of leave is if the employee’s employment was terminated before he could go on his entitled holiday. 

How the leave bonuses of contract staff are calculated in Nigeria varies from organization to organization. Also, the contract of employment of the contract staff will determine how the leave pay of an employee would be calculated. However, there are some popular methods of calculating leave pay for contract staff that is being practiced in many organizations across the country. 

One of the most popular methods organizations use to determine what their employees are entitled to as leave bonuses is by calculating the leave pay as a percentage of the basic/net/annual salary of the employee. Some organizations calculate the leave pay their employees are entitled to as 10% or 20% of the employee’s basic/net/annual salary. 

Another popular way some organizations in Nigeria determine the leave pay entitled to their employees is by offering a fixed amount to them as a leave bonus. Normally, organizations that use this method base the fixed amount entitled to their employees on their grade levels. For example, an employer may provide employees on leave with a bonus of N20,000 for each day, or N30,000 for Junior Executives, N40,000 for Mid-level Executives, and N60,000 for Senior Executives. 

Some other employers of labor in Nigeria offer their contract staff leave travel allowances during their leave period. With the leave bonuses provided to employees during their time off work, they can cover the transportation expenses they incur during their leave period. 

In any of the above methods an organization in Nigeria chooses to adopt towards calculating the leave pay entitled to their contract staff, the employee ought to receive the payment of the leave before embarking on leave.  

  • Can a Contract Staff Be Entitled to Leave Pay for Working Less Than a Full Year? 

We stated earlier that the Nigerian Labour Act specifies that an employee must have completed twelve continuous months of work to be eligible to go on leave. But if a contract staff loses his employment before attaining the twelve-month threshold as a result of a termination of appointment, redundancy, or incapacitation, he may be entitled to leave pay. However, the contract staff must have worked: 

  • Less than twelve but not less than six months in the continuous employment of an employer; or
  • Not less than six months of continuous employment of an employer since last qualified for a holiday


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