Salary is a fundamental entitlement arising from an employment relationship. Where an employer fails to pay an employee’s salary when it falls due, the employee is entitled to take steps to recover the outstanding amount. An employer’s failure to pay salary does not automatically extinguish the employee’s entitlement to that salary. The appropriate remedy depends on the terms of the employment contract, the applicable law, the reason for the non-payment and the nature of the employment relationship. An employee who is owed salary should first establish the amount outstanding, review the terms of employment and make a formal demand. Where the employer refuses to pay, the employee can pursue the appropriate legal remedy. What Is Unpaid Salary? Unpaid salary is remuneration that an employee has earned under an employment relationship but which the employer has failed to pay when due. It can arise where an employer: Fails to pay an employee’s monthly salary. Pays only part of the agreed salary. Withholds salary without lawful justification. Fails to pay salary for the final period of employment. Fails to pay other contractual remuneration that has become due. Continues to withhold salary after terminating the employee’s employment. The precise entitlement depends on the employment contract and applicable law. Is an Employer Legally Obliged to Pay Salary? Yes. Where an employee has performed work pursuant to an employment contract, the employer is generally required to pay the agreed remuneration in accordance with the terms of the employment relationship. The employment contract is therefore an important document in any dispute over unpaid salary. The employee should examine the contract to determine: The agreed salary. The payment date or payment cycle. Allowances and other contractual benefits. Conditions attached to any bonus or incentive. The circumstances in which deductions can be made. The procedure for termination. Any applicable disciplinary or grievance procedure. Can an Employer Refuse to Pay Salary Because the Business Is Experiencing Financial Problems? An employer’s financial difficulty does not automatically extinguish an employee’s contractual entitlement to earned salary. A company experiencing financial difficulties can take lawful measures to restructure its workforce or business, but it cannot simply assume that employees have surrendered their entitlement to salary already earned. If the employer cannot pay, the parties can agree on a lawful arrangement concerning outstanding remuneration. An employer should not, however, treat an employee’s earned salary as automatically forfeited because the business is experiencing financial difficulties. Can an Employer Withhold an Employee’s Salary? An employer cannot make arbitrary deductions from an employee’s salary. The legality of withholding or deducting salary depends on the circumstances, the employment contract and applicable legislation. Where an employer has a legitimate basis for a deduction, that basis should be identifiable and supported by the applicable law or contractual terms. An employee who discovers that salary has been withheld should therefore ask the employer to state the reason for the withholding and the legal or contractual basis relied upon. What Should an Employee Do When an Employer Refuses to Pay Salary? An employee should not immediately commence litigation without first establishing the facts and creating a documentary record. 1. Review the Employment Contract The first step is to review the employment contract or letter of appointment. Confirm the agreed salary, payment schedule and any provisions concerning deductions, suspension, leave, disciplinary action and termination. 2. Calculate the Amount Owed Determine precisely how much the employer owes. For example, if an employee’s monthly salary is ₦500,000 and the employer has failed to pay for three months, the basic salary arrears are ₦1,500,000, subject to any lawful deductions or other relevant contractual provisions. The employee should also separately identify unpaid allowances, commissions, bonuses or other benefits where they are contractually due. 3. Make a Formal Demand The employee should formally demand payment from the employer. The demand should state: The period for which salary remains unpaid. The amount outstanding. The contractual basis for the entitlement. The date by which payment is expected. The consequences of failing to resolve the matter. A written demand creates evidence that the employer was informed of the outstanding obligation. 4. Preserve Evidence An employee should preserve documents relating to the employment and non-payment. These can include: Employment contract. Letter of appointment. Payslips. Bank statements. Emails. WhatsApp messages. Staff handbook. Salary schedules. Evidence of previous salary payments. Correspondence with the employer. Termination or resignation documents. These documents can become important evidence if the dispute proceeds to litigation. Can an Employee Recover Unpaid Salary After Resigning? Yes. Resigning from employment does not ordinarily mean that an employee has abandoned salary that was already earned. If an employee resigns while the employer owes salary that had already become due, the employee can pursue recovery of the outstanding amount. The employee should distinguish between salary already earned and future salary that would have been earned had the employment continued. The fact that the employee resigned does not by itself extinguish an existing entitlement to salary already earned. Can an Employee Recover Unpaid Salary After Being Terminated? Yes. Termination of employment does not automatically extinguish salary that had already accrued before termination. For example, if an employee’s employment ends on 15 August and the employee has not received the salary due for the preceding month, the termination does not eliminate the existing salary debt. The employee can pursue the outstanding salary together with any other contractual entitlements that have become due. Where the termination itself was wrongful, the employee can also pursue the remedies available for wrongful termination, subject to the nature of the employment. Can an Employer Refuse to Pay Salary Because an Employee Owes the Company Money? An employer should not simply deduct whatever amount it considers appropriate from an employee’s salary. Whether a particular deduction is lawful depends on the applicable law, the employment contract and the circumstances giving rise to the alleged debt. Where an employer alleges that an employee owes the company money, the employer should establish the basis of the debt and the lawful mechanism for recovering it.