Termination and the National Industrial Court

Two lines of authority, and the one that will decide your case

The classical rule is Chukwumah v Shell Petroleum Development Company of Nigeria Ltd (1993) 4 NWLR (Pt 289) 512: an employer may terminate for good reason, bad reason or no reason at all, provided it follows the contractual procedure. The Supreme Court restated it as recently as Obanye v Union Bank of Nigeria Plc (2018).

The National Industrial Court has departed from it. In a consistent line running through Aloysius v Diamond Bank Plc (2015) 58 NLLR (Pt 199) 92, Bello Ibrahim v Ecobank Plc (NICN/ABJ/144/2018) and more recent decisions including Agbo v Dangote Cement Plc (2024) and Oyeyele v Nigerian Copyright Commission (2025), the Court has required a valid reason connected with the employee’s capacity or conduct or with the operational requirements of the business. The reasoning rests on Article 4 of ILO Convention No. 158, applied through section 254C(1)(f) of the Constitution as evidence of international best practice.

It is worth being candid about the doctrinal weakness: Nigeria has not ratified Convention 158. The Court applies it as best practice, not as ratified treaty law. The Court of Appeal is split on whether it may — Oak Pensions Ltd v Olayinka (2017) and Keystone Bank v Afolabi (2017) say an employer may terminate without assigning reasons; Sahara Energy Resources Ltd v Oyebola (2020) LPELR-51806(CA) holds that the NICN must apply international best practice and upheld an award of two years' salary.

The Supreme Court has never squarely decided it, and there is a structural reason: section 243(4) of the Constitution makes the Court of Appeal final in civil appeals from the NICN. Apparently conflicting Supreme Court authority comes from cases that travelled the High Court route, not from the NICN. For an employer the practical consequence is simple. Your case will be heard by the NICN, and the NICN will apply the valid-reason standard. Comply with it.

What a lawful termination now requires

Cumulatively: a valid reason, communicated at or before termination; a fair hearing where misconduct is alleged; notice or payment in lieu; and strict compliance with the contract, handbook and any collective agreement.

The fair hearing limb has produced the most 2025 authority. Dismissals have been set aside where there was no evidence the employee was invited to the disciplinary committee, and where the same body carried out both the investigation and the decision. One decision held that an internal disciplinary process cannot make a finding of theft — only a criminal court can — and that a staff handbook cannot confer that authority. Against that, an employer need not await the outcome of a criminal trial before exercising its own disciplinary powers, and an admission of theft permits summary dismissal without further inquiry.

Bello Ibrahim also indicates that payment in lieu of notice should be made contemporaneously with the notice, not in a later cycle. The burden of proving both the reason and the process sits on the employer, so the documentation is the defence.

Who the Labour Act actually covers

Section 91 defines a worker but excludes persons exercising administrative, executive, technical or professional functions “as public officers or otherwise”. The prevailing reading is that this takes managerial, executive, administrative, technical and professional staff in the private sector outside the Act altogether. Their rights are contractual and collective only. The phrase is not free from doubt and no appellate decision settles it, but it is the working position.

For those the Act does cover, section 11(2) sets notice by length of service: one day under three months, one week from three months to under two years, two weeks from two to under five years, and one month at five years or more. Notice of a week or more must be in writing. Payment in lieu is computed on basic wages only, excluding overtime and allowances.

What the Labour Act does not contain is worth stating plainly: no general unfair dismissal regime, no requirement to give reasons, no statutory redundancy pay scale, no severance formula and no reinstatement remedy. Every one of those protections in Nigeria today is judge-made by the NICN. That is the structural fact an employer should understand.

Redundancy

Section 20(3) defines redundancy as an involuntary and permanent loss of employment caused by an excess of manpower. Section 20(1) requires the employer to inform the trade union or workers' representative of the reasons for and extent of the anticipated redundancy, to apply last-in-first-out within the affected category subject to all factors of relative merit including skill, ability and reliability, and to use best endeavours to negotiate redundancy payments.

The Minister may prescribe redundancy allowances by regulation. No such regulations appear to have been made, so there is no statutory redundancy pay scale; redundancy pay is whatever the contract, handbook, collective agreement or negotiation produces. Where no union exists the notification limb has no addressee, but the NICN has been receptive to unfair labour practice arguments where a disciplinary termination is dressed up as redundancy or last-in-first-out is bypassed without a defensible justification.

What it costs

The old measure was salary in lieu of notice. That has gone. Sahara Energy v Oyebola upheld two years' salary where the dismissal carried stigmatising allegations. In Skye Bank Plc v Adegun (2024) LPELR-62219(SC) the Supreme Court substituted two years' salary plus bonuses and gratuity for the one month awarded at trial, holding that an employer in breach of the contract cannot rely on that same contract to cap its liability.

2025 awards range widely: sixty months' salary plus substantial general and exemplary damages in a disability discrimination case; reinstatement with arrears plus ₦50 million in general damages against a public body; US$1 million for constructive dismissal through workplace bullying. Against that, a claim for ₦400 million failed where correct terminal benefits had been paid — which is the most useful employer-side lesson available. There is no reliable tariff, and commentators including the Court’s own annual reviewers criticise the inconsistency. Plan on one to two years' salary as a floor for a straightforward wrongful termination, and considerably more where discrimination or stigma is in play.

Appeals

Skye Bank Plc v Iwu (2017) 16 NWLR (Pt 1590) 24 settled that appeals from the NICN lie to the Court of Appeal to the exclusion of any other court. Criminal matters and civil matters raising fundamental rights go as of right; other civil matters require leave. Section 243(4) makes the Court of Appeal’s decision final. Pleading “fair hearing” does not convert an ordinary employment appeal into an as-of-right one: the constitutional right attaches to courts and tribunals, not to an employer’s internal disciplinary panel.