TERMINATION OF CONTRACT OF EMPLOYMENT IN NIGERIA

In employer and employee relationships just like in any relationship disputes are bound to arise and where the dispute is not properly managed it may lead to the termination of employment by either the employer or the employee. Generally, the principles of law governing the termination of employment depend on whether the termination is that of;

(a) Termination of master and servant contract of employment; 

(b) Termination of Employment with statutory flavour; and 

(c) Termination of employment at will.

Termination of Written Contract of Employment

Where there is a written contract of employment, it is outside the province of the Court to look anywhere for terms of termination of the contract, other than in the written contract. See: Katto vs. C.B.N (1999) 6 NWLR (Pt. 607) 390 at 405, paras. D-F.

The terms and conditions of contract of employment are the substratum of any case where the issue of wrongful termination of employment calls for determination. The importance of the terms of a contract of service in determining the question of termination of the contract was emphasize as follows by Mohammed JSC in Ifeta v. Shell Pet. Dev. Co. Ltd (2006) 7 MJSC 121 at page 133, para. G

"In the determination of this issue, I need to emphasize the bindingness of the terms of the contract of service between the parties. There is no doubt that the parties’ freedom of contract carries with it the inevitable implication of sanctity of their contracts. This means that if any question should arise with respect to the contract, the terms in any documents which constitute the contract are, invariably, the guide to its interpretation. On this premises, the material question is; what did the parties in the instant case agree with respect to the termination of the contract of service” 

  

In the absence of a written contract of employment either of the parties could abrogate the contract on a week’s or a month’s notice, or on payment of wages for a week or a month or whatever was agreed period for payment of wages.

Termination of a Master and Servant Employment:

A master can terminate the employment of his servant at any time and for any reason or for no reason at all provided the termination is in accordance with the terms of the contract of employment the motive for such termination is irrelevant. See Osianya v. Afribank Nig Plc. (2007) 6 NWLR (Pt.1031) 565 (SC)

Where a contract contains a provision that either party thereto may determine it by specified notice or payment of prescribed sum of money in lieu thereof, such notice of payment as the case may be must be complied with in strict accordance with the terms of contract. 

Where the right to determine the contract by notice depends upon the performance of a condition precedent, the party seeking to exercise his right of determining the contract must first establish that the prescribed condition precedent was fulfilled. 

In a master and servant relationship, where a criminal charge or accusation is involved care must be taken that the provision of section 36(4) of the 1999 Constitution is adhered to. In such a situation the employer is prohibited from instituting disciplinary measures against his employee.

It is settled law that, for a dismissal of an employee based on an allegation of crime to stand the allegation must first of all be proved. Savannah Bank Nig Plc v. Fakokum (2002) 1 NWLR (Pt. 749) 544

An unconfirmed employee does not enjoy the permanence of employment which a confirmed employee enjoys. Thus, in the termination of the employment of an employee on probation, no particular procedure needs be followed once the employer is satisfied that there is good cause for the termination and a reasonable notice is given. See Ihezukwu v. University of Jos (1990) 4 NWLR (Pt. 146) 598 (SC)

Remedy of Specific Performance or Reinstatement for Breach of Contract of Service.

The traditional common law rule which has been adopted and applied in many decisions of the courts in Nigeria is that the courts will not grant specific performance in respect of breach of contract of service. 

Thus, as a general rule, specific performance or reinstatement is not ordinarily the remedy for breach of contract of service. Special circumstances will be required before such a declaration is made and its making will usually be in the discretion of the court. Such special circumstances have been held to arise where the contract of employment has a legal or statutory flavour thus putting it over and above the ordinary master and servant relationship. Equally so where a special legal status such as a tenure of public office is attached to the contract of employment.See Olaniyan v. University of Lagos (1985) 2 NWLR (Pt.9) 599 (SC)

Where an employment protected by statute is terminated unlawfully, the remedy is to declare such termination null and void and to reinstate the employee to his former position. See Iderima v. R.S.C.S.C (2005) 16 NWLR (Pt. 951) 378 (SC)

Wrongful dismissal applies to a master servant relationship, and merely entitles an employee to the usual damages in terms of what he would have earned for the period of notice he is entitled to in the event of the termination of his employment.

