Understanding the Distinction: Termination of Employment vs. Wrongful Dismissal

Understanding the Distinction: Termination of Employment vs. Wrongful Dismissal

Experiencing a job termination can be a challenging and distressing situation for anyone. In Nigeria, the act of laying off employees can be either lawful or unlawful, depending on the procedures followed. Regardless of the circumstances, there are legal implications that come into play. Unfortunately, many employees are unaware of the difference between termination of employment and wrongful dismissal, yet understanding these concepts is vital for navigating the complex landscape of employment law in Nigeria.

By virtue of Section 254(c)(1)(f) and (h) of the Constitution of the Federal Republic of Nigeria, the National Industrial Court is vested with exclusive powers to handle all matters related to labour and employment in the country:

“(I) Notwithstanding the provisions of sections 251, 257, 272 and anything contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National Assembly, the National Industrial Court shall have and exercise jurisdiction to the exclusion of any other court in civil causes and matters;

(f). Relating to or connected with unfair labour practices or international best practices in labour, employment and industrial relation matters

(h). Relating to, connected with or pertaining to the application or interpretation of international labour standards.”


So, what does wrongful dismissal entail?

Wrongful dismissal occurs when an employer terminates an employee’s contract of employment without adhering to due process. I shall discuss what constitutes due process in the course of this article. In cases of wrongful dismissal, both the terms of the employment contract and the employee’s rights are violated. Wrongful dismissal can take various forms, depending on what was stated in the contract, such as termination without notice, termination without a valid reason, or non-compliance with the contractual steps. Ebere Onyekachi Aloysius V. Diamond Bank PLC (2015) 58 NLLR 92.


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On the other hand, termination of employment refers to a lawful and valid end to an employment contract. Termination is deemed valid if it is carried out in accordance with the terms and conditions specified in the contract. It is important to note that the common law principle of “he who hires, can fire, for good reason, bad reason, or no reason at all” no longer holds true, as established in Bello Ibrahim v Ecobank Plc, by the National Industrial Court (NIC) in Suit No. NICN/ABJ/144/2018.


 In the Nigerian case of Mr. Abdul-Hakeem A. Olasewere v Airtel Networks Limited, an illustrative example of wrongful dismissal is evident. The claimant initiated legal proceedings seeking compensation in the amount of 1.3 billion naira as special damages and 100 million naira as general damages, citing the breach of the employment contract and disciplinary policy and procedure.Mr. Olasewere had been employed by Airtel Networks Limited and had progressed to the position of Vice President of Operations and Support. He was on the verge of being promoted to the role of Chief Executive Officer when an internal memo surfaced, indicating that he had been demoted. Allegations were made against him, but the company failed to disclose any specifics to him. In 2013, his employment contract was abruptly terminated, prompting him to take legal action to defend his rights. The court, in its ruling, granted damages amounting to 160 million naira against the defendant. The court justified its decision by highlighting that it goes against international best practices and labour standards to terminate the employment of a high-performing staff member without justifiable reasons. Furthermore, the court emphasized that globally, the termination of employment without cause or reason is no longer considered fashionable or acceptable


In Nigeria, the primary regulation governing both concepts is the Labour Act of 2004. According to this act, an employee is entitled to a fair reason for termination, such as misconduct, incapacity, redundancy, or genuine organizational restructuring. Furthermore, the act stipulates that employees must be provided with reasonable notice or payment in lieu of notice unless there are cases of gross misconduct that justify summary dismissal. Apart from the National Industrial Court, which has original jurisdiction over labour and employment matters, employees can also lodge complaints with the Industrial Arbitration Panel.


Notably in order to establish a case of wrongful dismissal in court, certain documents are typically required to be presented before the court, including offer letters, employment contracts, performance evaluations, and witness statements.

What then amounts to the due procedure in the termination of contracts of employment? 

  1. Notice:

For due process to be said to have been followed in a case of termination of the contract of employment, adequate notice must have been given to the employee. It would amount to wrongful dismissal for a person’s contract of employment to be terminated without prior notice.

  1. Reason:

 The National industrial court in Nigeria has held in a plethora of cases that it is in line with international standards and best practices for an employer to state the reason for dismissing his employee, and the reasons stated must be cogent.

  1. Investigation:

When it is alleged that an employee has acted in a manner inconsistent with the codes of conduct,he should be investigated and evidence of such misconduct should be brought to his notice.

  1. Right to be heard:

The law in all circumstances frowns at jungle justice in any form. The right to be heard is one of the cardinal pillars of justice and it must be adhered to.

  1. Compliance with Employment Contracts and Laws:

 Employers must adhere to the terms and conditions outlined in the employment contract, including any provisions related to termination. For example, some contracts of employment specify that an employee should give 1-month notice or 1-month payment in lieu of the notice before termination.  Employers must comply with applicable labour laws and regulations governing the termination of employment, which may include providing severance pay or following specific notification procedures.


It is crucial for employees in Nigeria to be aware of their rights and obligations. Carefully reviewing employment contracts to understand the terms and conditions is essential. Familiarity with company policies, grievance procedures, and disciplinary processes is also of utmost importance. The court’s judgment in the case above underscores the importance of adherence to proper procedures and the provision of justifiable reasons when terminating an employee’s contract. It serves as a reminder that wrongful dismissal can have significant legal and financial consequences for the employer, emphasizing the need for companies to uphold international labour standards and fair employment


Ifeoma Ezenwa
Sophia Chukwufumnaya