INTRODUCTION
Beyond the handshake that seals a job offer lies a more critical juncture in the employment lifecycle: its termination. In Nigeria’s dynamic labour market, where informality often overshadows formal protections, the severance of an employment relationship goes beyond mere contractual closure, it’s a significant legal event with far-reaching implications. Recognizing this, the Nigerian Labour Act stands as a crucial framework, outlining the rights and obligations of both employers and employees when the employment bond breaks, rendering outdated the simplistic notions that “a willing servant cannot be foisted on an unwilling master” and that “he who hires can fire” without due process. This exploration delves into the key provisions of the Act governing employment termination, outlining the legal pathways for both voluntary and involuntary separation, the essential principles of fair hearing and due process, and the proactive measures to be taken to avoid wrongful termination. Understanding these tenets is not just prudent, it is essential for navigating the complex legal landscape surrounding employment termination in Nigeria.
1.1 WHAT IS TERMINATION OF EMPLOYMENT?
Termination of employment simply means disengaging an employee and bringing their service to an end. This may occur voluntarily or as a result of an employer’s decision, where either party to the employment contract finds no further need to continue the employment relationship[1]. An employee who has been absent due to maternity leave, leave of absence or illness is still considered an employee as long as the relationship has not been formally severed by a notice of termination.
A contract of employment can be terminated in the following ways:
- Termination upon expiration of contract period
Contracts of employment usually have duration, and upon the effluxion of time, if the contract is not renewed, the contract automatically comes to an end.[2] The expiration of the contract period is a natural conclusion to the contractual relationship, and neither party is obligated to provide reasons for the termination. The termination of the contract due to the effluxion of time does not imply a breach of contract by either party; rather, it is simply a result of the terms of the agreement reaching their natural conclusion.
- Termination Upon the Death of the Employee
This is predicated on the legal principle that personal contracts, particularly those of employment, are typically non-transferable. Employment contracts, being personal and based on an employee’s individual skills, ends automatically upon the employee’s death.[3] This is because the required personal services can no longer be performed. While the contract terminates, the deceased’s estate may be entitled to unpaid wages and benefits, and survivors might receive death benefits or life insurance based on the employment terms and labor law.[4]
- Termination Upon Notice by Either Party
The third major way in which an employment contract can be terminated is through the issuance of a notice, either by the employer or the employee.[5] This provision is commonly included in most contracts of employment. The notice period allows either party the ability to end the employment relationship without causing undue hardship to the other. The notice period serves as a buffer, providing the employer with time to find a replacement and the employee with time to seek alternative employment. In most contracts, the length of the notice period is clearly specified and in the absence of a specified notice period, the Nigerian Labour Act will apply.
1.2 VOLUNTARY TERMINATION OF EMPLOYMENT
Voluntary termination refers to the situation where an employee chooses to end their employment relationship with a company of their own accord. Unlike involuntary termination, where the employer decides to end the contract, voluntary termination is initiated by the employee. This decision can be driven by various factors, ranging from a desire for career advancement to personal reasons. Voluntary termination is often governed by the terms of the employment contract and applicable labor law, which may outline the necessary procedures and notice periods that must be followed.
Employees may voluntarily terminate their employment for several reasons. A common motivator is receiving a better offer from another company, often involving higher pay, improved benefits, career growth, a healthier work-life balance, or a more supportive work environment. Others may leave to pursue entrepreneurial goals, seeking greater independence, control, and the potential for financial success by starting their own business. Retirement is another reason, as individuals choose to exit the workforce to enjoy personal time, hobbies, or spend time with their family.
In most cases, employees who voluntarily terminate their employment are not entitled to severance pay as it is typically reserved for situations where the employer initiates the termination, such as in cases of layoffs, redundancy, or dismissal. However, employees who leave voluntarily may still be entitled to certain benefits, such as accrued vacation time, pension contributions, or other contractual benefits. The terms of these entitlements will depend on the specific employment contract and the applicable laws.
Resignation by the Worker:
This is one of the ways an employee may terminate his employment voluntarily. In T.O.S Benson v. Onitiri,[6] the Supreme Court affirmed that a person has an ‘absolute right to resign’ and no discretion lies in the employer to refuse to accept the resignation. To do so would amount to forced or compulsory labour contrary to the freedom to contract and the fundamental right to dignity of human person under section 34(1)(c ) of the constitution. Even in pensionable employment, once a worker has fulfilled all the necessary conditions to qualify for retirement benefits, they may voluntarily resign and still be entitled to those benefits. Once the resignation takes effect, the employment relationship is considered terminated, and no disciplinary action can be initiated against the worker thereafter.[7] The contract of employment usually stipulates the required notice period the worker must give upon resignation, or the amount payable in lieu of notice.
