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Compensation For Being Wrongfully Sacked From Work In Private Sector

Compensation For Being Wrongfully Sacked From Work In Private Sector

Compensation For Being Wrongfully Sacked From Work In Private Sector. Daily Law Tips (Tip 561) by Onyekachi Umah, Esq., LLM. ACIArb(UK)

In the private sector (outside government work), workers are employed, managed, paid and sacked in line with in their various employment agreements or collective bargain agreements with their employers. Each worker has a separate unique employment agreement with his employer. Above all, an employer with right to hire, also has right to fire (sack). And, a willing worker cannot be forced on an unwilling employer. This is for private sector employment (also known as Master-Servant Relationships). This is quite different from what happens in government (public sector) employment. This publication focuses and applies to ONLY workers in private sector (workers not employed by local, state or federal governments of Nigeria). The word “sack” in this publication refers to and covers removal, termination and dismissal of a private sector worker.

When a worker is employed, his employment letter or contract says how he or she is to be treated at all times, including who to be sacked. Where a worker is sacked without following his employment agreement, he is said to be wrongly sacked (terminated) or dismissed from work. Since the termination or dismissal is wrong, the wrongly sacked worker has every right to approach the National Industrial Court (NIC) for legal remedies (compensation). The court will consider the contract of agreement to ascertain if a worker was sacked or dismissed without adhering to the agreed procedure for doing so in his agreement with his employer.

A private sector employer can sack his worker with or without reason, so far as the employer gives necessary notices or pays salary in place of notice to the worker. An employment agreement states the duration of notice that must be given to a worker before he or she is sacked from work and that if such period cannot be given, then the worker must be paid salary in advance to cover for such period. For example, where a worker is to be given one-month notice or be paid one-month salary in place (in lieu) of the one-month notice, it means the worker can be rightly sacked when he is informed about his termination at least one month before the termination date. And, where the worker is not given one-month notice, then the worker is paid one-month salary in place of the one- month notice before being sacked by his employer.

A sacked worker is entitled to his outstanding salaries and benefits. However, where a worker is dismissed for gross misconduct, indiscipline, fraud or such related allegations, the worker does not need to be given notice, paid his benefits, dragged to law enforcement agency and court of law or wait for completion of a criminal case before being sacked, so far as the employer believes the worker did something wrong against the employer. A dismissed worker is at liberty to run to National Industrial Court for the court to ascertain if he was wrongly or rightly dismissed without notice, salary and benefits. Where the court finds the termination or dismissal to be wrong, the court will order for payment of salary and benefits ONLY for the period that the worker ordinarily should have been given notice before being sacked, which is often one month. Where an employer has good reasons for termination or dismissal without proper procedure the employer is safe and justified.

No court can ever order a sacked or dismissed worker to be reinstated by his private sector employer. Court never suffers an employer for sacking a worker rather will suffer an employer for sacking a worker without following agreed procedures contained in his employment letter or contract. This is greatly different from what is applicable to workers employed by government because they have statutory (law backed) employment and cannot be tossed around without following the rigorous procedures in laws establishing the concerned government offices. And, unlike private sector workers, government workers can be reinstated by court.

Below are the golden words of the Supreme Court oF Nigeria on this issue, in the recent case of PETER ONYEACHONAM OBANYE v. UNION BANK OF NIGERIA PLC (2018) LPELR-44702(SC);

“The law is settled that an employer who has the right to hire also has the right to fire. The employer has an unfetted right to terminate the employee’s employment. He may terminate for good or bad reason or for no reason at all. The motive for exercising the right does not render the exercise ineffective….What is essential is that the firing must be done in accordance with the terms and conditions of the employment….

In an employment with statutory flavour, where the procedure for employment and discipline, including dismissal, are clearly spelt out in the relevant statute, the employer must comply strictly with its provisions in terminating the employment or in dismissing the employee. Any other manner of terminating the employment which is inconsistent with the statute is null and void and of no effect.

In other cases where the employment is governed by the agreement of the parties, removal by way of termination of appointment or dismissal must be in accordance with the terms agreed upon. Failure to comply with the terms renders the termination wrongful but not null and void. The only remedy available to an employee in an ordinary master and servant relationship for wrongful termination of employment is a claim for damages. The rationale being that a servant, though wiling, cannot be foisted upon an unwilling master.

Where the parties have agreed that the contract of employment may be terminated by either party upon the giving of notice or the payment of the equivalent salary for the period of notice, the measure of damages for wrongful termination or dismissal is the amount the servant would have earned over the period of notice.”

Per, KEKERE-EKUN ,J.S.C ( Pp. 24-27, paras. F-E )


1. The Supreme Court judgement (on the issue of compensation for wrongful termination or dismissal) in the case of OBANYE v. UNION BANK (2018) LPELR-44702(SC)

2. 2. The Supreme Court’s judgement (on the issue of reliefs for wrongful termination of private sector worker) in the case of ATIVIE v. KABELMETAL (NIG) LTD (2008) LPELR-591(SC)

3. 3. The Supreme Court’s judgement (on the issue that a worker can be dismissed for misconduct, fraud or indiscipline without notice or payment of wages and even without being charged to court or reported to law enforcement agency) in the case of EZE v. SPRING BANK PLC (2011) LPELR-2892(SC)

4. 4. The Supreme Court’s judgment (on the issue that an employer in private sector must not give reason for sacking a worker) in the case of OLAREWAJU V. AFRIBANK PLC (2001) 13 NWLR (PT. 731) 691; OLANIYAN V. UNIVERSITY OF LAGOS (1985) 2 NWLR (PT. 9) 599; and GARBA V. UNIVERSITY OF MAIDUGURI (1986) 1 NWLR (PT. 18) 550.










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