Termination
Nigeria
Grounds
Usually, the employment contract provides for termination of employment, and, where the contract of employment makes explicit provision for termination, said termination of the employment must be done in accordance with the prescribed procedure. The statutory obligation which applies only to manual and clerical workers is that required notice is given for termination of employment. Some decisions of the National Industrial Court of Nigeria (NICN) state that employers are required to state valid reasons for the termination in the notice of termination. Failure to do so may amount to wrongful termination and give rise to a cause of action for breach of contract. These decisions must be affirmed by the Supreme Court – the highest court – to be widely judicially recognized.
Employees subject to termination laws
All employees.
Restricted or prohibited terminations
Termination of employment is prohibited during maternity leave. In addition, employees in the oil and gas industry (particularly persons employed by the holder of an oil prospecting license, oil mining lease, or any other license or a permit issued under the Petroleum Act) cannot be terminated without the consent of the Department of Petroleum Resources (DPR), now the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
Third-party approval for termination/termination documents
No 3rd-party approval for termination or termination documents, except in the oil and gas industry, where the consent of the NUPRC is required.
Mass layoff rules
An employer may terminate an employment on the basis of a mass layoff/redundancy. However, there are prescribed rules that must be complied with. The redundancy must be within the meaning of the Labour Act, which defines redundancy as an involuntary and permanent loss of employment caused by an excess of manpower.
In the event of redundancy, the employer is required to inform the trade union, if any, of the reason and the extent of the anticipated redundancy. The principle of "last in, first out" shall be adopted in the discharge of the particular category of workers affected, subject to factors such as skill, ability and reliability. Employers are also expected to use their best efforts to negotiate redundancy payments.
Where the employee falls within the scope of the Labour Act, the following steps must be taken in a redundancy:
- The principle of "last in, first out" must be adopted in the termination of employees by redundancy, subject to all factors of relative merit, including skill, ability and reliability
- The employer is required to negotiate redundancy payment with the affected workers and
- Where the employee is a member of a trade union, the employer must notify the applicable trade union of the reasons for the redundancy.
Please note that this process applies to only manual and clerical workers. For other categories of employees, the steps outlined above are used as a guide but are not mandatory.
For other categories of employees not covered under the Labour Act, the terms of the individual employment contracts and policies of the employer will determine the applicable procedure and payment on redundancy.
With regard to the oil and gas industry in Nigeria, the guidelines for release of staff which was issued by the Director of the Department of Petroleum under the Petroleum (Drilling and Production) (Amendment) Regulations, 1988 provide that the holder of an oil mining lease, license or permit issued under the Petroleum Act 1969 or regulations made thereunder or any person registered to provide any services in relation thereto shall not remove any worker from their employment except in accordance with guidelines that may be specified from time to time by the Minister. Furthermore, the prior consent of the NUPRC. is required for the release of any worker employed by the holder of an oil mining lease, license or permit under the Petroleum Act.
In the oil and gas sector, an employer is also required to obtain the approval of the Minister of Petroleum Resources, through the NUPRC, prior to declaring any employee redundant.
Failure to inform & consult
The courts have held that failure to notify the trade union does not invalidate the redundancy. The right conferred on trade unions is merely a right to be informed, and no sanction is provided for failure by employers to do so.
Notice
The Labour Act provides for termination with notice or payment in lieu of notice. In practice, the notice period is typically 30 days’ reciprocal notice for non- senior employees, and at least 30 days’ reciprocal notice for senior employees, as set forth in the employee’s employment agreement. Where allegations of misconduct giving rise to immediate dismissal have been made against an employee, the employer is not required to give notice. However, the employer must provide an avenue for the employee to be heard, usually through a disciplinary hearing, and afforded opportunities for representation prior to any decision being made on the dismissal.
Statutory right to pay in lieu of notice or garden leave
Where the employment contract provides for pay in lieu of notice, either party terminating the contract may decide to pay in lieu of notice. Garden leave is not provided for under the Nigerian Law and is not a common practice in Nigeria, but some employment contracts provide for the same.
Severance
For manual and clerical workers (who are covered by the Labour Act), redundancy pay is mandatory. The law does not stipulate the amount to be paid as redundancy pay; the law only provides that the employer should use its best endeavors to negotiate redundancy payments. For employees not covered by the Labour Act, severance pay is usually subject to the provisions of the employment contract, policies of the employer or collective agreement.