In Nigeria, the termination process for employment contracts is governed by the Labour Act. This act stipulates the minimum notice period an employer must provide to an employee during termination.

Minimum Notice Periods

The minimum notice period required by law varies depending on the employee's length of service. The breakdown is as follows:

• For up to 3 months of service, one day's notice is required.
• For up to 2 years of service, one week's notice is required.
• For up to 5 years of service, two weeks' notice is required.
• For 5 years or more of service, one month's notice is required.

Important Points to Consider

• These are the minimum legal requirements. An employment contract can stipulate a longer notice period, which would supersede the minimums outlined in the Act.
• Employers are obligated to provide written notice of termination. This notice should detail the reasons for termination, especially if immediate dismissal is involved.
• In lieu of providing notice, employers can opt to pay the employee their salary for the notice period.

Additional Considerations

While the Labour Act provides a framework, it's important to note that adhering to best practices goes beyond legal mandates. The National Industrial Court of Nigeria (NICN) encourages employers to follow international labour standards, which often involve providing a reason for termination.

In Nigeria, there is no universal legislation that mandates severance payments for all forms of employment termination. The provisions for severance pay are primarily determined by clauses in employment contracts. These clauses typically detail eligibility, calculation methods, and other relevant conditions.

Contractual Agreements and Collective Agreements

Severance pay can also be included in sectoral or branch-level collective bargaining agreements for employees under those agreements. Under the Labour Act (Section 20), in cases of redundancy, employers must negotiate redundancy payments for workers who aren't covered by regulations regarding such. However, specific regulations haven't been enacted as of yet.

Redundancy Severance

The Collective Framework Agreement of 2006 provides some guidance on redundancy severance. Employees dismissed due to redundancy, with at least two years of service, and where the dismissal wasn't due to serious misconduct, are eligible. The calculation is based on a minimum of 15 days' wages per year of service based on the most recent salary.

Documentation of Severance Pay

When severance pay is offered, it's crucial that employers clearly document the amount, calculation method, and any eligibility requirements. This information should be included in either the employment contract or relevant collective agreement.

The termination of an employment contract in Nigeria is guided by provisions under the Labour Act and any applicable terms within the individual's employment contract.

Types of Termination

• Termination by Notice: Either employer or employee can terminate the contract by providing the legally required notice period or payment in lieu of notice.
• Summary Dismissal: Immediate termination without notice due to the employee's serious misconduct. Requires a fair hearing to give the employee the opportunity to respond to allegations.
• Mutual Termination Both parties mutually agree to terminate the employment contract.
• Termination due to Redundancy: Dismissal due to economic or operational reasons.

General Termination Process

1. Review Contract and Law: Scrutinize the employment contract and relevant sections of the Labour Act to understand specific requirements and stipulations.
2. Notice of Termination: The terminating party (employer or employee) must provide written notice of termination, detailing reasons if applicable.
3. Notice Period or Payment in Lieu: During the notice period, the employee continues to work. As an alternative, the employer can pay the equivalent salary in lieu of the notice period.
4. Accrued Benefits: The employer must ensure that all accrued benefits, including outstanding salary, holiday pay, and pension entitlements, are settled upon termination.
5. Documentation: Maintain accurate records of the termination process, including notice letters and termination agreement (if any).

Summary Dismissal

• Valid Reasons: Only permitted for serious misconduct as defined by law or within the employment contract.
• Fair Hearing: The employee must be given a fair hearing before dismissal, providing an opportunity to defend themselves.

Additional Considerations

• Redundancy: In cases of redundancy, employers must make efforts towards negotiating redundancy payments in accordance with the Labour Act.
• Best Practices: While the Labour Act outlines the basics, employers should strive to follow best practices and international labour standards. This often involves providing reasons for termination to avoid disputes.