1.3 INVOLUNTARY TERMINATION
Involuntary termination occurs when an employee is forced to leave their position against their own will. This can arise under various circumstances, such as redundancy, downsizing, or misconduct.
1.3.1 REDUNDANCY
The Labour Act[8] defines the term “redundancy” as “an involuntary and permanent loss of employment caused by an excess of manpower”. Redundancy occurs when an employee is involuntarily terminated due to reasons such as downsizing, restructuring, or a reduction in the need for their role. When a company decides that there is an excess of manpower, and it is no longer necessary to retain all employees, employees are entitled to certain legal protection including redundancy or severance pay.[9] These entitlements are designed to help the employee transition financially and professionally as they seek new employment. The principle of “last in, first out” is to be adopted in discharging the workers affected subject to all factors of relative merit, including skill, ability and reliability.[10] Employers must ensure a fair and transparent process when selecting employees for redundancy, and make sure that decisions are justified and not arbitrary.
1.3.2 SUMMARY DISMISSAL
This is the right of an employer to terminate the contract of service of an employee without notice or payment in lieu of notice on account of gross misconduct on the part of the employee which strikes at the root of the contract.[11] An employer is entitled to opt for the dismissal of its employee, instead of the termination of a contract of employment with notice, where the employee has committed a grave offense which undermines the relationship that exist between him and his employer. Grounds on which an employer may dismiss an employee summarily include gross misconduct, gross neglect, disobedience of lawful order and dishonesty among others.[12] It is pertinent to note that where the employment contract provides for acts that amount to gross misconduct for which summary dismissal will apply, this is done instantly. In other cases where the acts amounting to misconduct are not clearly spelt out by the employer then the disciplinary procedure provided by the employer will be complied with before dismissing the employee.[13] When an employee is found guilty of gross misconduct, he could be summarily dismissed without notice or wages. Where there are allegations of the commission of a criminal offense against a person, which has also been denied by the accused person, the person or authority making the accusation must satisfy the constitutional requirement by establishing the guilt of the accused person according to the provisions of the law. The employee must be given an opportunity to hear the allegations against him, and defend himself before the employer takes any decision that will affect the employee. If a disciplinary tribunal is constituted, it must be independent and impartial, and must comply with the rules of natural justice and the principles of a fair hearing. [14]Where the allegations are of a criminal nature, the employer must prove them beyond a reasonable doubt. While an employer has the right to dismiss an employee summarily in cases of gross misconduct, the termination must follow certain legal requirements and fair procedures listed below to ensure that the employee’s rights are not violated.
- Right to Fair Hearing
Before an employee is summarily dismissed, they must be given a chance to defend themselves against the allegations. This is part of ensuring that the dismissal process adheres to the principles of natural justice and fairness. The employee should be informed of the charges against them and given an opportunity to present their side of the story before any decision is made.
- Investigation and Evidence:
If the dismissal is based on a criminal allegation or gross misconduct, the employer must conduct a thorough investigation to verify the facts. If the alleged misconduct has criminal implications, such as theft or assault, the employer is required to follow due process, ensuring that the employee’s rights to a fair trial are respected.[15] The employer must also ensure that any evidence presented is credible, and the employee must be allowed to refute or challenge the evidence during the disciplinary hearing.
- Disciplinary Procedure:
If the misconduct is not clearly defined in the contract, the employer must follow a disciplinary procedure, which typically includes a formal investigation, a hearing, and a decision-making process. This process must be impartial, and the employee must have the opportunity to be represented or accompanied by a colleague or union representative during hearings.
- Constitutional and Legal Safeguards:
When allegations of criminal misconduct are made, the burden of proof remains on the employer, and the employee is presumed innocent until proven guilty. In cases involving criminal behavior, the standard of proof is typically “beyond a reasonable doubt,” mirroring the requirements of criminal law.
- Independent Tribunal:
In some instances, a disciplinary tribunal may be formed to assess the evidence and determine whether summary dismissal is warranted. This tribunal must be impartial and independent to ensure fairness. The employee should also be allowed to appeal the decision if they believe that the dismissal was unjustified.
