Constructive Dismissal under Nigerian Labour Law by A. I. Iortyaver

Termination of employment

Dismissal (referred to informally as firing or sacking) is the termination of employment by an employer against the will of the employee. Though such a decision can be made by an employer for a variety of reasons, ranging from an economic downturn like the economic recession currently being experienced in Nigeria to performance-related problems. On the part of the employee, being fired has a strong stigma in many cultures and organizations.

To be dismissed, as opposed to quitting voluntarily (or being laid off), is often perceived as being the employee’s fault or under performance. Finding new employment may often be difficult after being fired, particularly if there is a history of being fired from previous jobs, if the reason for firing is for some serious infraction, or the employee did not hold the job very long. Job seekers will often not mention jobs that they were fired from on their resumes; accordingly, unexplained gaps in employment are often regarded as a red flag in a resume by most employers.

An employee whose employment is terminated in ad variance with the terms of his/her employment is entitled to damages against his/her employer. The supreme court  Per KARIBI-WHYTE, J.S.C . (Pp. 21-22, para. G held in Imoloame v. W.A.E.C. (1992) NWLR (Pt. 265)303 thus”It is well settled that in cases of wrongful dismissal “the measure of damages is prima facie the amount the plaintiff would have earned had the employment continued according to contract subject to a deduction in respect of any amount accruing from any other employment which the plaintiff, in minimizing damages, either had obtained or should reasonably have obtained

Often times due to the fear of being liable to an employee for damages or other remedies either provided by the law or in the terms of employment, some employers create an unbearable working environment to force the employee to resign in order to exonerate themselves against any liability by an employee. This action by the employer creating a hostile working environment to force an employee to resign out of his/her volition is called constructive dismissal.

By way of definition, constructive dismissal simply means a Situation where an employer creates such working conditions (or so changes the terms of employment) that the affected employee has little or no choice but to resign. In such cases, the employee retains the right to seek legal compensation as having being dismissed constructively.
Also, Constructive dismissal occurs where an employee terminates his employment in response to his employer’s treatment of Him. Although there has been no actual dismissal, the treatment is sufficiently bad that the employee is entitled to regard himself having been dismissed. Examples of constructive dismissal include:

  1. reduction in pay or not being paid at all.
  2. being demoted without good reason.
  3. allegation of poor performance which are unfounded.
  4. disciplinary proceedings which are manifestly unreasonable.
  5. a complete change in the nature of your job.
  6. harassing or bullying.
  7. been forced to work in breach of health and safety law.

In order for an employee claiming constructive dismissal to succeed he/she must prove as enumerated by Lord Denning in Western Excavating v. Sharp [1978] 1 All ER 713.

  1. A repudiatory breach on the part of the employer. This may be an actual or anticipatory breach, but must be sufficiently serious to justify the employee resigning.
  2. An election by the employee to accept the breach and treat the contract as at an end.
  3. The employee must resign in response to the breach
  4. The employee must not delay too long in accepting the breach, as it is always open to an innocent party to waive the breach and treat the contract as continuing (subject to any damages claim that they may have)

A Court handling a matter of constructive dismissal will also need to satisfy itself that the employee did not delay too long in resigning. Western Excavating v. Sharp [1978] 1 All ER 713. The facts of the case are thus: An employee (Mr. Sharp) worked for the company and one of his terms of contract was that if he worked extra time he could have time off in lieu. He then went on to take an afternoon off work to partake in a card game which led to his dismissal. He appealed the dismissal and was reinstated but with a 5 day pay suspension in its place. Without these 5 days pay he was in financial difficulty and attempted to get his employers to pay his accrued holiday pay in advance and when they refused that he asked for a loan of £40. The welfare officer explained they couldn’t loan that amount but suggested that Mr. Sharp should see him again to discuss the details. Mr. Sharp was not happy with this and so resigned. He then claimed for constructive unfair dismissal at the tribunal.

When it reached the court of appeal however Lord Denning took a different approach to the matter and the Court reversed the decision of the tribunal and held that Mr. Sharp had not been constructively dismissed at all. Lord Denning went on to state,

If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer’s conduct”

While this principle has been enshrined in the labour enactments of other jurisdictions and thus has a statutory backing, the principal enactment governing labour related matters in Nigeria i.e labour Act (CAP L 1 LFN 2004) does not have any statutory backing regarding constructive dismissal in the Nigerian labour law. However all hopes are not lost with the creation of the National Industrial Court under Section 254 A (1)  third Alteration of the 1999 Constitution of the Federal Republic Of  Nigeria (2011 as amended) Which creates the national industrial Court and vest it with jurisdiction under section 254 C (1) to entertain labour related matters.

