Notice and Severance
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 the contract and by giving a notice for a period specified under the law.
The required notice period for terminating the employment contract depends on the length of service as follows.
- one day's notice for up to 3 months of service.
- one week's notice for up to 2 years of service.
- two weeks' notice for up to 5 years of service.
- one month's notice for 5 years or more of service.
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 the worker and the 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 the 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 1967 court decision states that summary dismissal is warranted if an employee’s conduct is so grave and weighty that it undermines the relationship of confidence that must exist between a master and a servant. Examples of such grave character include verbal or physical violence, assault on the employer, intoxication during working hours, stealing, fraud, bribery, or corruption.
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 the employment contract or a collective agreement.
Under the Labour Act, employers must negotiate redundancy payments for workers who are not covered by regulations regarding such. No specific rules on redundancy payments have been notified so far.
Source: §20 of the Labour Act (Cap L1 LFN 2004)