Unlawful dismissal applies to the employment governed and protected by statute.A person whose employment is wrongfully terminated cannot get both damages and reinstatement concurrently See Kabelmetal Nig. Ltd v. Ativie (2002) 10 NWLR (Pt. 775) 250 (CA)

Assessment of Damages for Wrongful Termination of Employment 

In a claim for wrongful dismissal the measure of damages is prima facie the amount that the employee would have earned had the employment continued according to contract.

In the case of  Nigerian Produce Marketing Board v. Adewunmi (1972) 11 SC 111 at 117; (1972) NSCC 662 at 665, per Fatayi Williams JSC (as he then was) held:-

“In a claim for wrongful dismissal the measure of damages is prima facie the amount that the plaintiff would have earned had the employment continued according to contract [see Beckham v. Drake (1849) 2 HLC 579 at pages 607-608]. Where, however, the defendant, on giving the prescribed notice, has a right to terminate the contract before the end of the term, the damages awarded,apart from other entitlements, should be limited to the amount which would have been earned by the plaintiff over the period of notice bearing in mind that it is the duty of the plaintiff to minimize the damage which he sustains by the wrongful dismissal.” 

Is an Employer Bound to Justify the Termination of the Employment of His Employee

It is an established principle of law that at common law, a master can terminate the employment of his servant at any time and for any reason or for no reason at all. See the case of Olarewaju v. Afribank (2001) 6 MJSC 68 at 77, where the Supreme Court held that:

“The law regarding master and servant is not in doubt under this class of employment, there cannot be specific performance of a contract of service. The master has power to terminate the contract with his servant at any time and for no reason or for none.”

Termination of Employment with Statutory Flavour

An employment is said to have a statutory flavour when the appointment and termination is protected by statute or laid down regulations made to govern the procedure for employment and discipline of an employee. Any other employment outside that category is governed by the terms under which the parties agreed to be employer and employee.

Where the contract of employment is governed by the provisions of a statute or where the conditions are derived from statutory provisions, it invests the employee with a legal status than the ordinary one of master and servant.See Balogun v. University of Abuja (2002) 13 NWLR (Pt.783) 42 at 53, A, C-H, 62, paras D – G 

The rules and regulations which are claimed by an employee to be part of the terms and conditions of his employment capable of giving it statutory flavour and be of protection to the employee must:

(1) have statutory reinforcement or at any rate, be regarded as mandatory, 

(2) be directly applicable to the employee or persons of his cadre, 

(3) be seen to be intended for the protection of that employment; and 

(4) have been breached in the course of determining the employment; before they can be relied on        to challenge the validity of that determination.

See Idoniboye-Obu vs. N.N.P.C. (2003) 2 NWLR (Pt. 805) 589 at 624 paras. C-E. 

An employment which is protected by statute must be terminated in the way and manner prescribed by the relevant statute and any other manner of termination inconsistent with the statute will be null and void and of no effect

Termination of Employment at Will

An employment at will is when an employee holds an office at pleasure of the employer.

Termination of Employment on Ground of Misconduct 

Gross misconduct is defined as conduct of a grave and weighty character as to undermine the confidence which exists between the employee and his employer, or which works against the deep interest of the employer.Where an employee is found guilty of gross misconduct, he could be lawfully dismissed summarily without notice and without wages. UBN Ltd. v. Ogboh (1995) 2 NWLR (Pt.380) 647 (SC)

Where an employer removes an employee for misconduct, his removal cannot be justified in the absence of an adequate opportunity being offered to him to explain, justify or else defend the alleged misconduct. The audi alteram partem principle imposes a duty upon an employer to act fairly by giving the employee an opportunity to explain himself before taking any decision which affects the employee’s proprietory right.In the case of University of Calabar v. Essien (1996) 10 NWLR (Pt.447)  225 at 262, Iguh JSC held:

"Where an employer dismisses or terminates the appointment of an employee on ground of misconduct all that the employer needs establish to justify his action is to show that the allegation was disclosed to the employee that he was given a fair hearing, that is to say, that the rules of natural justice were not breached”

In Olatubosun v. Nigerian Institute for Social and Economic Research (1988) 3 NWLR (Pt. 80) 25 at 52 Oputa, JSC asserted:

"The right to fair hearing arises where there is an allegation of misconduct which may result and in fact did result in some form of punishment, deprivation of some right or loss of means of livelihood to the appellant. In every case of dismissal or termination of appointment which may vitally affect a man's career or his pension in such a case it is equally vitally important that the appellant is afforded ample opportunity to defend himself.”

