Notice Requirement
The contract of employment may be terminated by either party at any time, with or without any reason by either party giving the notification period provided in the contract. A contract of employment is terminated by the expiry of the period for which it was concluded, death of the worker before expiry of contract and by giving a notice for a period specified under the law.
The required notice period for the termination of the employment contract depends on length of service. The notice period is one day for a period of three months or less; one week for more than three months but less than two years of service; two weeks for two to five years of service and one month for five or more years.
Notice period does not include the day on which it is issued. The notification of more than one-week period is always provided in written form. Notice period is the same for worker and employer.
For a worker employed for three or more months, the employer is not liable to make any payment for a period during which the worker is absent from work with the leave granted by the employer at the request of the worker. Payments owed to the worker must be paid on or before the expiry of notice period.
Right to notice may be waived by either party and payment in lieu of notice is acceptable. It is calculated by taking basic salary into an account and excluding overtime and other allowances.
A court decision of 1967 states that summary dismissal is warranted if an employee’s conduct is of some grave and weighty character that it undermines the relationship of confidence which must exist between a master and a servant. The examples of such grave character include verbal or physical violence, assault on employer, intoxication during working hours, stealing, fraud, bribery, or corruption, etc.
The employer cannot terminate the employment contract without prior notice except in cases specified by the law, otherwise it is treated as fundamental breach of contract.
Source: §11 of the Labour Act (Cap L1 LFN 2004)
Severance Pay
No provision could be located in law regarding severance pay. Employer in not obliged by the law to make any severance payment. However, severance pay may be specified in employment contract or collective agreement.
