Fashola: N’Assembly Acted Unconstitutionally Legislating on Salary in Minimum Wage Matter

•Says increase shouldn’t translate to distortions across salary compensation scheme

Onyebuchi Ezigbo in Abuja

Immediate past Minister of Works and Housing, Mr. Babatunde Fashola, yesterday, concluded that the National Assembly, while confusing salary for wage, might have acted unconstitutionally by legislating on the former, when it only has power to legislate on the latter.

Fashola, who participated at the recent Covenant Nation’s The Platform event, on June 12, promised to provide a reasoned contribution to the ongoing conversation on minimum wage.

He, however, argued that, in other jurisdictions where the minimum wage was applicable, amendments to increase them do not necessarily translate to massive distortions across the salary compensation scheme.

He noted that, “The extant law on minimum wage is the National Minimum Wage Act 2019, which came into force on the 18th April 2019; and it provides in Section 3 (4) that, ‘The national minimum wage expires after five years, and it shall be reviewed in line with the provision of this Act’.

“Please note that it is the ‘minimum wage’ that has expired but not the Act, and as is shown in the underlined portion above, the review of the 2019 minimum wage provisions, after the period of five years, shall be in line with the provision of the 2019 Act.

Defining the minimum wage, whose answer he said could found in Section 3 (1) of the law, he contended that, “Every employer shall pay a national minimum wage of not less than N30,000 per month to every worker under his establishment, except as otherwise provided under this Act.”

Bearing in mind that this is a federal law, he explained that, there must be constitutional authority for the Federal Government through the National Assembly (NASS) to make laws on wages.

His argument: “Therefore, it seems obvious from this definition that by making a law in Section 3(1) of the Minimum Wage Act that the minimum wage of N30,000 shall be paid monthly, the NASS may have acted unconstitutionally by legislating on a SALARY (monthly payment) when they only have power to legislate on WAGES, an hourly payment.

“This is important while the conversation on minimum wage is being had in 2024, because in Section 3(4), the minimum wage ‘shall be reviewed in line with the provisions of this Act’ which includes Section 3(1) that has prescribed a monthly amount instead of an hourly wage.

“If we follow the proper definition of wages as an hourly rate and apply the global method for computing it, which is to divide the gross annual sum by 52 weeks, and further by 40 hours recommended per week, we will have for Nigeria a minimum wage that is not N30,000 per month, but rather N30,000 X 12 (months) = N36,000 divided by 52 (weeks) = N6,923.07 divided by 40 (hours), which will give a minimum wage of N173.07 per hour.

“In other jurisdictions where the minimum wage is applicable, amendments to increase them do not necessarily translate to massive distortions across the salary compensation scheme.

“Those who are bound to pay minimum wage can also adjust their ability to pay by limiting the hours that employees work and maximise productivity, while employees cover the gap by working the additional hours in other places.

“What we have done is to erroneously fix monthly minimum salaries as wages, and then effect consequential adjustment for all other salary earners, which results in a bloated compensation wage that employees find difficult to meet.

“It would seem that since the employer has a choice to compensate the employee by either salary or wages, it must be presumed all institutions whether of Government or the private sector that have opted to compensate by salary payment are not bound by the minimum wage Act provisions if they do not pay hourly rates. This perhaps explains in part, why some employees observe the law in breach than in compliance.”