- Compensation and Benefits:
In cases of summary dismissal for gross misconduct, the employee is generally not entitled to severance pay or salary in lieu of notice, as the termination is seen as a result of the employee’s own actions. However, if the dismissal is found to be unfair or procedurally flawed, the employee may be entitled to compensation or reinstatement.
1.4 WRONGFUL TERMINATION OF CONTRACT OF EMPLOYMENT
Wrongful termination of employment occurs when an employer ends an employee’s contract in breach of its terms or through unlawful means. Where a worker’s employment is terminated, he is generally entitled to damages, he may also be entitled to a reinstatement which is basically returning him to his status quo ante especially where the employment enjoys statutory protection. Under Nigerian Labour Act, termination must comply with the terms of the employment contract and relevant statutory provisions. Failure to do so may render the termination wrongful, entitling the affected employee to legal remedies. The onus of proving wrongful termination of employment however lies on the employee. He has to show the court the terms of his employment and the ways and manners these were breached.
Key Elements of Wrongful Termination
Under the Labour Act, wrongful termination may arise in several ways, including:
- Failure to give proper notice or payment in lieu of notice as required under Section 11 of the Labour Act;
- Termination without just cause, particularly where the employment contract provides for conditions under which termination may occur;
- Breach of disciplinary procedures, especially in cases involving allegations of misconduct;
- Non-compliance with statutory procedures in the case of employment with statutory flavour (typically in public service).
In such cases, the employee is generally entitled to damages, which are calculated based on what the employee would have earned had proper notice been given, or for the unexpired term in a fixed contract. However, Nigerian courts typically do not award reinstatement or specific performance in ordinary master-servant relationships, as the court would not like to foist a willing servant on an unwilling master.[16] The burden of proof in cases of wrongful termination lies on the employee. The employee is required to prove the existence of an employment contract, show the terms of the contract, and demonstrate how those terms were breached by the employer. Without clear evidence of the contract and its breach, the court is unlikely to find in favor of the employee.
1.4.1 PROACTIVE MEASURES TO BE TAKEN BEFORE TERMINATING AN EMPLOYMENT TO AVOID WRONGFUL TERMINATION LAWSUITS
Termination of Employment with Notice and Reasons
Section 11 of Nigerian Labour Act 2004 categorically states that either party to a contract of employment may terminate the contract on the expiration of the notice given to the other party of his intention to do so. Subsection 2 of the section further provides that the notice to be given shall be one day, where the contract has continued for a period of three months, one week where the contract had continued for more than three months but less than two years, two weeks where the contract has continued for a period of two years but less than five years and one month where the contract had continued for five years or more. However, the Act is silent on whether an employee whose service is to be terminated should be given a reason or cause for such termination in the notice of termination.[17] While the common law position is predicated on the premise that “a willing servant cannot be foisted on an unwilling master” and as such the employer is under no obligation to proffer reasons for the termination of an employee, the third alteration to the Constitution of the Federal Republic of Nigeria 2010 upturned this position by vesting exclusive civil jurisdiction on the National Industrial court of Nigeria on matters connected with or pertaining to the application of any international convention, treaty or protocol of which Nigeria has ratified relating to labour, employment , workplace, industrial relations or matters connected therewith[18].
The above provision presupposes that the National Industrial court may apply international best practices in determining whether or not an employer can terminate an employment without reason[19]. The provision of Section 254C (1)(f)(h) of the Constitution of the Federal Republic of Nigeria 1999 as amended allows the National Industrial court of Nigeria to invoke the provisions of International Labour Organization[20] and Termination of Employment of Convention[21] in determining labour and employment matters notwithstanding their non ratification into Nigerian Law[22].
Strict Compliance with Contract of Employment
Employers must follow termination procedures outlined in employment contracts to avoid legal issues. Deviating from these procedures can lead to breach of contract and damages. Compliance with contract terms is crucial to prevent wrongful termination claims. Regular contract reviews help employers understand provisions and employment duration.[23]
1.4.2 TERMINATION OF EMPLOYMENT OF A PREGNANT WOMAN
Under the Nigerian Labour Act, a pregnant female employee, upon presentation of a Medical Certificate indicating her Expected date of Delivery (EDD), is entitled to maternity leave of at least six weeks before the EDD and six weeks after the delivery of the child. She is also entitled to 50% of the wages she would have earned, if she had not been absent from the employment by reason of her carrying and delivering a child, provided she has been in employment for a period of six months or more. This is a critical right that guarantees mothers the time they need to recover and care for their newborns without the worry of losing their income or facing immediate job insecurity.
