The welfare of employees in any organisation is paramount to the success of such an organisation. Employees are regarded as the force that makes any business operational, hence there is the need to ensure that this workforce is well-taken care of to enhance productivity and efficiency. For this reason, employees enjoy compensations which are usually in the form of salary, a healthy work environment, and other benefits.

In the process of keeping the business operational, accidents happen. These accidents may lead to injuries or even death. If it happens in a workplace, the law demands that the employers and employees must be responsible.[1]

The Employee Compensation Act (ECA) 2010 which is the principal law governing employee compensation in Nigeria has made provisions to take care of employees when injury or death occurs in the act of carrying out their lawful duties. This Act replaced the Workmen’s Compensation Act with the sole aim of providing for an open and fair system of guaranteed and adequate comprehensive provisions for payment of compensation to employees who suffer from occupational diseases or sustain injuries arising from accidents at the workplace or in the course of employment in Nigeria.[2]

In the light of the foregoing, this article shall focus on the provisions of the Employee’s Compensation Act 2010.


The Black’s Law Dictionary[3] describes compensation as payment of damages, or any other act that a court orders to be done by a person who has caused injury to another.

By the provisions of ECA, compensation means any amount payable, or service provided under the Act in respect of a disabled employee and includes rehabilitation.[4]

As a fundamental principle of law, laid down in the Latin maxim ‘ubi jus ibi remedium’ meaning, (where there is a wrong there is a remedy), anyone that has suffered loss or injury during the course of carrying out his duties as an employee has the option to sue the employer for compensation either in torts or in contract.[5]

From the above definitions, it can be seen that compensation is only paid to an employee who sustains an injury or dies during their time as an active member of the labor force. This compensation will not be paid to an employee who sustained an injury on a frolic of his own. It is a very crucial point to note that for any claim for compensation to be sustained by the employee, the claim must be for injury/death ‘arising out of or in the course of employment. The burden of proving that the injury was caused by an accident arising out of and in the course of employment lies upon the injured employee.[6]

The scope of an employee being in the course of duty has been extended to cover accidents occurring while an employee is on his way to work from his place of residence.[7]

It is important to note that the provisions of the ECA are in lieu of any other action, whether in tort or in contract, maintainable by the employee against the employer.[8] The import of this is that employees that invoke the provisions of ECA are barred from taking further actions against the employer for failure to compensate as and when due. This provision seems to be unconstitutional as it denies an injured employee recourse to the Court for the determination of his civil rights and obligations.

It should be equally noted that the ECA applies to every employee and employer in the public and private sectors of Nigeria except members of the armed forces of the Federal Republic of Nigeria except those employed in a civilian capacity.[9] The ECA grants inalienable rights to employees in Nigeria. Therefore, this Act is mandatory and applies to all employees regardless of the choice of law in the employment contract.[10]


The ECA establishes a contributory compensation fund referred to as the Employee’s Compensation Fund (‘the Fund’) which is to be managed by the Nigeria Social Insurance Trust Fund Management Board (‘the Board’).[11] Contributions to the Fund derive from various sources including a take-off grant by the federal government, compulsory contributions, fees and charges assessed to employers, gifts or other grants from local or international organizations, and also earnings from profitable investments of the surplus fund by the Board.[12]

The money in the fund is applied for payment of adequate compensation for all employees or their dependants for any injury, disease, or disability arising out of or in the course of employment; the provision of rehabilitation to employees with work-related disabilities amongst others.[13]

Employers are mandated to remit 1% of their total monthly payroll into the Employee Compensation Fund to compensate employees who suffered death or permanent incapacity resulting from accidents in the course of their employment.[14]

Employees on the other hand are prohibited from contributing to the Fund as the Act imposes sanctions against employers who attempt to deduct assessments that are payable to the Fund from the remuneration of an employee. [15]


The Act provides for various forms of compensation an employee is entitled to.

