The Legal Framework Governing the Judicial Termination of Employment Contracts in Nigeria

By Abdulrasaq Kamaldeen 

The power of termination of employment contract can be exercised by the employer or the employee depending on the circumstances birthed. The employer’s right of termination has to be done in accordance with the provision of law. Thus, termination of employment under law refers to the end of an employee’s work with a company. This may be voluntary or a decision made by the employer. 

The major law that regulated and guided the system of employment in Nigeria is Labour Act the Cap L1 LFN 2004. Although, other laws regulate employment such as Employees’ Compensation Act 2010, Finance Act, 2021, Factories Act, Chapter F1, LFN 2004, Industrial Training Fund, Chapter 19, LFN 2004 (as amended), National Health Insurance Scheme Act, Chapter N42, LFN 2004, etc.

Therefore, the power to execute the termination of an employee’s contract by the employer is explicitly stated under section 7 and section 11 of the Labour Act (2004). Before the termination can be recognized under law it has to be made in accordance with the prescribed law. Thus, the employer must ensure to give Quit notice to the employer before the termination not later than 3 months after the beginning of the worker’s period of employment with an employee, Section 7(1) (e) of the Labour Act (2004). In other words, the employer must notify the employee before the termination except in case of dismissal. However, Termination and Dismissal are two different words, because Dismissal can only be exercised by the employer when there is gross misconduct on the part of the employee but termination can be exercised by both employee and employer. 

The court is not allowed to interfere if the termination is legally done. In Bamidele v. Nigerian Bottling Co. Plc (2013) LPELR-20668(CA), the Court of Appeal held that “the court cannot compel an employer to retain an employee where the termination is lawful.” Also, in Benue Cement Co. Plc v. Oyakhilome (2007) 5 NWLR (Pt. 1027) 320, the Supreme Court reiterated that “the court cannot interfere with the employer’s right to terminate employment, provided it is done legally.” However, if it’s done unjustly and unfairly, the court can interfere and retain the employee. Adejumo v. Ecobank Nigeria Plc (2017) LPELR-42269(CA) In this case, the Court of Appeal upheld the NICN’s order for the reinstatement of an employee who was found to have been unfairly dismissed.

Over the years, the Supreme Court of Nigeria has recognized the common law principle that in any private employment contract, an employer has the right to hire and fire an employee, and need not give any reason whatsoever to justify such termination. However, in recent times, the National Industrial Court has changed this trajectory, upholding the principles of natural justice, equity, and international labor standards and international best practices. An employer must now give a justifiable reason that is connected with the performance of the employee’s work before termination of employment. EBERE ONYEKACHI ALOYSIUS V DIAMOND BANK PLC (2019) LPELR-47769(CA).

It is sacrosanct to note that, a court did not have the right to impose an employer to retain an employee he doesn’t need except when the termination is against the provision of law. AGWU & ors V Julius Berger (2020). The court that can settle a dispute between employer and employee is the National Industrial Court of Nigeria (NICN). In the absence of an employment contract or where the employment contract is silent as to means of dispute resolution, matters relating to termination of employment go straight to the National Industrial Court of Nigeria (NICN).

The contract may terminate on the expiration of a notice given by one of the parties to another to do so.  Section 11 (1) of Labour Act (2004). Accordingly, the Quit notice to be given is different from each other, it depends on the employer’s period of service within the employment. Section 11(2) (a, b, c, & d). But if the notice is for one week shall be written, in section 11(3) of LA.

Conclusively, a court didn’t have exclusive power when it come to the termination of an employment contract by the employer except if the termination is against the statutory provision.

The writer is a student from Usmanu Danfodiyo University Sokoto. He can be reach out via: kamaldeenabdulrasaq@gmail.com or 09072621530

Source: @theloyalnigerialawyer