Section 7 of the National Industrial Court Act 2006 provides that Court shall have and exercise exclusive jurisdiction in civil cases and matters-

(a)     relating to….

(i)        labour, including trade unions and industrial relations; and

(ii)       Environment and conditions of work, health, safety and welfare of labour, and matters incidental thereto….

Subsection 6 provides thus:

 The Court shall, in exercising its jurisdiction or any of the powers conferred upon it by this Act or any other enactment or law, have due regard to good or international best practice in labour or industrial relations and what amounts to good or international best practice in labour or industrial relations shall be a question of fact.

This provision is a great relief and of wide scope to enable the court in the exercise of its duty to apply best international labour practices in its administration of justice. The court in the case of Miss Ebere Ukoji  V Standard Alliance Life Assurance Co. Ltd  (Suit No: NICN/LA/48/2012) held thus:

 Globally, and in labour/employment law, constructive dismissal, also referred to as constructive discharge, occurs when an employee resigns because his/her employer’s behavior has become intolerable or heinous or made life difficult that the employee has no choice but to resign. Given that the resignation was not truly voluntary, it is in effect a termination. In an alternative sense, constructive dismissal or constructive discharge is a situation where an employer creates such working conditions (or so changes the terms of employment) that the affected employee has little or no choice but to resign. Thus where an employer makes life extremely difficult for an employee, to attempt to have the employee resign, rather than outright firing the employee, the employer is trying to create a constructive discharge. The exact legal consequences differ from country to country, but generally a constructive dismissal leads to the employee’s obligations ending and the employee acquiring the right to seek legal compensation against the employer. The employee may resign over a single serious incident or over a pattern of incidents. Generally, the employee must have resigned soon after the incident. The court held the conduct of the respondent as amounting to a constructive dismissal.

At times, an employer may behave badly but his conduct will not amount to him making your position untenable. For instance, non-payment of salaries maybe as a result of an ailing economy which, will not suffice as a good ground at that time. Each case is however decided based on the facts and circumstances surrounding it.

Conclusively, the doctrine of constructive dismissal by virtue of the powers conferred on the National Industrial Court Act can effectively be applied under the Nigerian legal system, even though not enshrined in any statute, as was done by the Court in Ebere’s case (supra).This is a welcome development in the Nigerian Labour Law jurisprudence.

Source: The Nigeria Lawyer

How to prove that the termination of your employment was wrongful

termination

When is termination/dismissal said to be wrongful? 

You may sue and demand to enforce your rights if your employment contract is wrongfully terminated. Wrongful termination is when any of the following occurs:

  1. Your former employer did not follow the terms of the contract in terminating it or dismissing you. For instance, if the contract specified that either party can only terminate by giving the other 30 days’ notice or one month’s salary in lieu of notice, it would be wrongful to terminate the contract forthwith and not pay you anything in lieu. Also, if your employment contract provides for a disciplinary procedure to be followed before you can be dismissed (say for gross misconduct) and the procedure was not followed or your act/omission was wrongly categorized, your dismissal would be wrongful.
  2. Your appointment was terminated ‘in accordance’ with the terms of contract but the reason for the termination is unlawful or unjustifiable. For instance, where termination is based on discrimination or sexual harassment, it will qualify as wrongful termination. It does not matter that your employer (like most companies in Nigeria) does not have a policy against workplace discrimination or sexual harassment. These are matters of law and public policy that are implied into every employment contract.
  3. You actually did resign ‘voluntarily’ but under conditions that left you with no other choice. For instance, your former employer frustrated you and deliberately made it practically impossible for you to continue with the job. The technical term for this is “constructive dismissal”, and it also qualifies as wrongful termination.
  4. Your position had been rendered redundant but your former employer played smart and clothed it as simple termination (like merely said your ‘services no longer required’) in order to save itself the cost of paying you redundancy or other benefits.

While it is true that no employer should feel compelled to retain an employee whose services are no longer required or who is no longer fit to remain in the job, if your appointment must be terminated, it should be with the dignity and respect deserving of your person as an employee, and all your entitlements fully paid.

When to sue

If you are aggrieved about the manner that your appointment has been terminated, you need to move fast in getting a redress. Sue as soon as it is reasonably clear to you that your grievance cannot be amicably resolved. By law, you must sue within 6 years of the termination otherwise your claim will become stale and unenforceable. The courts are strict with this timeframe and would hardly entertain any excuse for delay in suing; not even where the delay was because you were trying to settle amicably with your former employer.

