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April, 2010
Legal Alert –
Distinction between Termination and
Dismissal of Employment Contracts in Nigeria To read this Alert in pdf format, please go to
http://oseroghoassociates.com/pdf/2010_04.pdf
In this Issue:-
- Legal Alert for April 2010 – Distinction
Between Termination and Dismissal of
Employment contracts in Nigeria
- Subscribe & Unsubscribe to Legal Alerts.
- Disclaimer Notice.
LEGAL ALERT—Distinction
between Termination and Dismissal of
Employment Contracts in Nigeria
The global recession is contributing to the
escalation of employment related litigation
in Nigeria. An insufficient appreciation of
the difference between a termination of an
employment contract with a dismissal of an
employee from his employment is also
contributing to this escalation as this is
deducible from the nature of claims filed
and their chances of success at the end of
most litigation.
The Contract of
Employment
This The principal and most
direct legislation on employment matters in
Nigeria is the Labour Act which was enacted
in 1971. A worker or an employee is
described under this Act as a person who
enters into a contract of employment with an
employer, whether such a contract is a
contract of service or a contract to
personally execute any work or labour. The
Act is however inapplicable to persons
exercising administrative, executive,
technical or professional functions as
public servants, or to any person employed
on a vessel or on an aircraft to which the
laws regulating merchant shipping or civil
aviation already apply, among other classes
of persons.
The Labour Act requires that within three
(3) months of the engagement of an employee,
an employer must give to the employee a
written contract of employment which
contract must specify among other things, a
description of the parties to the contract
of employment, the nature of the service or
services to be rendered under the contract
of employment, the tenure of the contract
including its probation period, the
remuneration which must be paid in the legal
tender of the country where the contract is
entered into, the hours of work, mandatory
holiday with paid leave, rules with regard
to periods of incapacity to work due to
sickness or injury, maternity leave, the
appropriate period of notice to be served
before the contract can be terminated,
possible grounds for dismissal of the
employee without notice, etc.
The Labour Act also stipulates that no
contract of employment shall provide for the
payment of wages at intervals exceeding one
calendar month unless the written consent of
the Governor of the State where the contract
is being executed is previously obtained.
Also, every employee must be medically
examined by a registered medical
practitioner as to the suitability of the
employee to discharge his or her duties
under the employment contract. The cost of
the medical practitioner for this
examination is borne by the employer.
Employers are vicariously liable for all
work undertaken by their employees, on the
employer’s behalf, should such work cause
injury or loss to a third party. For this
reason, and to cover negligent conduct
outside of the scope of the employee’s
contract, employers traditionally demand
from their employees an acceptable
Guarantor’s indemnity or Fidelity Guarantee
from the employee’s Guarantor which
indemnity or fidelity bond must cover such
vicarious and unauthorised conduct of the
employee while remaining bound by the
contract of employment.
Every employee, who has served his or her
employer for a continuous period of twelve
(12) months, is entitled to such period of
days or few weeks or month as may be agreed,
as annual leave or vacation in addition to
his full basic salary for the same period of
the leave or vacation. While this annual
leave or vacation may be deferred for good
reason(s), such deferment must not be
exceeded during a period of twenty-four (24)
calendar months, more than once. The present
practice in Nigeria of employers paying
their employees not to go on vacation is
therefore unlawful.
The freedom of an employee or employees to
join a trade union must not be inhibited by
an employer either in the contract of
employment or in practice, neither must the
employee be prejudiced in any way by reason
of his association with a trade union or by
his trade union membership.
The Labour Act statutorily allows pregnant
women to proceed on maternity leave, six
weeks before birth provided that a medical
certificate is produced. Pregnant women are
also entitled to a minimum of fifty per cent
(50%) of their wages during the period of
their maternity leave. After birth, a
nursing mother is also entitled to another
six weeks leave. On resumption for work, a
nursing mother is entitled to half an hour
recess twice in a day to nurse her infant.
An employer is however not liable for the
medical expenses of an employee incurred
during or on account of the employee’s
pregnancy or confinement during such
pregnancy and birth of a child.
Termination
of Contracts
Like under the common law, either an
employer or its employee may terminate a
contract of employment, subject to the terms
of the written contract, where the tenure of
such a contract expires without a new
contract of employment being entered into,
either by conduct or in writing. Another
instance where a contract of employment
could be terminated constructively is where
either party to the contract dies.
The most common method of terminating a
contract of employment is by the delivery of
a written notice of termination of the
contract on the opposite party. Where a
notice of termination is served, the
contract automatically terminates at the
expiration of the period of the notice of
termination. Either party could equally
elect to pay compensation in lieu of the
employee working for the employer during the
period of the notice of termination.
