Can an employer in Nigeria terminate employment without giving a reason?

It depends on which court you ask. Under the old common-law rule, an employer could end a contract without a reason as long as notice was given, and some Court of Appeal decisions still follow that position. But the National Industrial Court, which is where these cases start, has held since Aloysius v Diamond Bank (2015) that a valid reason is required. Because your case would begin at that court, terminating without a stated reason is a real risk.

What is the statutory notice period in Nigeria?

Under section 11 of the Labour Act: one day where the contract has run three months or less; one week for more than three months but under two years; two weeks for two years but under five; and one month for five years or more. Any notice of one week or more must be in writing. Contractual notice that is longer than the statutory minimum applies instead.

Terminating an employee in Nigeria (2026): what the law now requires

Q: Can a dismissed employee forfeit earned salary?

No. Wages earned before the exit date remain payable, and section 11(7) of the Labour Act requires all wages payable in money to be paid on or before the expiry of any notice period. Accrued leave and pension remittances are also not disciplinary tools.

The rule employers still quote — and what the courts now say

A business owner called us recently, frustrated. An employee was underperforming, the salary had become hard to justify, and the plan was simple: pay off the notice period, say nothing about why, and move on. That plan came from a real rule. Under the old Nigerian law (called “master and servant” law), an employer could end a contract for a good reason, a bad reason or no reason at all, as long as proper notice or pay in place of notice was given.

In 2010, a change to the Constitution gave the National Industrial Court (NICN) — the court that handles almost all job disputes — the power to follow international standards on work. In Aloysius v Diamond Bank Plc (2015), the court used that power to say something new: an employer must have a good and justifiable reason to end someone’s job. The idea came from ILO Convention 158, an international rule that says a job should only end for a reason connected with the person’s ability, conduct, or the needs of the business. The NICN has repeated that position in later cases, and it now awards much bigger compensation than the old one-month’s-salary cap when a termination is unfair.

Now for the honest part: the courts above the NICN have not all agreed. Some Court of Appeal decisions, like CGC Nigeria Ltd v AbdulFatai Bakare (2018), still follow the old rule — an employer who ends the contract exactly as the contract allows, without giving a reason, has won on appeal. So lawyers can still argue about this, and that is exactly why a smart employer separates three different questions instead of mixing them into one:

1.Was the exit allowed by the contract? (Did the employer give the right notice or pay, exactly as the contract says?)
2.Did the employer break a separate legal duty, or skip a required process? (For example, a fair hearing before a dismissal, or paying what was earned.)
3.Was the exit handled so badly that it could count as unlawful or degrading treatment? (Humiliation, public disgrace, withheld pay used as a weapon.)

Keep the three questions apart, and you will see clearly where you stand. But plan for this: your case starts at the NICN, and that court leans towards the new rule. If your only defence is “the contract allowed it”, you are exposed.

Four rules to work to

A reason is expected — but the top courts still disagree

The old rule said an employer may end a job for a good reason, a bad reason or no reason at all, as long as notice is given. The employment court (the National Industrial Court, NICN) has said again and again that this is no longer enough: you must have a valid reason to end a job. But the appeal courts above it have not all agreed — some still follow the old rule when the contract was followed exactly. The safe play is simple: always have a real reason, and always say what it is in the letter.

NICN: Aloysius v Diamond Bank Plc (2015), applying ILO Convention 158, Article 4. Court of Appeal: CGC Nigeria Ltd v AbdulFatai Bakare (2018) LPELR-46810(CA).

Dismissal requires proof and procedure

Summary dismissal for gross misconduct — fraud, theft, harassment, gross insubordination — is still available, but only after a fair process. That means a written query, a genuine opportunity to respond, an investigation, and a hearing the employee can attend. The burden of proving the misconduct sits on the employer, not on the employee to disprove it.

Constitution 1999, s.36(1) (fair hearing), applied by the NICN to internal disciplinary processes.

Earned pay cannot be forfeited

The belief that a dismissed employee forfeits everything is wrong. Wages earned up to the date of exit remain payable, and the Labour Act requires all wages payable in money to be paid on or before the expiry of any notice period. Accrued, untaken annual leave and remitted pension contributions are likewise not disciplinary tools.

Labour Act, s.11(7); annual holiday entitlement, s.18.