In Yusuf v. Union Bank of Nigeria (1996) 39 LRCN 1139 at 1154 Wali JSC stated that before an employer can dispense with the services of his employee under the common law he needs to afford the employee an opportunity of being heard before exercising his power of summary dismissal.

In Akumechiel v. Benue Cement Co. Ltd. (1997) 1 NWLR (Pt.454) 695 at 703 Muntaka-coomassie, JCA held that where an employer removes an employee for misconduct, his removal cannot be justified in the absence of an adequate opportunity being offered to him to explain, justify or else defend the 

alleged misconduct.

Where the allegation against the employee is for gross misconduct which involves dishonesty bordering on criminality, prosecuting such an employee before a court of law is not a sine qua non for an employer to exercising disciplinary measures on the employee. Yusuf v. UBN Ltd (1996) 6 NWLR (Pt. 457) 632, Olarewaju v. Afribank (Nig) Plc. (2001) 13 NWLR (Pt. 731) 691 at 714 – 715.

Thus, where an employee has been found guilty by a disciplinary committee of gross-misconduct, the employer has a choice either to exercise his or its discretion in favour of prosecuting the erring employee or dismissing him summarily. See Olanrewaju v. AFRIBANK (supra) at page 510 lines 18 – 24.

Where an employee is found guilty for gross-misconducts, he can be summarily dismissed. See Keystone Bank Plc v. Kassim Yiggon (2013) LPELR-22131, where Bada, J.C.A. at pages 17-18, paras. D-A relying on the authority of Olanrewaju v. AFRIBANK (supra) held that:

"In this case under consideration, the Respondent was queried and he responded. In his response and in his testimony under cross examination he admitted counter signing forged cheques numbering ten in all. He also admitted posting N1.38 Million into a wrong account. In my humble view, with the admissions of the Respondent referred to above, he could be summarily dismissed. See: ALHAJI YUSUF VS. UNION BANK OF NIGERIA LTD. (1996) DELTA STATE LAW REPORT PART 1 AT PAGE 31." 

It is submitted that even if it is an offence known to law, whether an employee should be tried before a court of law before he is summarily dismissed depends on the circumstances of each case. In University of Agriculture, Makurdi v . Jack (2000) FWLR (Pt. 20) 720 at 744, the Court of Appeal distinguished Garba v. UNIMAID case (supra) when it held thus: 

“The Supreme Court did not lay down in GARBA v. UNIMAID that once there is a criminal allegation in the act or conduct of an employee, the employer will have no power to exercise disciplinary measure on him unless his guilt or otherwise is determined a criminal court. Far from it, all that the case lays is the necessity to preserve the constitutional right to fair hearing. It is by no means an authority which seeks to gag the power of the employer to sanitize its work force be removing undesirable elements in order to enhance the efficiency of its organization by putting in difficulty if not impossible conditions; by employing criminal jurisprudence in order to present the employer with a fait accompli ....”

Termination of Employment on Ground of Criminal Offences

An attempt by counsel to equate the criminal offence of stealing with mere misconduct or gross misconduct was held to be cosmetic and mere sophistry. There is a world of difference between gross misconduct and a criminal offence. They are neither synonymous nor interchangeable and they have different denotations and connotations. They mean different things with different legal implications and considerations. In Jibril v. Mil. Admin. of Kwara State (supra), it was held that:

"There must be a clear distinction between gross misconduct, that is administer insubordination and dishonest, e.g., telling lies, which is not serious enough to be labeled as a "criminal offence" on the one hand, and the allegation of outright commission of an offence contrary to the penal of criminal code..."

