Kelechi Adiele & Co. (2026)

05/04/2018

COLLECTION OF ENTITLEMENTS UPON TERMINATION DEBARS AN EMPLOYEE FROM SUING FOR UNLAWFUL TERMINATION
By: Kelechi Adiele (LL.M)

The employment relationship between an employer and an employee is usually governed by the terms upon which both parties have agreed to work together. Though, as a general rule, a contract of employment may be oral, written or even implied from the circumstances of each case, Section 7 of the Labour Act provides that not later than three months after the beginning of a worker’s period of employment, the employer is to give the worker a written statement specifying the names of the employer and the worker, the nature of the employment, the expiry date of the contract if it is for a fixed term, the period of notice required to terminate the contract, wages payable to the worker, etc. An employer who fails to give the written statement to his worker within the stipulated time frame commits an offence under Section 20 of the Labour Act.

The terms of an employment could therefore be found in a letter of offer of employment, Terms and Conditions of Employment, Staff Manual, formal Contract of Employment, Statutes or Regulations made pursuant thereto (in the case of employments with statutory flavour), or other memoranda between the parties. The terms of employment would usually specify in what circumstances the employment relationship could be brought to an end, and the length of notice required to terminate the employment. Any termination of employment or dismissal which does not conform to the requirements of the terms of employment is liable to be declared wrongful or unlawful as the case may be, by the courts.

In other words, where an employer terminates the employment of an employee in a manner inconsistent with the terms of employment, the employee reserves the right to challenge the purported termination before a court of competent jurisdiction and claim damages for wrongful termination, or reinstatement in the case of employments with statutory flavour. By virtue of the 3rd Alteration Act, 2010, which amended the 1999 Constitution of the Federal Republic of Nigeria, the National Industrial Court is vested with exclusive jurisdiction to entertain all such matters.

However, there are instances where an employer terminates the employment of a worker in a manner inconsistent with the worker’s terms of employment, but nevertheless pays the worker his arrears of salary, terminal benefits or other entitlements. A good example is where an employer fails to serve the requisite length of notice on the worker before termination, or where an employer unilaterally terminates a contract expressed to be for a fixed term before the due date. In such circumstances, a worker who collects the payment made by the employer would be prevented from subsequently challenging the propriety of his termination.

This position of the law was aptly restated by the National Industrial Court in the case case of Egbe V. Union Bank Plc. & Anor (2015) 58 NLLR (Pt.200) 192 at 297, paras. D-G, as follows:

“Where an employee accepts salary or other payment like his gratuity after employment is brought to an end he cannot be heard to complain later that his contract of employment was not properly determined”.

In the case of Odiase V. Auchi Polytechnic (2015) 60 NLLR (Pt. 208) 1, at 29, paras. B-E, the Court of Appeal, relying on the Supreme Court decision in the earlier case of Morohunfola V. Kwara State College of Technology (1990) 4 NWLR (Pt. 145) 506 equally echoed the same position in the following words of Ige JCA:

“An employee having accepted his entitlements cannot thereafter bring an action for wrongful termination or be heard to complain that his contract of employment was not validly or properly determined. Such a conduct renders the determination mutual”.

A good understanding of the above reality would certainly guide both the employer and the employee in taking steps to bring their employment relationship to an end.

• Kelechi Adiele is the Senior Editor of Nigerian Labour Law Reports (NLLR). He can be reached on 08056501351, 07067956883 or [email protected].

10/06/2017

EMPLOYEE CONTINUING TO WORK AFTER PROBATION PERIOD WITHOUT A NEW CONTRACT: LEGAL EFFECT OF

By: Kelechi Adiele

It is not unusual for employers of labour to put their new employees on probation for a definite period of time. This provides the employer the opportunity to observe the performance of an employee in a particular job function to determine whether or not he or she is suitable for a permanent employment.

The rationale for putting an employee on probation was recently restated by the National Industrial Court in the case of Ogbonna v. Neptune Software Limited (2016) 64 NLLR (Pt. 228) 511 at 541, paragraph E, as follows:

“A major rationale for putting an employee on probation is simply to give the employer an assurance that the employee is a fit and proper person to be placed on permanent appointment”.

An employment on probation is therefore a temporary employment in which the employee is placed under observation for the duration of the probation period, to determine his or her suitability for a permanent employment. Under a probationary employment relationship, the employer reserves the right to determine whether or not to confirm the employment of at the expiration of the probation period. The employer may also lawfully dismiss or terminate an employee’s appointment during the probation period, and is not under an obligation to give notice of termination to an employee who is on probation until the employment is confirmed. See Ogbonna V. Neptune Software Limited (Supra).

