Termination vs dismissal in Nigeria: what employers and employees should know
Notice, pay in lieu, summary dismissal and fair process — the essentials for ending an employment relationship lawfully.
Ending employment is one of the most common sources of workplace disputes. Whether you are an employer or an employee, the key questions are the same: what does the contract say, what does the law require, and was a fair process followed?
Termination and dismissal are different
- Termination ends the relationship in line with the contract — usually by giving the agreed notice, or paying salary in lieu of notice. It does not need to imply wrongdoing.
- Summary dismissal ends employment immediately, without notice, typically for gross misconduct. Because of its serious consequences, it should follow a fair hearing: the employee should know the allegation and have a chance to respond.
Notice periods
The contract of employment usually sets the notice period. For workers covered by the Labour Act, section 11 provides minimum notice periods that increase with length of service — from one day (for up to three months’ service) to one month (for five years or more). A contract may give more, but not less, than the statutory minimum.
What employees are entitled to on exit
- Salary up to the last working day, and pay in lieu of notice where notice is not worked.
- Accrued benefits under the contract or handbook (for example, leave allowance).
- Pension contributions properly remitted under the Pension Reform Act 2014.
- Any redundancy benefits agreed or provided for, where the exit is a redundancy.
Redundancy
Where roles are cut for economic or restructuring reasons, section 20 of the Labour Act requires the employer to inform the workers’ union, apply fair selection criteria (the “last in, first out” principle, subject to relevant factors such as skill and efficiency), and use best endeavours to negotiate redundancy payments.
The National Industrial Court
Employment and labour disputes are heard by the National Industrial Court of Nigeria, which has exclusive jurisdiction in these matters and has been willing to consider unfair labour practices and international best practice, alongside the contract.
Practical tips
- Employers: keep contracts and handbooks current, document performance issues, and follow your own disciplinary process.
- Employees: keep your contract, payslips and correspondence; respond to queries in writing; take advice before signing a settlement.
Every situation is different — for advice on yours, speak with our team in confidence.