INTRODUCTION
A contract is an agreement between two or more parties that is enforceable. There are about three relationships that could arise as a result of employment relationship. These are employee, independent contractor, and an agent. This means that a person may be employed as an employee, an independent contractor, or as an agent. A contract of employment in this context is a contract between employer and employee.
This article shall be limited to the employer and employee relationship. An employer is a person or company that pays people to work for them. While an employee is a person who is paid to work for somebody. An employee therefore is a person who has enters into a contract to serve or work for an employer in exchange for payment. The relationship between the employer and the employee must have the elements of a valid contract for it to be valid and enforceable.
ELEMENTS OF A VALID CONTRACT OF EMPLOYMENT
The elements of a valid contract are those factors and conditions that a contract of employment must have for it to be valid and enforceable. The elements of a valid contract of employment are:
I. offer and acceptance,
II. capacity to contract,
III. legality of the contract, and
IV. consideration.
OFFER AND ACCEPTANCE
The validity of any contract of employment depends on offer and acceptance. An offer is a proposition made by a party to another party. In this case the offer is in the action of the employer to request the service of an employee in exchange for payment of salary or wages. Acceptance on the other hand is the desire of the employee to accept the request of the employer to accept to work for him in exchange for wages or salary. For a contract to be valid there must be offer and acceptance.
CAPACITY TO CONTRACT
The parties to a contract of employment must have the legal right to do so under the law of the land. Infants, aliens, state and corporations in whichever case must enter into contract of employment with a detailed knowledge of the provision of the law of the land as applicable to their employment relationship.
Infants, that is, those under the age of twenty-one years of age are protected at common law against disadvantageous contracts because such contracts are binding on them. Aliens are those who are not citizen. In Nigeria, an alien is prohibited from accepting employment, except with the state or federal government, without the consent in writing of the federal immigration officer. A contract of employment must not also be entered into with a person of unsound mind.
LEGALITY OF THE CONTRACT
All contract of employment must not be contrary to a statute, common law, and public policy. Any contract who contradicts a statute, common law and public policy is therefore illegal, null and void, and courts will not assist in enforcing such a contract.
CONSIDERATION
A valid contact must have an element of consideration. A consideration is a value given in exchange for an act or a service. Consideration in this respect is the wages or salary given by the employer in exchange for the service of an employee. All valid contracts must have an element of consideration.
TERMS OF CONTRACT
The terms and conditions of a contract of employment refer to the conditions under which the contracts of employment are entered into. The two terms of contract applicable to the contract of employment are express and implied terms.
EXPRESS TERMS
The express terms are the conditions and terms expected to guide or moderate the contractual relationship between the employer and the employee that were agreed to or jointly expressed before or after the commencement of the employment relationship, by the parties involved. Express terms could take the form of oral or written document.
Express terms could be incorporated into the letter of employment and could also be in the form of a document such as Work Rules, Employment Contract Regulations or Conditions, Administrative Manual, and Collective Agreement.
IMPLIED TERMS
These are terms and conditions implied into the contract of employment which would impose rights and obligations on the parties to the contract of employment despite the fact that the parties have not expressly provided for them or jointly agreed on them. A good example of implied terms is the duties of employees and employers which may not be expressly stated in the contract paper.
An employer is expected as a duty to pay wages and to provide work. Employees on the other hand are expected to obey reasonable and lawful orders of the employer and to render their services to the employers faithfully.
TERMINATION OF A CONTRACT OF EMPLOYMENT
The contract of employment no matter how long must definitely come to an end, one day. There are many factors that can give rise to the termination of a contract of employment. A contract of employment could be terminated through the following means:
- performance,
- frustration,
- notice,
- agreement,
- summary dismissal.
PERFORMANCE
This is a situation where a contract of employment ends due to the expiration of the fixed time agreed by the parties to bring the contract to an end. This is applicable to a contract of employment that is for a fixed period of time. Another example is where the person involved has attained the age of retirement as provided for in the contract of employment. Most contract of employment only come to an end upon retirement.
Frustration
Frustration occurs when changes in the circumstances of the employment render the performance of the contract impossible. This could also happen in a situation where the obligations undertaken by parties to the contract have become radically different. Events such as war, natural disasters, death or illness of either of the parties, change of law, and imprisonment of an employee can lead to the frustration of the contract. Once this is the case, frustration occurs, and this signals the death of the contract. Therefore, both parties are automatically discharge from any contractual obligations.
Notice
A contract of employment could be terminated by notice from either of the parties. The most important thing is that the notice must be sufficient, that is, it must follow the agreed period of time specified in the contract of employment. A party whose contract of employment is expected to be terminated with three months notice must follow this to the letter. Failure to do this may render the termination as unfair and the other party can sue for damages as the case may be. Payment can also be made in lieu of notice. Great care must be taken in this respect provided the contract of employment is silence on the issue of giving payment in lieu of notice.
To avoid unnecessary litigations, termination by notice must be done in accordance with the provision contained in the contract paper. If the contract is silence on this, a reasonable notice is deemed to be adequate but what constitute a reasonable notice is for the court of law to decide.
Agreement
The parties to a contract of employment can as a result of mutual consent decided to bring the contract to a close. This agreement therefore kills the contract and discharges both parties automatically.
Summary dismissal
Summary dismissal is the sudden termination of the contract of employment of an employee by its employer without notice, payment or benefits. This is otherwise called outright dismissal. Summary dismissal could be as a result of any of the following:
- willful disobedience,
- incompetence,
- habitual neglect, and
- gross misconduct.
REMEDIES FOR WRONGFUL TERMINATION OF EMPLOYMENT CONTRACT
Employees have the right to challenge the unlawful termination of their contract of employment in the court of law. The following remedies are available to anyone whose employment contract has been terminated wrongfully.
i. Damages and compensation.
ii. Specific performance.
iii. Fair hearing.
CONCLUSION
The parties to a contract of employment must always have a detailed understanding of the terms and conditions of their employment contract as detailed in the contract papers. Employer’s representatives in charge of Human Resources should always review and update the employees’ contract of employment from time to time to keep abreast of changes in government legislations, provisions and laws as related to employment and labour issues from time to time.
All newly employed managers in charge of Human Resources must make it a point of duty to go over and digest the company’s labour policies and employment conditions so as to be able to make an informed labour decisions at all times.
Employees on the other hand are expected to go over the employment terms and conditions as the case may be before appending their signatures on them. Management must provide all employees with new labour policies and conditions for them to know the implications of such policies on their former contract of employment.
The contract of employment of any employee could be terminated at will by the employer. Employers need not give any reason for such termination, all that is required is for the employer to give appropriate notice or payment in lieu of notice as stipulated in the contract of employment.
REFERENCES
Nelson Temienor Tuedom (2006): Human Resource Management: An on the job approach, 1st edn, Page and Pictures, Lagos.
Ogunniyi Oladosu (2004): Nigerian Labour and Employment Law in Perspective, 2nd edn, Folio Publishers, Lagos, Nigeria.
Uviegara, E. E (2001): Labour law in Nigeria, 1st edn, Malthouse Press, Lagos, Nigeria.
About the author
Ajiboro Ayodeji is a Chartered HR Practitioner based in Lagos, Nigeria. Tel: 2348027807452. Email: hutrenconsulting@gmail.com.
©Hutren Consulting 2011