They include:

  • Compensation for Injuries occurring in the normal workplace: An employee is entitled to payment of compensation for any accident sustained while on the way between the place of work and the employee’s principal or secondary residence, the place where the employee usually takes meals, or the place where he usually receives remuneration provided that the employer has prior notification of such place.[16]
  • Compensation for Mental Stress: An employee is entitled to compensation for mental stress arising from an acute reaction to a sudden and unexpected traumatic event arising out of or in the course of the employee’s employment. [17] Where the mental stress is caused as a result of the decision of the employer to change the work, the working conditions of work organization in such a way as to unfairly exceed the workability and capacity of the employee thereby leading to mental stress, such situation shall be liable to compensation to the degree as may be determined under any regulation made by the Board. A Medical Board of Inquiry may be appointed by the Board consisting of relevant specialists to review the situation and determine whether or not the employee is entitled to compensation for mental stress.
  • Compensation for Occupational Disease: Where an employee suffers from an occupational disease and is disabled from earning full remuneration at the workplace or the death of an employee is caused by an occupational disease; the disease is shown to be due to the nature of any employment in which the employee was employed, whether under one or more employments; or an employee suffers from any occupational disease, compensation, and health care benefits is to be payable.[18]
  • Compensation for Hearing Impairment – Where an employee suffers from hearing impairment of non-traumatic origin but arising out of or in the course of employment, the employee shall be entitled to compensation. Also, where the hearing impairment amounts to total deafness, but with no loss of earnings resulting from the hearing impairment, compensation will be calculated as may be provided by regulations made by the Board in consultation with the National Council for Occupational Safety and Health. [19]
  • Compensation for Injuries occurring outside the normal workplace: Where the injury to an employee occurs while the employee is working outside the normal workplace which would otherwise entitle the employee to compensation if the injury occurred in the workplace, compensation is to be paid to the employee. Factors to be considered will be; if the nature of the business of the employer extends beyond the usual workplace; the nature of the employment is such that the employee is required to work both in and out of the workplace; or that the employee has the authority or permission of the employer to work outside the normal workplace.[20]

In addition to the series of compensation stated above, the Board provides for the injured employee any medical, surgical, hospital, nursing and other care or treatment, transport, medicines, crutches, and apparatus, including artificial members.[21] The Board also provides rehabilitation for injured employees.[22]

Waiver– it should be noted that the right of employees or dependants to compensation cannot be waived by any agreement made between the employer and employee. Any agreement made to that effect void and unenforceable. [23]


Employee’s Notification of Injury/death: To qualify for payment in every case of an injury of disabling occupational disease to an employee in a workplace, the employee, or his dependant (in the case of employee’s death) is required to inform the employer by providing requisite information to the appropriate representative of his employer within 14 days of the occurrence of the event or receipt of the occurrence.[24]

The employee is also required to file an application for compensation in the prescribed form by the Board within one year after the date of occurrence of the event. No compensation will be paid if the application is not filed within one year after the death, injury or disability, except where the board is satisfied that there existed special circumstances which precluded the filing of an application within one year after the event occurred. In that situation, the Board may pay the compensation if an application is filed within 3 years after that date.[25]

Note that failure to provide the requisite information is a bar to a claim for compensation (subject to the decision of the Board in certain circumstances).[26]

Duty of the Employer: Apart from the employer’s duty to contribute to the funds, he/ she also has to report the information presented to him by the employee for injury sustained to the Board and the nearest office of the National Council for Occupational Safety and Health in the State within seven days of receiving the employee’s notification. [27]

If the employee dies in the accident, the employer is to report this immediately to the Board and the local representative of the Board.[28]

The Nigeria Social Insurance Trust Fund Management Board (the Board) makes all payments of the various compensation or benefits to any person entitled to such compensation or benefit and make all disbursements required to be made out of the Fund established under the ECA.[29]

Payments of compensation under the ECA do not affect the employee’s retirement benefit payable under the Pension Reform Act 2004.[30]


When employers fail to comply with the provisions of the ECA, there are specific penalties which include:

An employer who deducts either directly or indirectly any payments made to the Board from the remuneration payable to its employees is liable upon conviction to a fine of not less than ₦100,000.00 (₦1,000,000.00 in the case of a corporate employer) or imprisonment for a term not exceeding one year or both. In addition to the penalty mentioned above, the employer shall make a repayment of any amount deducted from the employee. [31]

An employer who fails to make the required payroll information available to the Board or where it is found that the information contained in the payroll is untrue or inaccurate, the employer may be liable to pay the provisional assessment levied by the Board and a fine, calculated as a percentage of the assessment by the Board.