There are instances, however, where an employee placed on probation continues to work after the probation period without the employer either confirming the appointment or handing a new contract of employment to the employee. The legal effect of this scenario was also recently addressed by the National Industrial Court in the case of Ikhuemeso v. Daar Communications Plc. (2016) 64 NLLR (Pt. 227) 406 at 433-434, Paras. H-B, where the Court held as follows:

“The continuation of services after the expiry of the probation period without a new contract being drawn up is equivalent to the conclusion of a contract of indeterminate duration which takes effect on the date on which the probation period began. In other words, where the worker continues to work after the probation period, the contract is deemed to have been concluded on the date on which the probation period began”.

The implication of the above is that where after the expiry of his probation period, a worker is neither confirmed nor given a fresh contract, but he continues to work with the knowledge and acquiescence of the employer, all the incidents of a probationary employment cease, and the law presumes the existence of a substantive employment with effect from the date the probationary employment began. This means that the employer cannot subsequently purport to exercise any right not to confirm the employee; neither can the employer terminate the employment of the employee without notice.

CONCLUSION

At the inception of employment, an employer has ample opportunity to determine the terms and conditions of employment of its staff. However, where a probationary employment is given to a staff, the employer must ensure that it promptly takes a position at the expiration of the probation period as to whether or not to confirm the staff in question. Where a decision is taken to confirm a staff, a fresh contract embodying the terms of the substantive employment must be promptly executed so as to leave no room for presumption of a contract of employment whose terms the employer may not have envisaged or expressly specified.

• Kelechi Adiele is the Principal Attorney of Kelechi Adiele &
Co. and the Senior Editor of Nigerian Labour Law Reports
(NLLR). He can be reached on 08056501351,
07067956883 or [email protected].

12/01/2016

WHO CAN ENFORCE A CONTRACT?

Where a valid contract is breached by any of the parties, the innocent party can bring an action in court to compel the defaulting party to fulfill his obligations under the contract. He can also claim damages for the breach, or injunction to prevent further breach. “Damages” is the amount of money awarded by the court to compensate a party for the breach of contract or wrongful action of another party. A contract is therefore, said to be enforceable when any of the parties can sue on it.

However, it is not just anybody that can sue to enforce a contract. The law is that it is only the parties to a contract themselves who can sue to enforce it. As a general rule, a third party cannot sue to enforce a contract even when it is made for his benefit. This is what is known as privity of contract. Thus, if ‘A’ enters into an agreement with ‘B’, requiring ‘B’ to build a house for ‘C’, ‘C’ cannot sue ‘B’ for failure to build the house, simply because ‘C’ was not a party to the agreement between ‘A’ and ‘B’.

The doctrine of privity of contract has its roots in English law, and was expounded in the age-long case of Dunlop Pneumatic Tyre Co Ltd V. Selfridge & Co [1915] AC 847, at 853, where Viscount Haldane made the following apt remarks:

"My Lords, in the law of England certain principles are fundamental. One is that only a person who was party to a contract can sue on it. Our law knows nothing of a jus quaesitum tertio [third party right of action] arising by way of contract".

Another aspect of the doctrine is that a contract can only bind the parties thereto. A third party cannot be bound by a contract between ‘A’ and ‘B’ to which he is not himself a party. In other words, both benefits and obligations created under a contract are enforceable only by the parties to the contract, and not by third parties.

The above-stated position is however, a general rule, and as is the case with all general rules, there are some exceptions. A third party may therefore be able to enforce a contract in any of the circumstances described below:

1. Where the contract is a third party insurance contract
Third party insurance contracts are agreements between an insurer (usually the insurance company) and the insured (the person taking up the insurance policy) by which the insurer in consideration of payment (premium) made by the insured, assumes the obligation to pay a specified sum of money to a person or class of persons upon the occurrence of a given incident. A good example is motor vehicle third party insurance.

Section 6 (3) of the Motor Vehicles (Third Party Insurance) Act - CAP M22 Laws of the Federation of Nigeria, 2004, provides as follows:

"Notwithstanding anything in any written law contained, a person issuing a policy of insurance under this section shall be liable to indemnify the persons or classes of person specified in the policy in respect of any liability which the policy purports to cover in the case of those persons or classes of person".

Under the above law, it is mandatory for every vehicle owner to take out a third party insurance policy. The insurance contract, even though made between the insurer and the insured is for the benefit of third parties, and upon the occurrence of the insured risk (accident or damage caused by the insured vehicle), the third party can legally claim benefit of the contract from the insurer. This constitutes a statutory exception to the doctrine of privity of contract.

2. Where the parties enter into contract as agents
Agency is a fiduciary relationship between two parties in which one (the 'agent') is authorized by the other (the 'principal') to perform certain acts, for and on behalf of the principal. It is based on the maxim qui facit per alium facit per se (He who acts through another does the act himself).The principal is bound by the acts of the agent performed within the scope of the agent's authority. An agency can be created in any of the following ways:

i. By express agreement, whether oral or written,
ii. By implication, based on the custom or practice of the trade, or
iii. By conduct of the principal.

The rule here is that if one of the contracting parties contracts as an agent, then either the agent or the principal, but not both, can sue to enforce the contract.

…to be continued.

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03/07/2014

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