A Critical Look At Wrongful Dismissal/Termination

Adeola Fadiran, LL.B, BL. (Harlem Solicitors, Bodija, Ibadan)

Termination and dismissal bring an employment relationship an end.

A contract of master and servant may be either subject to statutory or common law rules.

On the one hand, contracts with statutory flavour are contracts involving an employer created by a statute. Such contracts are governed by the statute which created the employer. A contract is one with statutory flavour where the conditions for appointment and termination of the contract are governed by an enabling statute. Consequently, a valid appointment or termination of the contract must satisfy provisions in the statute.

On the other hand, contracts of master and servant without statutory flavour are classified as ordinary contracts of service. Such contracts are governed by an employee handbook where the conditions of service are spelt out. The employer can terminate the service of the employee with or without reasons. OFORISHE V. N.G.C. LTD. (2018) 2 NWLR (Pt.1602) 35 S.C.

Further, the intention and motive for termination of the employment is never considered by the courts. They are irrelevant. The termination of employment would be lawful if the terms of the contract of service between the employer and the employee are complied with. OLANIYAN V. UNIVERSITY OF LAGOS (1985) 2 NWLR (Pt.9) 599 Pp. 53-54.

There are three possible types of contracts of employment:

  1. Contract determinable by notice
  2. Contract for a fixed term
  3. Contract which expires by performance or on the happening of a specified
  4. Contract determinable by notice

It provides for termination by either party giving a specified and pre-agreed period of notice. In this case, the contract comes to an end when either party exercises right to give notice of intention to bring the employment relationship to an end. Section 11 (1) of the Labour Act Cap 198 Laws of the Federation of Nigeria 1990 provides for termination by notice. The Section states:

“Either party to a contract of employment may terminate the contract on the expiration of notice given by him to the other party of his intention to do so. The notice to be given for the purposes of subsection (1) above shall be:-

One day, where the contract has continued for  period of three months, or less, one week, where the contract has continued for more than three months but less than two years.

Two weeks, where the contract has continued for a period of two years but less than five years and, one month, where the contract has continued for five years or more. Any notice for a period of one week or more shall be in writing. The periods of notice specified in subsection (2) above exclude the day on which notice is given. Nothing in this section affects any right of either party to a  contract to treat the contract as terminable without notice by reason of such conduct by the other party as would have enabled him so to treat it before the making of this Act.

Nothing in this section shall prevent either party to a contract from waiving his right to notice on any occasion, or from accepting a payment in lieu of notice.

All wages payable in money shall be paid on or before the expiry of any period of notice. If an employer gives notice to terminate the contract of employment of a worker who has been continuously employed for three months or more, the employer shall not be liable under this section to make any payment in respect of a period during which the worker is absent from work with the leave of the employer granted at the request of the worker; see section 11(8) of the Act. In the calculation of a payment in lieu of notice, only that part of the wages which a worker receives in money, exclusive of overtime and other allowances, shall be taken into account”.

It is my humble opinion that the provisions of section 11 of the Labour Act are prejudicial to the common law right of an employer to dismiss without notice for certain gross offences which, by decided cases and well recognised practices, have been regarded as constituting gross misconduct.

Legal requirements as to notice of termination

Notice of termination must be in clear and unambiguous term. From decided employment law cases, it is clear that as a matter of law, an employer cannot effectively dismiss his employee by saying- “I intend to dispense with your services at some time in the coming months”. This notice is imprecise and therefore ineffectual. In order to terminate a contract of employment, the notice must either specify the date or contain material details from which the date is positively ascertainable: HONICA SAWMILL (NIGERIA) LTD. V. HOFF (1992) 4 NWLR 238, 673 particularly 675.

Payment in lieu of notice

Where a contract of service gives a party a right of termination of the contract by either party giving a particular length of notice or payment in lieu of notice, and the latter course is chosen, the party seeking to put an end to the contract must pay to the other party the salary in lieu of notice at the time of the termination of the contract. It is not sufficient that in the letter of termination, he offers to pay salary in lieu of notice: CHUKWUMA V. SHELL PETROLEUM (1993) 4 NWLR 89, 512-522.

Contract stipulating no notice of termination.

In the case of Ajolore v. Kwara State College of Technology & Another (1980) FLNR 414, Justice  Kawu C.J presiding held: where there is no stipulation as to the procedure whereby a contract of employment can be terminated by either party, the Court itself will decide what would be a reasonable period of notice having regard to the plaintiff’s status in the employment.

Also, in Maiduguri Flour Mills Ltd v. Abba (1996) 9 NWLR at 506, it was held that where a contract of service is silent on the notice of termination of the contract, then reasonable notice will be implied.

  1. Contract for a Fixed Term

Contract for a fixed term can be defined as a contract where the term of employment is pre-determined at the commencement of the contractual relationship. In Swiss Nigeria Wood Industries Ltd v. Bogo (1970) 1 UILR 337, the respondent was engaged for a fixed period of two years as Deputy Managing Director of the defendant company on a salary of N7,200 per annum but was dismissed after ten months of service for no justifiable reason. The Supreme Court said that the company was not justified in terminating the appointment and held the company liable to pay the respondent the full salary he would earned for the unexpired period of fourteen months. Also, in Garabadia v. Jarmakani (1961) 1 ALL NLR 177, the Supreme Court said that a servant in such a situation should minimise his damage.

  1. Contract Expiring by Performance or on the Happening of a Specified Event

Where, under the terms of a contract, an employee is employed to perform a specified duty of indeterminate duration, then it will be taken that the contract of service expires at the completion of the specific task. In a situation where there is a notice clause in the contract, then the court will be most unlikely to treat it as one determinable by performance: McClelland v. Northern Ireland General Health Service Board (1957) 1 WLR 594.

