Berkeley Legal | WRONGFUL TERMINATION OF EMPLOYMENT CONTRACT IN NIGERIA AND THE AVAILABLE REMEDIES
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07 Jun WRONGFUL TERMINATION OF EMPLOYMENT CONTRACT IN NIGERIA AND THE AVAILABLE REMEDIES

INTRODUCTION

Contracts are generally documents that bind every contractual relationship. The law allows for freedom of contract i.e., every person is given the freedom to enter into any contract of his/her choosing provided such a contract is not illegal such as a contract to commit a crime. Hence, employment contracts are one of such documents which bind the Employer/Employee relationship.

A contract of employment has been defined under the law as “an agreement whether oral or written, express or implied whereby one person agrees to employ another as a worker and that person agrees to serve the employer as a worker”.

It has therefore been an age-long principle of law in Nigeria that the terms in the contract of employment spell out the rights, duties, and obligations of the parties, and is also the bedrock of any case where the issue of wrongful termination of employment is for consideration. The Labour Act 2004 by virtue of section 7 provides “that every employer must issue a written contract to an employee within 3 (Three) months of commencement of the employment relationship”. Nevertheless, even with the mandatory provision of the contract of employment, disagreements between employer and employee are inevitable and if unresolved, ultimately bring an end to the working relationship.

In Nigeria, the employer and employee relationship are regulated by several laws such as the Constitution of the Federal Republic of Nigeria 1999 (as amended), The Labour Act 2004, the Employee’s Compensation Act 2010, the Pension Reform Act 2014, Factories Act 2004, Trade Union Act 2004, Trade Dispute Act 2004, National Industrial Court Act 2006 etc.

TERMINATION OF EMPLOYMENT CONTRACT

In Nigeria, the current position of the law appears to be that an employer can terminate an employee’s contract of employment without giving any reason(s). See the cases of Chukwumah v. Shell Petroleum Development Company Nigeria Limited (1993) 4 NWLR (Pt 289) 512 and Obanye v Union Bank of Nigeria Plc (2018) LPELR-44702(SC). However, in a more recent judicial decision of the National Industrial Court in the case of Ebere Aloysius v Diamond Bank Plc (2015) 58 NLLR (Pt. 199), the trial Court appeared to have deviated from the decision of the Supreme Court in Obanye v Union Bank of Nigeria Plc [supra]. The Court held in line with international best practices that every employer must give valid and justifiable reason(s) for the termination of a contract of employment.
In order to be compliant with the law, the termination of employment must embody the following guidelines: Hence, to terminate a contract of employment, an employer must:

i. strictly comply with the termination procedure provided in the contract of employment.
ii. provide a valid and justifiable reason for the termination of employment.

Flowing from the foregoing, the following can be deduced as the instances where a contract of employment may be terminated:

a. Termination by Notice: A contract of employment may be terminated on the expiration of a notice given by the other party of his intention to terminate the contract of employment. This is governed by the terms of the contract of employment and where such terms do not exist, recourse is to be had to Section 11(1) of the Labour Act.

b. Termination by Frustration: A contract of employment may be terminated where an unexpected event prevents either party from performing the requirements of the contract of employment such as death, prolonged illness, war etc. Frustration implies that it relieves the parties from further obligations under the frustrated contract of employment.

c. Termination by Mutual Agreement: A contract of employment like any other contract may be terminated by mutual agreement between the parties, such as contractually stipulated causes or by subsequent agreement.

d. Termination by Effluxion of Time: A contract of employment may be executed for a fixed term and will be terminated on the expiration of the fixed term agreed by the parties to the contract.

e. Termination by Dismissal: A contract of employment may be terminated by an employer without notice nor payment in lieu of notice on account of gross misconduct, infidelity, whistleblowing, negligence etc.

f. Termination by Winding-Up of the Company: While winding up, a company ceases to do business as usual, and this process automatically leads to the termination of an employee’s contract of employment.

REMEDIES AVAILABLE TO A PARTY WHOSE CONTRACT OF EMPLOYMENT IS WRONGFULLY TERMINATED

1. Damages:
Damages is a remedy in the form of a monetary award that is paid to a person as compensation for wrongful termination of employment. This is the most common remedy granted to employees whose contract of employment has been wrongfully terminated.

2. Reinstatement:
Reinstatement is another remedy available to employees whose employment have been wrongfully terminated by their employer. However, this remedy is only applicable to employment with statutory flavour i.e., employees whose contracts are regulated under the law such as government officials. Generally, Courts are reluctant to grant this remedy because it negates the principle that a Court cannot foist an employee on an unwilling employer to reabsorb an employee, he/she is not willing to keep.

3. Injunction:
An injunction is a legal tool that is used to prevent an employer from carrying out a particular line of action or compel such an employer to do an act that he would not otherwise have done voluntarily. This remedy may be where in the opinion of the court damages are insufficient to remedy the wrong done to an employee.

CONCLUSION
The National Industrial Court vested with the jurisdiction to entertain all labour and employment matters is now drifting from the old-fashioned procedure of, he who hires has the right to fire without reason and is now embracing the international best practices in adjudicating issues of termination of employment in Nigeria by requiring employers to give reason for termination.

At Berkeley Legal, we have a dedicated team of lawyers who are expert on employment and labour matters.

The content of this document is solely for information purposes and should not in any way be construed as a legal opinion if you require specific legal advice on any of the matters covered in this article, please contact at info@berkeleylp.com or +234 903 985 6876, +234 909 888 8016