In all cases of the termination of a
contract of employment, neither party is
obligated to provide any reason for
terminating the contract. Also, the motive
of the party that terminates the employment
contract is equally irrelevant provided that
the provisions of the employment contract in
relation to its termination are complied
with by the terminating party. Where for
example, the provisions of the contract of
employment requires that notice must be
served or monetary compensation paid in lieu
of such notice of termination, a breach of
this term will lead to an otherwise
avoidable, protracted and expensive
litigation.
Nigerian courts do not grant specific
performance of contracts of employment in
the private sector because the courts will
not impose an employee on an unwilling
employer, neither will it impose an employer
on an unwillingly employee. The principle of
freedom of contract is strictly adhered to
in Nigeria.
Dismissal
An employer is entitled to opt for the
dismissal of its employee’s contract,
instead of the termination of a contract of
employment, where the conduct of its
employee “...... is of some grave and
weighty character that it undermines the
relationship of confidence which must exist
between a master and a servant”.
Examples of conduct which could be
considered to be of a grave and weighty
nature will include cases of stealing,
fraud, bribery, corruption, falsification of
records, gross insubordination, dereliction
of duty, sleeping at work, verbal or
physical violence, fighting, assault and
battery, working under the influence of
illegal drugs, conflict of interest,
competition with the employer’s business,
conversion of company’s property for private
use without the employer’s permission or
consent, assault and battery, etc. This is a
departure from the old standard which
prevented the employer from automatically
dismissing his employee without notice where
such employee has committed an offence that
have a criminal element(s) which criminal
offence requires the proof in a court of
law, of proof beyond all reasonable doubt.
While the criminal prosecution or otherwise
of an employee in a court of law is no
longer a sine qua non, i.e. a prerequisite,
for summary dismissal, many employers these
days, depending on the circumstance and the
facts, elect to serve a notice of
termination or pay salary in lieu of notice
in order not to provide any explanation or
reasons for terminating the contract of
employment. If the misconduct or series of
misconducts are however grave, prior legal
advice is recommended to be obtained before
the letter of dismissal is issued and
delivered to the employee. In some instances
also, where the employee’s misconduct is
grave and weighty, a dismissal will be
preferred to a termination as such will
serve as a deterrent to other employees.
Fair Hearing
What determines the wrongfulness or
otherwise of the termination or dismissal of
any employment contract in Nigeria is not
whether there was fair hearing at the time
the case of the termination or dismissal
occurred but whether the terms and
conditions of the written contract of
employment was/were adhered to by the
parties in effecting the termination or
dismissal of the contract of employment.
Where there is no written contract of
employment, the court will, subject to the
general practice of trade or industry
relevant to the employment, apply such
reasonable trade or industry terms and
conditions. This is the reason why many
employers prepare a standardised and
encompassing contract of employment with an
accompanying staff handbook for all their
employees.
Breach of employment contracts –
Compensation
The fundamental basis for assessing damages
in breach of contract cases is the
compensation which the injured party would
have been deprived of if the contract was
not unlawfully terminated. Thus, in the case
of an unlawful termination, the Court will
only award as damages the compensation of
such period of salary that the terminating
party would have been paid in lieu of the
giving of the proper notice of termination.
For wrongful dismissal without notice, the
measure of damages will be the amount the
injured party would have earned had he or it
continued with the performance of the
contract until the contract is lawfully
terminated.
Nigerian law does not recognise claims for
injured feelings, physiological trauma or
such similar claims when considering the
amount to award as damages for breach of any
employment contract. This is particularly as
the injured party is required to mitigate
whatever loss he or she may have suffered by
getting another employment or securing
another employee’s services.
Conclusion
The Nigerian Labour Act was passed into law
in 1971. This law, in the twenty-first
century, is restrictive and outdated.
Equally correct must be the observation that
this Law, like others of its era, have
remained unable to promote the much required
human capital development in Nigeria. The
Nigerian legislature will therefore do well
to amend the provisions of this Law to meet
the fundamental development requirements of
the Nigerian economy.
Also, some Nigerian employers need to
reappraise their belief that they have the
legal authority to hire and fire at will.
This is because such a belief or strategy
must inhibit the ability of a serious
business owner to engage and retain the best
people in a massively aggressive and
competitive global business environment.
Lastly, the Nigerian employee needs to
review his or her expectation on job
retention and security. The best of the
latter will only lie in employees
continuously equipping themselves by
bringing more value to their individual
environment, employment and country, in
contrast to remaining on a job; this is
particular as the common law rule on the
freedom of parties to easily enter into and
exit from contracts remains one of the basis
canons of capitalism.
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DISCLAIMER NOTICE: This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm.
Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
EHIJEAGBON O. OSEROGHO
April, 2010.
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