Preem & Partners | 19th March, 2025
Termination of employment heralds the end of an employee’s work with an organisation. While termination in itself is not inherently wrongful, it becomes legally contentious when an employer fails to follow the proper procedures outlined in the employment contract or relevant labour laws.
Termination of employment must be done within the confines of contract of employment or labour laws. Termination outside of these confines may be deemed wrongful, unlawful, and invalid, entitling the employee to remedies such as reinstatement, compensation for lost earnings, damages for unfair treatment. This article explores the conditions for a valid termination of employment, grounds for wrongful termination claims, and the process of challenging wrongful termination of employment in a competent court of law.
Just as an employee owes the employer a duty to perform their role, the employer also owes the employee termination responsibilities. These responsibilities, which may be referred to as “conditions of termination”, must be met by the employer before, during, or after terminating an employee’s contract. The conditions are discussed in below.
1. The court has moved on from the era that employers have the power to hire and fire without reasons. In a plethora of cases, the Nigerian Court of Appeal have held that termination of employment without notice is wrong. The court also stated in Honica Samwill Nigeria Ltd v. Hoff that the notice of termination must be clear and unambiguous. Such notice is to state the reason for termination and when the termination becomes effective.
2. Further, the notice period of termination must be reasonable, taking into account factors such as the nature of the employment, the employee’s service, and the fact of the compensation – remuneration or wages. Reasonable notice is generally one that is given at least 7 days [or as such time as the contract of employment provides] before the actual date of termination. For instance, if an employer intends to terminate an employee’s contract on the 30th of April, 2025, the employer may issue a notice on 28th of March, 2025, informing the employee of the impending termination effective from the 30th of April, 2025. This provides the employee sufficient time to make alternative arrangements, such as seeking new employment opportunities.
If the continues working throughout the notice period, the employee is entitled to payment for the work done during the notice period. However, if the employee decides to stop working immediately or at the end of the current month upon receiving the termination notice, the employee must formally communicate this desire to the employer. The employer may accept or decline the request, depending on the contract terms. If the employer agrees, the employee will not be entitled to compensation beyond the last salary payment, except for any work completed up to that point, which is usually paid on a pro rata basis.
3. If an employer is unable to provide the required notice or a reasonable notice period before terminating an employee’s contract, the employer is obligated to compensate the employee with a payment equivalent to the salary for the notice period. This payment, commonly referred to as “salary in lieu of notice”, must be made on the employee’s last working day or at the time of termination.
The purpose of this payment is to ensure that the employee does not suffer financial hardship due to an abrupt termination and has adequate support while seeking alternative employment opportunities.
4. Where the proposed dismissal is for a cause such as misconduct, then prior to dismissing the employee, the employer must have offered the employee an opportunity to defend himself/herself. If a disciplinary tribunal is constituted, the tribunal must be independent and impartial and must comply with the rules of natural justice and the principles of fair hearing.
In Oak Pensions Ltd. v. Mr. Michael Olayinka Oladipo, the respondent, an employee of the appellant was terminated from employment after serving the company for over 10 years. The respondent claimed that his termination was wrong and sought redress at the National Industrial Court of Nigeria [“NICN”], where he got judgment in his favour. Oak Pensions Ltd appealed. On appeal, the Court of Appeal decided that Oak Pensions Ltd failed to follow its own disciplinary procedure before terminating Oladipo’s employment, making the termination wrongful, unlawful, and invalid.
An employee may challenge the wrongful termination of their employment on any of the following grounds:
Regardless of the specific reason, a proper guide for instituting and maintaining an action for wrongful termination of a contract of employment is outlined in the next paragraphs.
When an employer terminates an employee’s contract without adhering to the terms of the contract or the law, the employee has the right to challenge the termination at the NICN. The process of challenging the termination follows these steps:
1. The employee initiates the action by submitting a complaint using Form 1 (Complaint Form) as prescribed by Order 3, Rule 1 of the NICN Rules, 2017. This is accompanied by the necessary filing fees.
2. Once filed, the complaint is served on the employer by a court bailiff, and proof of service is submitted to the court.
3. Upon receiving the complaint, the employer has 14 days to file a response using Form NICN 2 (Defence Form).
4. Within 14 days of the employer’s response, a pre-trial conference is held to identify and resolve preliminary issues, set a trial date, and explore potential settlement options.
5. If no settlement is reached, the case proceeds to trial. During the hearing, both parties present their case through witness testimonies and documentary evidence. The employee must prove wrongful termination on a balance of probabilities.
6. At the conclusion of the hearing, both parties file their final written addresses within 14 days. These addresses are then formally adopted on a date agreed upon by the parties.
7. The court delivers its judgment within 90 days. If the employee succeeds, the court may award damages, order reinstatement, mandate the payment of outstanding salaries and benefits, or grant other reliefs as appropriate.
8. If dissatisfied with the judgment, either party may file an appeal at the Court of Appeal within 14 days, as provided by Order 21, Rule 1 of the NICN Rules.
Employment relationships are governed by both contractual agreements and statutory laws that establish the rights and obligations of both parties. Employers must ensure that employment terminations seamlessly comply with these frameworks to avoid or minimize wrongful termination claims, which could lead to legal disputes and financial liabilities.
Employees, on the other hand, it is essential for employees to be aware of their rights in cases where their termination may not align with the agreed terms or legal requirements. Seeking proper legal advice is crucial for employees facing such situations, as it helps them navigate the legal processes involved, assess the strength of their claims, and explore available remedies.
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