CLAIMING DEATH BENEFITS OF A DECEASED EMPLOYEE IN NIGERIA

A. Introduction

This edition of Akintunde Esan’s Legal Illumination is focused on providing legal illumination for the next of kin, beneficiaries, dependants or legal representatives of deceased employees having challenges with claiming their death benefits.

B. The Relevant Laws

The claiming of death benefits of deceased employees/workers in Nigeria is subject to the provisions of Nigerian Labour Law, Insurance Law, Employee's Compensation Law and Administration of Estate Laws. 

C. Employee’s Death Benefits

The Death benefits of a deceased employee for the purposes of this legal illumination are all the benefits that, accrued or accrues to an employee by virtue of his or her employment as at the time and date of his or her death, which his or her next of kin, beneficiaries, dependants or legal representatives are legally entitled to claim. 

These benefits could be one or more of the following: outstanding salaries, bonuses and allowances, pension and retirement fund, insurances, compensations, reimbursements, material entitlements, gifts and miscellaneous policy, contractual and statutory entitlements. 

D. Employment Contract and Death of an Employee

Generally, the Law which regulates the terms and conditions of employment in Nigeria is the Labour Act. 

The Act provides that, a contract of employment becomes terminated by the expiry of the period for which it was made; or by the death of the worker before the expiry of that period; or by notice in accordance with section 11 of the Labour Act or in any other way in which a contract is legally terminable or held to be terminated.1 

The termination of a contract by the death of an employee shall be without prejudice to the legal claims of his personal representatives or dependants.2 

Likewise, a contract of employment cannot be deemed to be binding on the family or dependants of an employee (dead or alive) unless it contains an express provision to that effect.3 

E. Compensation for the Death of a Deceased Employee

The Employee's Compensation Act 2011 provides compensation for death, injuries or disease arising out of or in the course of an employment. Where death results from the injury of an employee, the Act provides that compensation shall be paid to the dependants of the deceased.4

F. The Pension of a Deceased Employee

Generally, there are pension schemes designed to provide employees with a regular and stable income after retirement from employment and to also serve as benefits to the employee’s dependants upon his or her demise. 

The Law that governs and regulates the administration of the contributory pension scheme for both the public and private sectors in Nigeria is Pension Reform Act 2014 which repealed the Pension Reform Act No. 2 of 2004 (repealed Act).

  

The Act provides that every employee shall maintain a Retirement Savings Account (“RSA”) in his name with any Pension Fund Administrator (“PFA”) of his choice. The RSA is financed by contributions from both the employer and employee.5    

In the event of death, before or after retirement, the funds in RSA would form part of the deceased employee’s estate, the implication of which is that, it is only the personal representatives of the deceased which are either the Executors appointed by his or her will or Administrators who have obtained Letters of Administration from the Probate Registry of the High Court with the requisite jurisdiction that can make claims.

In essence, it is only the next of kin, dependant or beneficiaries stated in a Will admitted to Probate or recognised in a Letter of Administration as the beneficiaries of the estate of the deceased employee that would be entitled to claim the funds in the RSA.6   

G. Group Life Insurance Policy

Section 4(5) of the Pension Reform Act, 2014 provides that every employer shall maintain a Group Life Insurance Policy in favour of each employee for a minimum of three times the annual total emolument of the employee.

In the event of death, the entitlement of the deceased employee under the Life Assurance Policy does not accrue to the estate of the deceased employee and shall be paid by the Insurance Company directly to the named next of kin or beneficiary on record.

Section 8 of the Pension Reform Act, 2014 provides further that, the mandatory Group Life Insurance Policy prescribed under Section 4(5) of the Act shall be paid to the named beneficiary or next of kin of a deceased employee in line with Section 57 of the Insurance Act.7  Unlike under the repealed Pension Act.8

H. Administration of the Estate of a Deceased Employee

The law which regulates the Estates of deceased persons is the Administration of Estates Laws of the states of the federation of Nigeria, while the procedure for the grant of the right to administer the estate of deceased persons is governed by High Court (Civil Procedure) Rules of each state of the federation.

It is instructive to note that, the death benefits of a deceased employee accrues to his estate and under the Administration of Estate Law9 no beneficiary, personal representative, next of kin or dependant of a deceased employee is automatically entitled to claim from his or her estate without first applying for and obtaining Letter of Administration or probate if named as an Executor in the will of the deceased employee which makes reference to the said death benefit.10 

I. Conclusion

Sometimes misunderstanding on death benefits between the employer of a deceased employee and the beneficiaries of deceased employee may result into reluctance of the employer to release the benefits to them. 

Equally, lack of understanding among the beneficiaries themselves seeking to claim the death benefits may degenerate into a crisis, confusion and stiff resistance from employers, siblings, surviving spouses, step fathers, step mothers, relatives and other interested parties.

At such a juncture, the intervention of a competent and resourceful Lawyer sound in Nigerian labour law, insurance law, pension law, property law and administration of estate law becomes inevitable in order to get the relevant issues sorted out.

You may contact Akintunde Esan (the Legal Adviser Online) or Ase Olodumare Chambers for further illumination on how to claim the death benefits of a deceased employee or benefactor and on how to obtain a Letter of Administration or Probate in Nigeria.

CLAIMING DEATH BENEFITS OF A DECEASED EMPLOYEE IN NIGERIA is a legal illumination of AKINTUNDE ESAN known as The LEGAL ADVISER ONLINE. Akintunde Esan is the Managing Partner & Principal Consultant @ ASE OLODUMARE CHAMBERS (Legal Practitioners/Consultants & Chartered Mediators)

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1.    Section 9 (7) ) Labour Act

2.   Section 9 (8) ) Labour Act

3.   Section 9(1) Labour Act

4.   Section 17 Employee's Compensation Act, 2011

5.   S.3 and 4 Pension Reform  Act, (PRA)2014

6.   S.8 PRA,2014

7.   Insurance Act 2003, Cap. N53 LFN vol. 7 2004 “A policy of insurance shall not be made on the life of a person or other event without inserting in the policy the name of the person interested in it, or for those whose benefit or on whose account the policy is made.”

8.   Pension Reform Act No. 2  2004

9.   Lagos State Administration of Estate, Laws of Lagos State,2015

10. Ironbar v. Federal Mortgage Finance. (2009) 15 NWLR (Pt.1165) CA 506 at 533, paras, B-F