Right of an Employer to terminate employment without reason under common

Any employer of labour does not have any obligation to retain the services of any unwanted employee and may terminate the appointment of the employee without any reason. The terms of contract of service are the bedrock of any case where the issue of wrongful termination of employment calls for determination. Even at this, the remedy available for breach lies in damages only.

What is wrongful dismissal?

Wrongful dismissal is usually the claim of an employee at common law where he contends that his contract has been wrongfully repudiated by the employer or where he feels that his contract has not been brought to an end in accordance with the procedure laid down by the contract.

Remedies for wrongful dismissal/termination

In contracts with statutory flavour where the termination of employment of an employee is found to be wrong, the court may order specific performance of the contract, injunction or reinstatement. However, employees whose appointments are terminated in simple contracts of master and servant have the remedy of damages, and the employees must mitigate those damages: OLATUNBOSUN V. NISER COUNCIL (1988) 3 NWLR (Pt. 80) 25.

  1. Measure of damages for unlawful dismissal/termination of employment

The general principle underlying the assessment of damages in contract is that of restitutio in integrum, but this principle is restrictively applied to cases of wrongful dismissal. Thus, in WESTERN NIGERIA DEVELOPMENT CORPORATION V. JIMOH ABIMBOLA (1966) NMLR 381, it was held that the measure of damages for wrongful dismissal is prima facie the amount the plaintiff would have earned had he continued with the employment. In this case, the plaintiff was not given one month’s notice before the termination of his appointment and the court held that he was entitled to one month’s salary in the absence of notice, and that was all he could get as damages.

Therefore, in most cases of wrongful dismissal, the plaintiff may not recover more than the pay for the contractual notice period. The damages recoverable are the losses reasonably foreseeable by the parties and foreseen by them at the time of the contract as inevitably arising if one breaks faith with the other. Such a loss does not take account of speculative or sentimental values and as was said in Ajolore v. Kwara State College of Technology (supra). The court, in awarding damages, will not include compensation for injured feelings or the loss that may have been sustained from the fact that his having been dismissed makes it more difficult to obtain fresh employment. Also, in B.S Onalaja v. African Petroleum Limited (1991) 6 NWLR  198, 492, the Court of Appeal, Ibadan Division, held:

“The measure of damages in cases of wrongful dismissal is always the amount of money that is payable during the period of notice to be given by the employer as stipulated in the contract of employment and not salaries up to retirement age. If no period of notice was prescribed then the common law rule will apply, namely that a reasonable period would be given, usually one month or three months, depending on the category of staff being dismissed.”

The Supreme Court in KATTO v. CBN (1999) 6 NWLR 607, in discussing the remedy available to an employee whose employment is wrongfully terminated in ordinary master and servant relationship, said: “In ordinary contracts of employment where the terms provide for one month’s notice before termination or salary in lieu thereof, the only remedy an employee who is wrongfully terminated can get is a month’s salary in lieu of notice and any other legitimate entitlements due to him at the time the employment was brought to an end”

Furthermore, the Supreme Court in OKONGWU v. NNPC (1989) 4 NWLR (pt. 115) 296, said:

“The terms “general” and “special” damages are normally inept in the categorization of damages for the purposes of awards in cases of breach of contract. Apart from damages naturally resulting from the breach, no other form of general damages can be contemplated.”

Damages in respect of breach of contract should be such as:-

  1. may fairly and reasonably be expected to arise naturally i.e. according to the usual course of things from such breach of contract itself; or
  2. may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it.

The principle of assessment of damages for breach of contract is RESTITUTIO IN INTEGRUM – that in so far as the damages are not too remote, the plaintiff shall be restored, as far as money can do it, into the position in which he would have been if the breach had not occurred. The principle is not RESTITUTIO IN OPULENTIAM – giving him a windfall.

  1. Injunction and the Prerogative Remedies

The general principle is that specific performance  will not be ordered in respect of obligation to perform personal services. But the courts conceded that there are special circumstances in the case which enables them to grant the injunction.

In England, the courts in recent years, prompted by the decision in Hill v CA Pearson (1972) Ch. 305; (1971) 3 ALL ER 1345,  have shown greater willingness than had hitherto been the case to grant the equitable remedy of injunction in some very exceptional cases. It must however, be said that unless the right to unfair dismissal is recognised by our law and the right to work is made legally enforceable, it is highly unlikely that similar remedies will be extended to Nigerian workers.

  1. Reinstatement

In the case of employment protected by statute, the Supreme Court has ordered reinstatement in appropriate cases. A case in point is OLANIYAN & ORS. V. UNIVERSITY OF LAGOS (1989) 2 NWLR (Pt. 9) 599 SC where reinstatement was ordered by the Supreme Court because dismissal was not in accordance with the statutory procedure laid down for the termination of such appointments.

It is important to know that this remedy has been so far granted only to people holding public office under the statute or under the constitution or under a statutory instrument which established a public institution.

What an employee alleging wrongful termination of employment must prove-

Where an employee complains that his employment was wrongfully terminated, he has the onus to prove the wrong by:

  1. placing before the court, the terms and conditions of the contract of employment; and
  2. proving in what manner the said terms were breached by the employer.

The terms of contract of service are the bedrock of any case where the issue of wrongful termination of employment calls for determination.

In conclusion, an employer of labour does not have an obligation to retain the services of an unwanted employee and may terminate the appointment of the employee without any reason. However, in a simple contracts of service, the termination must be in accordance with the terms of the contract of employment/employee handbook while in contracts with statutory flavour, conditions for termination are governed by an enabling statute.

Adeola Fadiran can be reached via email: adeola.fadiran@harlemsolicitors.com


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