LEGAL REMEDIES AVAILABLE TO EMPLOYEES DURING INSOLVENCY

Abstract

This article examined the legal remedies available to employees when corporate employers in Nigeria become insolvent. Against the backdrop of rising insolvency cases, the study highlights the vulnerability of workers, who are often the last to recover their entitlements after secured creditors and insolvency practitioners. Using a doctrinal method, it explored constitutional, statutory, judicial, and comparative dimensions of employee protection. The Constitution of the Federal Republic of Nigeria 1999 guarantees fair hearing (s. 36), freedom from discrimination (s. 42), and the right to property (s. 44), all of which underpin employee claims in insolvency. Statutory provisions, particularly under the Companies and Allied Matters Act 2020, classify employees as preferential creditors for wages, redundancy benefits, and pensions, while the Labour Act prescribes redundancy procedures and compensation. Judicial decisions have further reinforced protections through awards for wrongful dismissal, redundancy, and constructive dismissal. The analysis also drew comparative lessons from the United Kingdom and the United States, where stronger safeguards exist through consultation obligations, protective awards, and wage guarantee funds. In contrast, Nigerian law lacks wage-guarantee schemes and remains weakened by procedural delays, priority of secured creditors, limited transparency by liquidators, and weak union structures. The article argued for reforms to strengthen statutory protections, improve institutional capacity, and expand constitutional applications by the courts. Adoption of international best practices, including ILO Conventions Nos. 95 and 173, is recommended to ensure effective employee remedies. The study concludes that aligning Nigeria’s framework with global standards is essential to secure the rights of workers in insolvency contexts.