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Some Legal Issues In Termination Of Contract Of Employment

Economic downturn as well as other expediencies may render the downsizing of a workforce inevitable. In other cases, the very need of business survival may dictate that the employment of some employee(s) be terminated. Also, an employee may desire a new employment or may just want to relieve himself of his employment. In any case, the respective parties desire to terminate the employment. In terminating an employment, a person consciously desires and decides to bring the employment relation to an end. Notably, an employer and employee both enjoys the right to terminate the employment with or without giving any reason. However, while they reserve the right to terminate the employment, care must be taken to ensure that the terms and conditions of the employment contract are strictly complied with as failure in compliance may render the termination wrongful. Wrongful termination of employment can lead to lengthy resource draining and avoidable litigation. This apparently seems to be due mostly to insufficient appreciation of the legal considerations in termination of contract of employment.

The first step to terminating an employment must be a careful consideration and perusal of the provisions of the contract of employment: an employer is obligated to give a written contract of employment to an employee not later than three months after the employment has begun. A careful consideration of the contract should reveal any stated termination procedure to be followed, if any. It should also necessarily disclose the length of notice, if any, required to terminate the contract. The importance of the contract of employment is strengthened by the fact that the court have consistently held that parties are bound by their contract.

Secondly, having perused the contract of employment, the person desiring to terminate the contract of employment, if the employer, is to draft a notice of termination of the employment. Such notice addressed to the employee must be in writing, stating the fact that the service of the employee is no longer needed. If the employee desires to terminate his employment, he can do so by writing a resignation letter to the employer. The resignation letter effect to give notice of termination of the employment contract by the employee to the employer. As constraining and notwithstanding the difficulty that an employer may be put into by the resignation of an employee, it must be noted that an employer cannot refuse to accept the resignation letter as that would imply that the employee is being forced to work against his freewill. This will amount to “forced labour” in violation of the employee’s right to dignity of his person as provided for under section 34(1)c of the 1999 Constitution of Nigeria. The employer is therefore bound to accept the resignation letter. The remedy of the employer may lie in damages if the employee did not comply with the terms of the contract of employment in bringing the employment to an end.

Thirdly, the effective date of termination of the contract must be stated in the notice of termination or resignation letter and must not be less than the period required in the contract of employment, if any, or by law to terminate the contract. In calculating the length of notice, the date of service of the notice is deemed excluded. If no provision is made for the length of notice in the contract of employment, section 11(2) of the Labour Act provides that the length of notice shall be as follows:

a. One day, where the contract has continued for a period of three months or less;

b. One week, where the contract has continued for more than three months but less than two years;

c. Two weeks, where the contract has continued for a period of two years but less than five;

d. One month, where the contract has continued for five years or more.

To dispense with the required notice, either party may validly terminate the contract by making payment in lieu of notice to the other party. Such payment is to cover the period of notice. Once a party accept such payment, generally, he may not be able to validly contest the validity of the termination.

Furthermore, an employer is at liberty to terminate an employment without giving any reason. However, if he gives a reason, then the reason must be substantiated. Hence, when an employment is to be terminated on ground of misconduct, the termination is properly referred to as a “dismissal”. In such instance, the employer must ensure that the employee is given fair hearing: the employee must be heard and given opportunity to defend himself before he may be dismissed. Failure to afford the employee fair hearing may render the purported dismissal wrongful and the employer may be liable for damages. It follows that though a mere termination and a dismissal both have the effect of bringing the employment to an end, the procedure for a mere termination of employment and dismissal differs. A dismissal is a punitive measure taken against an employee for acts of misconduct. It is utilized in dealing with acts “of some grave and weighty character that it undermines the relationship of confidence which must exist between a master and a servant.” It is the very punitive nature of a dismissal that makes it incumbent on an employer to give the employee fair hearing before his eventual dismissal. In the event of a dismissal, prior notice of termination of the employment is not required. However, to properly terminate the employment, the fact of the termination/dismissal must be communicated to the employee and until such notice is conveyed to him, the employee is entitled to treat the employment as subsisting.

Summarily, it is necessary to understand and adhere to legal procedures in the event that an employment relation is to be brought to an end. Failure to adhere to any of the legal stipulations may render the termination wrongful and the defaulter may be held liable for damages if it’s an employment in the private sector. On the other hand, if it is an employment in the public sector, an order of specific performance directing that the employee be reinstated may be granted or damages may be awarded against the employer. It therefore behooves on the parties to seek proper legal guidance in dealing with issues of employments or termination of employment to protect one against needless litigation and avoidable cost.

Article by Benjamin Idahosa Carson nosa4krist@gmail.com 08180461455, & Borviga Yor-Yor aborviga@gmail.com 08134840667

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