Allegations such as “malpractices” and “financial irregularities” have been held not to constitute offences known to our criminal law. This was the decision of the Supreme Court in Olanrewaju v. Afribank Plc (2001) FWLR (Pt. 72) 2008 at 2017, Para. C – D.

In Olanrewaju’s case (supra) at page 2016 para. H the Supreme Court held further that:

“The cases of Garba v University of Maiduguri (supra) and Anakim v U.B.N. Ltd (1994) 1 NWLR (Pt. 322) 557 relied upon by the appellant and the trial court are not relevant to the circumstances of the present case. They are distinguishable from it. In Garba’s case a particular criminal offence known to law was committed while none was committed in the instant case”. 

It should be noted that, the cases of Yissa v. Benue State Judicial Service Commission (2005) All FWLR (Pt. 277) 856; Arinse vs. FBN Plc. (2004) 18 NSCQR 429 ; Osagie vs. New Nigeria Bank Plc. (2005) All FWLR (Pt. 257) 1485; Bamgboye vs. University of Ilorin (2001) FWLR (Pt. 32) 12 ; Uzoho vs. Task Force on Hospital Management (2004) 5 NWLR (Pt. 867) 622; Yusuf vs. UBN (1996) 6 NWLR (Pt 457) 632 and Olaruwaju vs. Afribank (Nig.) Plc. (2001) FWLR (Pt. 72) 517 are inapplicable to allegation of criminal offences 

Where there is an allegation of the commission of criminal offence against a person, which has been denied by the accused, the person making the accusation of the commission of the criminal offences must satisfy the constitutional requirement by establishing the guilt of the accused according to law. 

Where the Court of Appeal found that, the employee never admitted stealing the sum of eleven million naira and was neither confronted with the allegation before she was dismissed the Court held that, there was a need to establish her guilt of the theft of the eleven million naira in a competent court or judicial tribunal before her dismissal and that this:

 “has been the position of the law as established in a plethora of cases of Sofekun vs. Akinyemi (1980) 5 - 7 SC 1; Denloye vs. M. D. P. D. C. (1968) 1 All NLR 306; Ekperokun vs. Unilag (1986) 3 NWLR (Pt. 34) 162; Olatunbosun vs. NISER (1988) 3 NWLR (Pt. 80) 25 and FCSC & 2 Ors. vs. Laoye (1989) 2 NWLR (Pt. 106) 652, just to mention a few”.

Where allegation of the commission of criminal offences has been denied and disputed, the burden rests on the accuser to prove the Commission of the alleged criminal offences beyond reasonable doubt. This burden can only be discharged by a court established by law and constitutional vested with powers to exercise criminal jurisdiction. Dangtoe v. C. S. C. Plateau State (supra) at page 157, Karibi- Whyte Obaseki, JSC, in Garba vs. University of Maiduguri (1986) 1 NWLR (Pt. 18) 550, puts it this way:

"There is under our law no sliding scale of elements of satisfaction as to the guilt of a person of an offence. The appearance of guilt is not delusory appearance of guilt. The appearance of guilt which can satisfy this action is measured by the quantum of proof as laid down by law. It is for this reason that guilt in criminal matters is left for the ascertainment of court of law or other tribunals before it is accepted and acted upon by Administrative Tribunals."

Thus, it should be noted that judicial powers are not vested in the Investigating Panel established or constituted by an employee. Therefore, any purported exercise of judicial powers by such a Panel is a denial of the right of fair hearing under section 36(1) and (4) of the 1999 Constitution. In Dangtoe v. C. S. C. Plateau State (supra) at page 158, Karibi- Whyte held thus:

"Where there is an accusation of the commission of criminal offences, the burden of proof to be established by the accuser before a criminal tribunal established by law is that the Commission of the offence has been proved beyond reasonable doubt. An administrative body cannot usurp the constitutional function of the courts by making a finding of guilt in such cases..."

Conclusion

Ordinarily, employer and employee disputes may be resolved by mediation or negotiation or arbitration, if it is so agreed in the contract of employment. 

However, due to the power imbalance between the parties, some of these disputes are bound to end up in the National Industrial Court for determination.

For further legal illumination on employer and employee dispute resolution you may contact Akintunde Esan.

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