Termination of Contract of Employment
Legal Nuggets
- The employment contract is the bedrock of the relationship between an employer and an employee, and the courts will usually give effect to the parties’ agreement. Under Nigerian law, parties to a contract of employment have the unfettered right to lawfully terminate the contract at any time and for any reason (positive or negative) or for no reason at all, provided the terms of the contract regulating the employment relationship of the parties are complied with, and the appropriate notice as stipulated therein is issued; or by the payment of salary in lieu of the prescribed notice period.
- However, where a reason for termination is provided by the terminating employer, the termination must be for one or all of the reasons provided or implied in the contract of employment and the said reason must be plausible to justify the termination of the employee’s employment.
- It is standard practice for a contract of employment to expressly stipulate the manner in which such contract may be terminated by either party or a period within which notice must be provided to the other party before the termination becomes effective. Where this is the case, the contract of employment would cease upon the expiration of the notice period, and the employee’s employment becomes lawfully discharged without further liability on the parties.
- The notice of termination of the Employees’ employments must be clear, definite and certain. The date must be specific and the notice should contain enough information and detail to leave both the Company and more especially the Employees in no doubt as to the intendment of the notice and the exact time it is to take effect.
- An employment contract may also provide that the party seeking to terminate may pay certain sums or a specified quantum of salary in lieu of a termination notice. Thus, where a party is desirous of terminating an employment relationship for a period shorter than the agreed notice period, that party would be bound to make the necessary payments as agreed.
- A contract of employment may also be effectively brought to end by a mutual agreement of the parties. This could be achieved by the parties executing a simple agreement setting out the terms of the termination of the employment contract. The termination contract effectively brings to an end the contract of employment, and will set out the terms of the severance and outline the obligation of the parties, including the financial entitlements of the employer and continuing obligations that need to be observed by both parties.
- Nigerian courts do not grant specific performance of contracts of employment as the courts will not impose an employee on an unwilling employer, neither will it impose an employer on an unwillingly employee.
- An employee whose employment is wrongly terminated is entitled to damages in the sum of salaries for the length of time for which the notice of termination could have been given in accordance with the contract of employment.
- As earlier stated, the Company is not bound to give reasons for terminating the Employees’ appointment; but where the Company elects to give a reason for his termination or terminates for cause as outlined above, the law imposes a duty on the Company to establish the reason to the satisfaction of the Court, where such termination is challenged in court.