If you were working in the civil or public service, the need to act fast is even more urgent. This is because the timeframe allowed to sue public officers/offices is just 3 months! Although, there are legal arguments (and authorities) that this principle does not apply to breaches of contract, or claims for work and labour done, why delay and get your case entangled in any such legal haggles!

Where to sue

The National Industrial Court is your go-to court for labour disputes. The court only handles labour disputes hence the Judges are more able to quickly settle the cases before them. Let me quickly add that you should always first consider settling your case amicably (out of court) before suing. At any rate, Alternative Dispute Resolution (ADR) options are preferred to litigation in the resolution of disputes such as employment disputes. ADR options include arbitration, mediation, conciliation, etc. These options better protect confidences, they are cheaper (well, arguably) and faster too.

What facts to establish

It is not enough to say your employment is wrongly terminated. You have to explain how you came about that conclusion. It is helpful if you tell your story in a logical and compelling manner. You will therefore want to capture the following facts:

  1. That you were employed by the defendant (your former employer) – state date and the designation in which you were employed;
  2. The terms and conditions of the appointment including duration and termination – emphasize the procedure for termination;
  3. State who had the power, under your employment contract, to terminate or dismiss you;
  4. State any special circumstances that are needed to prove your case – for instance, if you are basing your claim for wrongful termination on workplace sexual harassment, discrimination or redundancy, state clearly the circumstances that led you to believe the facts;
  5. State the circumstances under which your appointment was in fact terminated – for instance, that you had not been given any notice (or payment in lieu), fair hearing etc
  6. State the pain and trouble that you have suffered on account of the wrongful termination – while this is not very necessary sometimes such sentiments prove helpful to your cause.
  7. Itemize your demands in an orderly manner and with explanations where necessary.

Help the court to help you; explain yourself!

What documents to rely on 

More often than not, your employment ‘contract’ is not just the ‘Offer Letter’. Other terms of the contract are contained in documents like the ‘Staff Handbook’, collective agreements (common in unionized industries like Maritime or Aviation), etc. It’s important to place before the court all documents necessary to paint the full picture. These include the following:

  1. Letter of Offer/Contract of Employment
  2. Letters of promotion
  3. Letters of commendation or awards
  4. Employee Handbook/Expatriate Policy,
  5. The letter of termination or dismissal,
  6. relevant Collective Agreements,
  7. Circulars, internal memos, notices, and
  8. other workplace documents, like official e-mails, etc that are necessary to establish your case.

These documents, together with your oral testimony (and that of any other witness) are what the court will use in deciding your fate.

What to ask for

This is the interesting part. Nearly all claims in court about wrongful termination are about money! You are most likely simply asking that you should be paid some money as terminal benefits. Two quick clarifications:

  1. payment of terminal benefits is not automatic and the payment (trust me) is not a windfall. What you will be paid will depend, largely, on what was previously agreed upon between you and your employer. Sometimes, Lawyers get overzealous and make bold baseless assurances to clients on what they can obtain in court. But the court is not Santa Claus and would not award you damages just for asking. You will have to earn it. Admitted, sometimes you would rather err on the side of caution and ask for more rather than less, but why pad your claims and end up appearing like a gold digger before the Judge? It is best to be clear-headed about your claims and save everybody’s time. In some cases, (like terminations based on workplace discrimination, sexual harassment, redundancy, etc) the Judge would likely award heavy penalty against your former employer as a deterrent to other employers and as compensation deserving of the manner of your termination. What is “heavy penalty” (Lawyers call it “punitive damages”) will ultimately depend on the facts of each case, but our Judges here are rather conservative on these things, so don’t get your hopes too high.
  2. Suing for wrongful termination is not (and should not) always be about money. There are cases (like a dismissal) in which it is more important for the aggrieved employee to ‘clear his name’ and set the records straight (or just to prove a point). Even where you are really pressed for the money, you should not overlook this aspect of your case. Interestingly, until you convince the Judge that indeed your dismissal/termination was wrongful, you are likely not getting paid any damages. Don’t allow money get in the way.

How do you determine your rightful entitlements?  Look at your contract and see for yourself what it says you will be paid in case you are asked to leave. For instance, are there provisions in the contract that you will be paid a salary in lieu of notice? Also check the Staff Handbook which may contain provisions on payment of gratuity, redundancy, etc. In summary, your list of claims could run like this:

  1. payment in lieu of notice
  2. outstanding salaries (if you were owed any prior to the termination)
  3. gratuity
  4. redundancy (if your case is deserving of it)
  5. other accrued benefits (like leave allowances, etc) that are outstanding.