Section 54 provides that where, however, for medical reasons, she exceeds the period allowed, her employment cannot be terminated during that period or for that reason, if she produces a medical certificate from a registered medical practitioner informing the employer of her medical condition. While she nurses her child in employment, she is entitled to half an hour, twice daily for the care of her child. This provision ensures that women are not unfairly dismissed or discriminated against because of their condition. The law explicitly protects pregnant employees from termination as her employment cannot be terminated while on maternity leave, even if her medical condition extends beyond the standard maternity leave period. This protection ensures that women do not face termination due to medical complications related to pregnancy or childbirth. It reinforces the idea that the employment relationship should not be compromised by factors that are beyond the employee’s control, such as health-related issues following childbirth.
1.4.3 TERMINATION OF EMPLOYMENT WITH STATUTORY FLAVOUR
An employment is deemed to have a statutory flavour when a worker is employed pursuant to a statute or statutory regulations. This type of employment is regulated by statutory provisions rather than the common law principles that govern ordinary master-servant relationships. An employee under such an arrangement can only be disciplined or have their appointment terminated in strict accordance with the procedures outlined in the relevant statute. Where the prescribed procedure is not followed, any disciplinary action or termination is rendered null, void and of no effect.[24] Generally, employment in the private sector falls under the master-servant category, while employment in the public or civil service is typically considered to have statutory flavour. Where the conditions for appointment or termination are governed by statutory provisions, such that a valid termination or appointment must comply with those provisions, the contract is said to enjoy statutory protection. In such cases, the contract cannot be lawfully determined by either party at will but only in accordance with the statutory preconditions governing its termination.
CONCLUSION
In conclusion, Nigerian labor law mandates a balanced approach to employment termination, safeguarding both employer and employee rights. Adherence to the Labour Act’s provisions regarding due process, fair hearings, and proper notice is crucial to prevent wrongful termination and foster a just workplace.
[1] Termination of employment without cause or reason in Nigeria, 2024, Folegal, https://www.linkedin.com/pulse/termination-employment-without-cause-reason-nigeria-0cpie/ accessed on April 5th, 2025
[2] Section 9(7) (a)Labour Act
[3] Section 9(7)(b) Labour Act
[4] Section 9(8) Labour Act
[5] Section 9(7)(c)
[6] (1960) 5 FSC 61, 82,
[7] A. Babalola ppt, Labour Law 1: Termination of contract of employment https://portal.abuad.edu.ng/lecturer/documents/1609925226Termination_Labour_Law_1.pptx accessed 7th April, 2025
[8] Section 20(3)
[9] Section 20 (2)
[10] Section 20(1)(b)
[11] O. M Atoyebi SAN, Termination of employment in Nigeria: An Overview of the Labour Law, 2024 https://omaplex.com.ng/termination-of-employment-in-nigeria-an-overview-of-the-labour-law/ accessed 7th April 2025
[12] See YUSUF V. UNION BANK OF NIGERIA, (1996) 6 NWLR (Pt 457) 632 SC.
[13] Differences between Termination of Employment and Summary Dismissal under the Nigerian Legal System, patreli partners https://www.patrelipartners.com/wp-content/uploads/2018/10/Differences-Between-Termination-of-Employment-Summary-Dismissal-Under-the-Nigerian-Legal-System.pdf accessed 7th April, 2025
[14] ibid
[15] ibid
[16] See UBN v. Chinyere (2010) 10 NWLR [pt 1203] 453, at 475).
[17] Termination of employment without cause or reason in Nigeria, 2024, Folegal, https://www.linkedin.com/pulse/termination-employment-without-cause-reason-nigeria-0cpie/ accessed on April 5th, 2025
[18] Section 254(C) of the Constitution of the Federal republic of Nigeria 1999 as amended.
[19] ibid
[20] Recommendation 166 of International Labour Organization
[21] Termination of Employment Convention, 1982 (No. 158)
[22] AFOLAYAN ADERONKE V. SKYE BANK PLC. (UNREPORTED SUIT NO. NICN/IB/08/2015)
[23] Ralph-Malix Legal-Consult, Termination of employment in Nigeria, what an employer should do to avoid a successful lawsuit for wrongful termination, 2024 https://www.linkedin.com/pulse/termination-employment-nigeria-what-employer-should-lydqf#:~:text=In%20Nigeria%2C%20employers%20can%20generally,extras%2C%20is%20taken%20into%20account. Accessed 11th April, 2025
[24] See Alhassan v. ABU Zaria (2011) 11 NWLR [pt 1259] 417