Termination of Employment: Things You Should Know

Termination of Employment contract is one of the most difficult aspects of Human Resource Management, depending on the side of the divide you are. It is one assignment many HR Managers or whoever that manages the assigned role of workforce management deplores because it is a negative role, but a difficult aspect of the job that must be executed. This was one of my albatross as a Human Resource Manager, when I worked in one organisation because the Managing Director always used it wrongly as a threat to employees which should not be – it could be very demotivating!

According to Wikipedia, “termination of employment is an employee’s departure from a job and the end of an employee’s duration with an employer. Termination may be voluntary on the employee’s part, or it may be at the hands of the employer, often in the form of dismissal (firing) or a layoff”.

“Termination of employment refers to the end of an employee’s work with a company. Termination may be voluntary, as when a worker leaves of their own accord, or involuntary, in the case of a company downsize or layoff, or if an employee is fired” – Investopedia.

Termination of employment according to Oladosu O. in his book, The Nigerian Labour and Employment Law, “is the bringing to an end the employment relationship”. It is the severance of relationship between the employer and employee.

Termination of employment could occur from either the employer or employee but should meet the written terms of the contract. The employer nor the employee is neither under any obligation to give reasons for the termination of employment contract.

You should know that Section 11 of the Labour Act in terms of contract of employment, provides for a compulsory issuance of notice or payment in lieu of notice by either party. Section 11(6) of the same act provides that “the right”to notice may be waived by ether party to the contract of employment by a payment in lieu of notice“.

Be reminded that contract of employment may not always be a written document; all that is required is that parties involved should reach an agreement and abide by the terms of engagement.

The termination of employment and dismissal brings the contract of employment to an end. The law on termination and dismissal in Nigeria is built around Common Law.

Factors leading to termination of Contract of Employment:

i). Expiry of Contract of Employment: at the expiry of fixed term contract for which the employee services may no longer be required, termination may be the next option;

ii) Mutual consent/ agreement: this could be occasioned by retirement or may be a “constructive dismissal”, a situation where employee is advised / forced to resign by the employer due to some irreconcilable differences.

iii). By notice e.g.

• Resignation
• Dismissal
• Redundancy (when an employer ceases to carry on the business)

iv). Breach of contract, necessitating the employer to dismiss the employee without notice.

Examples:

a). willful disobedience of lawful order, evidencing total disregard for the terms of contract and utter disrespect for constituted authority;

b). dereliction, abandonment or desertion of duty;

c). serious negligence or prolonged incompetence;

e). misrepresentation or falsification of information supplied in any official document;

f). on the receipt of unsatisfactory report(s) from the previous employer of the employee on probation;

g) giving out or divulging confidential information about the company’s trade secrets to a third party or person not entitled to know;

h). conviction for felony or any other criminal offence by a competent court of law;

i). dishonesty, misconduct or any act likely to bring the company’s name into disrepute or ridicule;

j). frustration emanating from the death, illness or imprisonment of employer or employee.

Dismissal:

The Webstar’s Dictionary and Thesaurus defines dismissal as the act of removing a person from office. Nigeria Law refers to dismissal as the determination of a contract of employment due to the employee’s misconduct and it is carried out summarily without advanced notice nor payment in lieu of notice. Employers adopt this to erring employees in cases of gross misconduct. In most situations, it takes immediate effect and it is the sole right enjoyed by the employer. The principle of fair hearing and natural justice must apply in such situation.

Dismissal does not only include the termination of an employee’s contract by his employer; it is also ending a fixed term contract without a renewal on the same terms.

Secondly, it is the termination of employment by the employee where the employers conduct forces him/ her to do so. This is referred to as “constructive dismissal” significantly precipitated by employer’s breach of contract, signifying that the employer no longer wants to be bound by one or more terms and conditions of the contract. The employee may decide to leave immediately depending on the gravity of the breach and ability to meet up with such conditions and responsibilities that appertains thereto (if any) to such actions.

Dismissals vary as follows:

Summary dismissal: This is when the employer dismisses the employee without the required notice period and as such, the employee may also not be entitled to payment(s) – entitlement(s). This occurs and can only be justified if the employee has committed a serious breach of contract otherwise he or she could seek redress in a competent court of law.

Unfair dismissal: An employee may approach the National Industrial Court to bring claim if he/she believes that he/she has been unfairly dismissed. The onus will lie on the employee first to prove that he/ she has been dismissed; and the employer’s responsibility at this point will be to prove that the dismissal was fair.

Wrongful dismissal: The employee can lay claim for wrongful dismissal if he/ she can prove with evidence that the dismissal was without justification as he/ she has not breached any part of the contract. The employee will also have to prove that it was not with appropriate notice and that that was ignored by the employer, thereby suffering losses as a result. The employer will be liable to wrongful termination in the Court of Law.

If wrongful dismissal can be proved, the employee may be able to claim some damages resulting from loss of earnings payable during the notice period or balance of wages due under fixed term contract.

In dismissing an employee, the employer is not justified except there were some serious offenses.

Resignation:

Resignation is a form of termination of contract by notice. Contracts are expected to specify notice periods. Be that as it may, termination of employment during probationary period carries minimal notice period or none, depending on several variables – position, company policy, reasons for resignation etc. Notice may be waived, or payment made in lieu of notice.

Employees may resign appointment for any number of reasons, personal or occupational which could be a reflection on the management style, company’s culture, harassment, increased work hours, new work location etc.

When an employee announces his/ her resignation, verbally or by letter, it is pertinent for Management to find out reasons why he/ she is leaving through the exit interview so as to make possible adjustments, where necessary.

Conclusion:

In managing termination of employment, the Human Resource Manager and Management generally should consider how the factors above apply in a given situation, depending largely on the individual concerned, the responsibilities of the incumbent job holder, cost of replacement in terms of time and finance, public perception and corporate image, company’s policy etc.

Contributed by Agolo Uzorka Eugene, CEO/ Lead Consultant, Eugene + George Consulting Limited, a front-line Human Resource Company, providing world-class services to a wide-range of clients (www.eugenegeorgeconsulting.com)