It is important to be sure that you are entitled to these benefits before you make your claim for them. Don’t get greedy and start making up claims from the blues. Also ensure that what you are claiming is actually outstanding. Do not embarrass your Lawyer by making him/her claim for money that is already paid to you. Finally, check to ensure that your pension, tax, NSITF, etc. deductions are also fully remitted or paid. Your lawyer will help you in computing the claims if your termination is based on special circumstances and you would like punitive damages awarded in your favour against your former employer.

What not to ask for

Keep your case tidy. Don’t spoil it with spurious demands. Some demands are not to be made because they are simply not practicable. Let’s briefly highlight some:

  1. Don’t ask for money for ‘injured feelings and loss of reputation’. Don’t get your claim for wrongful termination mixed up with claims about defamation. You can actually claim for both but not in one breathe (and also not in the same court).
  2. Don’t ask to be reinstated – unless your employer is a government agency, nobody has legal powers to foist you on your unwilling employer. Termination of ordinary employment contracts is never “null and void, unlawful or unconstitutional”. The termination, at best, can only be wrongful but not invalid. Either party is free to terminate at any time and for any or no reason. All that is required is fairness – that the terms of the contract are followed and within the bounds of the law.
  3. Don’t ask for pre-judgment interest on the monies that you are claiming – unless it had already been agreed upon between you and your former employer. Interest, if any, on any award that the court will grant you, will start to run from the date of the judgment, and not from the date that the money became due.

PS: The language of this article is deliberately simple and devoid of legal niceties because it is intended for non-lawyers. It is however, not intended to be a substitute for legal advice. You will certainly need a Lawyer to, among other things, plead your case in court. Finally, going to court should be a last option. Employment disputes are best resolved amicably; unless of course you are left with no other option than to sue.

The evolution of Commerciality: Some personal notes for in-house lawyers

Old way new way conceptCommercial awareness is a vital skill for in-house lawyers. Gordon Donovan sums up ‘commercial awareness’ thus:

  • An interest in business and an understanding of the wider environment in which an organisation operates: its customers, competitors and suppliers.
  • Understanding of the economics of the business and understanding the business benefits and realities from both the organisation’s and the customer’s perspectives.
  • The need for efficiency, cost-effectiveness, customer care and knowledge of the market place in which the company operates (current economic climate and major competitors).

A report by Bond Dickinson LLP states that “The domain in which general counsel and legal teams operate is changing. In-house legal professionals are playing more business centric roles and looking for ways to add greater strategic and commercial value to their organisations. At the same time, questions of economic, social and environmental sustainability have risen to prominence in boardrooms around the world and are becoming a more explicit influence on corporate strategy, governance and decision-making”.

What this means is that being an effective lawyer requires not just legal expertise, but a real understanding of an organisation’s objectives and the commercial dynamics that surround them. This is more so for in-house lawyers, who should increasingly move away from the traditional role of ‘risk spotters’ to ‘strategic partners’. Legal departments have a legacy of being naysayers, deal-stoppers and those folks with poor business acumen, but that is changing, and rightly so.

The Bond Dickinson reports states further that businesses are increasingly looking to their legal advisers to contribute at a strategic level; and whatever their professional remit or legal specialism, lawyers who really understand the more holistic dimensions of a business’s activities will be in a position to provide the best counsel.

How to become commercially aware:

  1. Keep up to date with what is happening about the future of your organisation, and the markets in which your organisation operates;
  2. Understand the nature and structure of external supply markets, list out the things that affects them and keep a track on when they occur;
  3. Understand any historical patterns which will help in predicting future trends. It is particularly useful to be aware of any typical cyclical patterns, such as how wider economic conditions tend to affect a particular industry;
  4. Understand and map out the key strategic relationships you have with your suppliers. What is their strategic vision and do you feature? Gather data on the suppliers and supply market(s) you serve and are served by and pay attention to the trends;
  5. For any piece of legal analysis you do, remember to ask SO WHAT!

According to Thomas Eckardt, lawyers who demonstrate the ability to be business ‘enablers’ and make commercially savvy decisions arguably find it easier to connect with the business teams and will be more successful in their careers. Management increasingly look to legal teams to help make strategic decisions based on both commercial and legal analysis. The ability to provide this combined advice is where in-house can really add value to a business.