Nigeria: "I Resign With Immediate Effect"

Last Updated: 14 August 2018
Article by Perchstone & Graeys

An employee resigning, especially due to unpalatable circumstances such as habitual non- payment/past-due payment of salaries or unfair labour practices by employer, can be a truly unsavoury event with the employee having to grapple with the emotional, economic and social consequences of such action. If the employee resigns with immediate effect, does the employee lose all earned salaries or benefits outstanding? Coupled with the unsavoury consequences above, a misunderstanding of the position of law about the issue may further compound the employee's problems. Recently, the National Industrial Court of Nigeria (NICN) was confronted with the task of determining the right of an employee as to earned salary and employee benefits upon immediate resignation.

DR DAVE NWABOR V. OILFLOW SERVICES LTD.1

On March 19, 2014, the claimant was employed by the defendant company with his monthly salary set at N1,000,000.00, amongst other benefits. Being fraught with non-payment of the employee's salaries as at when due, the employment was short and lasted only 5 months and three weeks. For the entire period of the employment, the claimant was paid only twice. Even then, both salaries came behind schedule.

At the start of the employment, despite the late salaries, the claimant continued to work for his employer. By August 29, 2014, he stopped coming to work and followed up his absence with a resignation letter on October 8, 2014. After resigning, the employee's solicitors made a formal demand of the sum of N6,000,000.00 representing outstanding salary and flight expenses. The defendant then paid N1,000,000 after which it represented that it would satisfy the outstanding sum. Hereafter, the defendant adamantly refused to settle the outstanding sum and denied owing the claimant. The claimant then filed an action at the NICN.

The court found that the claimant effectively resigned on October 8, 2014, when the employer received his letter wherein he asked the employer to "...accept this letter as my formal notice of resignation from Oilflow Services Nigeria Ltd, effective immediately".2 This statement played a significant role in the Court's decision as the court held that the statement indicated that the claimant's resignation was effectively immediately and he ceased to be an employee of the employer upon the latter's receipt of the letter. The Court refused to be swayed by the Employee's offer (in his letter of resignation) to help the company train a potential replacement within two weeks, stating that his offer cannot be considered as notice.

COMMENTARY

A. EMPLOYEE'S IMMUTABLE RIGHT TO RESIGN

The court's decision reaffirmed the now settled position that an employee has an immutable right to end a contract of employment by resignation.3 The right of the employee to resign at will is founded on the general principle that the law cannot foist an unwilling servant over a master and vice versa and in effect, resignation automatically takes effect upon the delivery of the letter of resignation to the employer by the employee.

In a decided case, the employer, a commercial bank, inserted a clause that reserves the right to reject a notice of resignation or payment in lieu from an employee if it is seen as strategy to cover up a fraud or misconduct to avoid disciplinary action. The Court struck down the clause and held that the clause is tantamount to forced labour4 and as such the provision was illegal.5

B. LEGAL CONSEQUENCES OF RESIGNATION WITH IMMEDIATE EFFECT

Resignation with immediate effect by an employee carries with it three legal consequences:

  1. the right to leave service automatically;
  2. the employee's forfeiture of any employee benefit; and
  3. the employee paying any indebtedness to his employer.

Granted, the right of the employee to resign admits no restriction; but where the contract of employment prescribes an obligation which the employee is expected to fulfil for the termination of the contract to crystallize, the employee will forfeit any benefit that inure to him for resigning with immediate effect. For instance, where the contract of employment provides that the employee give the employer notice of termination of the contract for a specific period or pay in lieu of the notice and the employee abruptly ends the contract, the employee will forfeit claimable benefits. The same principle also applies to where the employee is indebted to the employer.

Consequently, distinguishing between employee benefit and earned salary in an employment relationship is paramount to determining the scope of claims an employee who resigns with immediate effect may make from the employer. Employee benefits are "non-salary compensation that can vary from one establishment to another; often indirect and non-cash payments within a compensation package, and provided in addition to salary to create a competitive package for the potential employee". In this sense, earned salary would not qualify as benefit, benefits are an add-on to salaries. Resignation with immediate effect cannot disentitle the employee from earned salaries.

The deduction that can be made from the decisions of the Court in these cases is that an employer whose employee resigned with immediate effect still has the duty in law to pay the employee all earned salaries. However, the employer has a right in law to withhold other fringe benefits such as bonuses, and allowances accruable to the employee as the consideration for all other obligation of the employee under the contract.

CONCLUSION

The Court has clearly distinguished between employee benefits and earned salaries. The rationale for the forfeiture of benefits upon immediate resignation is that benefits forfeiture inures as contractual consideration for the immediate and automatic separation of contractual relationship as per the employment and therefore it cannot be that an employee who resigns with immediate effect can also benefit from such immediate separation by claiming benefits from the employer.6 In this wise, the employee pictured above may need to exercise some tact before jetting out that door.

Footnotes

1. Unreported Suit No. NICN/LA/552/2015 which judgment was delivered on July 10, 2017.

2. WAEC v. Oshionebo [2006] 12 NWLR (Pt. 994) 258 CA; Yesufu v. Gov. Edo State [2001] 13 NWLR (Pt. 731) 517 SC.

3. See WAEC v. Oshionebo [2006] 12 NWLR (Pt. 994) 258 CA.

4. Contrary to section 34(1)(c) of the 1999 Constitution and section 73(1) of the Labour Act.

5. Ineh Monday Mgbeti v. Unity Bank Plc, Unreported Suit No. NICN/LA/98/2014, judgment delivered on 21st February 2017.

6. Dr (Mrs) Ebele Felix v. Nigerian Institute of Management, Unreported suit number NICN/LA/321/2014, which judgement was delivered on July 4, 2017.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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