The employer (if an individual) will also be penalized for contravention in the sum of ₦100,000.00 while for a body corporate is ₦1,000,000.00 or to imprisonment for a term not exceeding one year or both. Besides, each director, manager, or officer of the body corporate shall be deemed to have exceeded one year or a fine of ₦100,000.00 or both such imprisonment and fine.[32]

Where an offence is committed by a body corporate, every director, manager, secretary or other officers of the body corporate; partner or officer of the firm; or person who was purporting to act in such capacity mentioned above will be deemed to have committed the offence unless he proves that the act or omission constituting the offence took place without his knowledge, consent, connivance or neglects or he took reasonable steps to prevent the commission of the office. [33]


Employer and Employee relationship creates duties and responsibilities which are complimentary. To an Employee; the responsibility is to take care of him/herself and a fellow employee in the course of the employment. The Employer on the other hand has the responsibility among several others to compensate an employee who sustains an injury, occupational disease or in the case of death (his dependants) in the course of carrying out his duties.

It is silhouetted against the foregoing that employers and employees understand the extent of the law as it relates to compensation. Employees and dependents are encouraged to notify the authority concerned within the stipulated time. Employers are to ensure that they make the required contribution to the fund and report to the Board as provided by the provisions of the ECA. Failure to comply will lead to sanction/penalty by the Board.


[1]< › what-is-workers-compensation> accessed on 13th November 2021

[2] The Employee Compensation Act 2010

[3] 8th ed. 2009. P 301-2

[4] Section 73 of the Employee Compensation Act 2010

[5] Afrab Chem Ltd v. Owoduenyi (2014) LPERLR-23613(CA)

[6] Anike v. S.P.D.C(Nig) Ltd (2011) 7 NWLR (pt. 1246) 227

[7] Section 7 of the Employee Compensation Act 2010

[8] Section 12 of the Employee Compensation Act 2010

[9] Section 2, 3, and 70 of the Employee Compensation Act 2010

[10] Employment and employee benefits in Nigeria: an overview by Ejide Sodipo, and Vivian. C. Nwachi, <> accessed on 12th November 2021

[11] Section 56 of the Employee Compensation Act 2010

[12] Section 56 of the Employee Compensation Act 2010

[13] Section 58 of the Employee Compensation Act 2010

[14] Section 33 of the Employee Compensation Act 2010

[15] Section 14 of the Employee Compensation Act 2010

[16] Section 7 of the Employee Compensation Act 2010

[17] Section 8 of the Employee Compensation Act 2010

[18] Section 9 of the Employee Compensation Act 2010

[19] Section 10 of the Employee Compensation Act 2010

[20] Section 11 of the Employee Compensation Act 2010

[21] Section 26 (1) of the Employee Compensation Act 2010

[22] Section 16 of the Employee Compensation Act 2010

[23] Section 13 of the Employee Compensation Act 2010

[24] Section 4 (1) of the Employee Compensation Act 2010

[25] Section 6 (2 &3) of the Employee Compensation Act 2010

[26] Section 4(4) of the Employee Compensation Act 2010

[27] Section 5 of the Employee Compensation Act 2010

[28] Ibid

[29] Section 32 of the Employee Compensation Act 2010

[30] Section 28 of the Employee Compensation Act 2010

[31] Section 14 (1, 2 & 3) of the Employee Compensation Act 2010

[32] Section 39 (4) of the Employee Compensation Act 2010

[33] Section 71 (1) of the Employee Compensation Act 2010

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1 Comment

MARK ANUSIEM · March 30, 2022 at 9:10 am

My company has decided to lay me off from work as a result of the injury I sustained at my work place.what right do I have.also they to resort to paying the compensation through Nigerian social insurance board.

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