All questions

Discontinuing employment

i Dismissal

In the past, Nigerian law generally permitted parties to an employment contract to terminate for cause or for no reason, provided that the terminating party complied with the contract terms. However, this position was substantially altered by the decisions of the NICN in 2016. The NICN departed from the applicable principle of law in a master and servant relationship, which the common law developed and the decisions from other courts (up to the apex court) had followed. By its decision in the leading case of Aloysius v. Diamond Bank, in certain circumstances, an employee cannot be terminated without a reason. The employer is required to not only give a reason, but that the reason be justified and connected with the performance of the employee's work.

The law distinguishes between termination and dismissal, with dismissal being a severe sanction available only to the employer and connoting some grave infraction by the employee, such as theft, fraud or gross insubordination. It is often exercised without notice or pay. An employee should only be dismissed for a stated cause. Before a decision is reached on account of an infraction, the law requires the employer to afford the employee an opportunity to defend such allegations. Failure to do so may lead a court to declare the dismissal wrongful, entitling the employee to damages.

Notification to the authorities of the dismissal is generally not required. However, certain industries require prior notification to the appropriate industry regulator. Except where expressly stated in any CBA, notification to a works council or union is not required. The closest thing to a social plan for dismissed employees is the RSA contributory scheme.

The employer's obligations should be up to date as at the time of dismissal. An employee has no legal right of rehire, although employers are not prohibited from extending this privilege. Either an employer or an employee may terminate the employment relationship. The Labour Act (and most contracts) state the required termination notice period. It is widespread practice for contracts to contain a clause permitting payment in lieu of notice.

The Labour Act protects a woman who is absent from work for a long period owing to a certified illness arising out of pregnancy from receiving a notice of dismissal during her absence, or one expiring during her absence. Additionally, an employer cannot cause the dismissal of or prejudice a worker by reason of a union membership and related reasons.

Severance pay in a dismissal is dictated by the employment contract. Employers may also make (discretionary) ex gratia payments. The parties may, however, enter into a settlement agreement.

ii Redundancies

The law does not recognise multiple redundancies nor require government notification for individual or collective redundancies. Employers are to inform the union or worker's representative of the reasons for and extent of the anticipated redundancy. In certain industries, this requirement may extend to the regulator.

There is no statutory redundancy notice period, but the applicable contract, handbook or CBA may stipulate the period. The employer must fulfil its severance, statutory and contractual obligations. Nigerian legislation does not confer rehire rights; it does, however, require that the principle of 'last in, first out' is adopted in executing a redundancy. Offers of suitable alternative employment may be exercised.