Notice and dismissal are not the same thing

Termination on notice ends the contract lawfully and requires statutory or contractual notice, or payment in lieu. Summary dismissal ends it without notice — but only where serious misconduct is established and procedural fairness was followed first. Labelling a termination a dismissal to avoid paying notice is one of the most expensive mistakes an employer can make.

Labour Act, s.11(1)–(6).

Fair hearing: what it actually has to contain

Fair hearing is not a formality you perform after the decision. Section 36(1) of the Constitution guarantees it, and the National Industrial Court reads it into internal disciplinary processes. In practice, six things need to exist on file before a dismissal letter is signed.

A written query that states the specific allegation, with dates and facts — not a vague reference to poor attitude or underperformance.
A reasonable, stated period to respond in writing (48 to 72 hours is the common practice; anything shorter invites a fairness challenge).
An investigation that gathers documents and statements before any decision is drafted.
A disciplinary panel of at least two people, none of whom is the sole complainant, with the employee allowed to attend and to be accompanied by a colleague.
Minutes of the hearing, signed by the panel, plus the employee's written response on file.
A decision letter that states the reason, the evidence relied on, and the outcome.

Notice periods and pay in lieu

Section 11 of the Labour Act sets the statutory floor. Where the contract gives a longer notice period, the contract wins — the statute is a minimum, not a ceiling. Notice of one week or more must be in writing, and the day notice is given does not count towards the period.

Length of service	Minimum notice
3 months or less	1 day
More than 3 months, under 2 years	1 week
2 years but under 5 years	2 weeks
5 years or more	1 month

Two details catch employers out. First, where payment is made in lieu of notice, the Labour Act calculates it on the money wage only, excluding overtime and other allowances — so a generous allowance structure does not inflate the notice payment unless the contract says it does. Second, the strict statutory definition of “worker” in section 91 excludes administrative, executive, technical and professional staff, so senior contracts are governed mainly by their own terms — which is precisely why those contracts must be drafted properly rather than borrowed.

The final payment: what must go out

Salary earned up to and including the last working day.
Notice pay, where notice was not worked — statutory minimum or contractual period, whichever is longer.
Accrued but untaken annual leave.
Employer and employee pension contributions remitted to the PFA, including the final month.
PAYE correctly deducted on terminal payments and remitted to the state internal revenue service.
Any documented reimbursable expenses already approved.

If you want the employer-side arithmetic behind those figures, our guide on the real cost of employing staff in Nigeria breaks down pension, NHF and the rest, and the free PAYE calculator handles tax on the final payslip. To see how your own termination practice measures up, run the free HR compliance health check.

A five-step offboarding procedure

Step 1

Decide which route you are on

Performance, redundancy, or misconduct. They have different evidence requirements and different documents. Choosing the wrong route — dismissing for misconduct when the real issue is capability — is where most cases unravel.

Step 2

Build the file before the decision

Appraisal records, warning letters, the improvement plan and its review dates, or the investigation report and witness statements. If the file is created after the decision, it reads that way in court.

Step 3

Run the fair-hearing process

Query, response, investigation, hearing, minutes. Do not skip it because the outcome feels obvious. The process is the defence.

Step 4

Write a letter that states the reason

One clear, truthful reason, the effective date, the notice position, and a line-by-line breakdown of the final payment. A letter that says only 'your services are no longer required' is the sentence most often read back to employers in court.

Step 5

Close out cleanly on the last day

Exit interview, handover, asset and access recovery, clearance sign-off, final payslip, and pension remittance. Keep the whole pack in the employee record for at least six years.

Where employers get caught

Terminating with pay in lieu of notice and no stated reason, on the assumption that the contract clause is a complete defence.
Calling it a dismissal to avoid notice pay, without an established act of gross misconduct.
Withholding earned salary, leave pay or pension remittance as leverage in a handover dispute.
Running the disciplinary hearing with the complainant as the sole decision maker.
Backdating query letters or minutes — a documented process is worth far less once its dates cannot be reconciled with the payroll and email trail.

Navigating employment law is not only about protecting the business. It is about building transparent, human-centred organisations. Cut the shortcuts out of your offboarding process, or the court will cut them out for you.

Sources

This guide is general information for employers and HR teams, current as at October 2026. It is not legal advice, and the courts in this area are still not fully agreed. For a specific termination, take advice on your own facts and contract.

Terminating an employee in Nigeria: what the law now requires