Generally, the common means by which employment relationship is brought to an end is by termination. Customarily, a termination clause is inserted into a contract of employment to be invoked by either party and will not result in adverse legal consequences in so far as the invoking party fulfils the precondition(s) set out in the contract of employment in respect of termination notice and related matters. However, in times of economic downturn, excess manpower, or due to technological or structural reasons, employers of labour may be compelled to adopt measures that will enable them to remain in business. One of such measures is the declaration of some positions in the business organization as redundant and consequently reducing the number of employees on the grounds of redundancy.

The aftermath of the adoption of redundancy as an option for reducing the number of employees is often complicated, in that, whilst the affected employees would lose their means of livelihood, employers are at risk of industrial actions by the disengaged employees. It is therefore in the best interest of employers to follow the letters of the law and international best practice (where applicable) in the disengagement of their employees based on redundancy.

This article seeks to briefly examine the law and practice of redundancy in Nigeria, as well as the application of international best practice on the subject.

Laws and Rules Applicable to Redundancy

Redundancy procedures in Nigeria are governed by the following:

1. The Nigerian Labour Act (“The Act”).
2. The decisions of the Court i.e. case laws.
3. The employment contracts of the affected employees/employment handbook.
4. The provisions of any collective bargaining agreement between an employer and the representatives of a trade union.
5. Applicable international best practices.

Meaning And Scope of Redundancy

Redundancy is defined under Section 20(3) of the Act as “…involuntary and permanent loss of employment caused by excess manpower”. However, there appears to be a lacuna in the provision of section 20 of the Act in the definition of the concept of redundancy, in that; the Act failed to stipulate what can lead to excess manpower. Nonetheless, it is important to mention that factors such as technological advancement, acquisition of a company, or even restructuring have been considered by the court as valid grounds for declaring redundancy.

In Union of Shipping, Clearing and Forwarding Agencies Workers of Nigeria v. Management of Transaltic Nigeria Limited (1988) Unreported, Suit No: NIC/14/87, the court had the opportunity to examine the nature of redundancy, and accordingly held that, “a redundancy occurs when the services of a worker, having been in the continuous employment of an employer, are no longer required by that employer due to no fault of the worker”.
Also, in Adibuah v. Mobil Oil (Nig) Plc, 2015 LPELR-40987 (CA), the Court of Appeal in explaining the nature of redundancy reasoned that, “Redundancy in service is a mode of removing an employee from service when his post is declared redundant by his employer. It is therefore not a voluntary retirement, nor is it a dismissal from service. It is also not a voluntary or forced resignation, nor is it a termination of appointment. Rather, it is a unique procedure whereby the employee is quietly and lawfully relieved of his appointment. As such, the conditions applicable to redundancy are quite distinct from those applicable to retirement or other modes of relieving an employee from active service, such as termination, compulsory resignation or dismissal.”

It is observed that the scope of redundancy in our legal jurisprudence appears rather too broad to allow for precision and certainty in the law, and as such, the courts are left with the task of providing appropriate interpretation whenever a dispute arises in this regard.

Procedure For Redundancy

The procedure for the discharge of employees on the ground of redundancy is contained under Section 20(1)(a-c) of the Act. The section provides that in the event of redundancy:

a. The employer shall inform the trade union or workers’ representative concerned of the reasons for and the extent of the anticipated redundancy.

b. The principle of “last in, first out” shall be adopted in the discharge of the particular category of workers affected, subject to all factors of relative merit, including skill, ability, and reliability; and

c. The employer shall use his best endeavours to negotiate redundancy payments to any discharged workers who are not protected by regulations made under subsection (2) of this section.

Section 20(2) of the Act provides that the Minister (in charge of labour and employment) may make regulations providing, generally or in particular cases, for the compulsory payment of redundancy allowances on the termination of a worker’s employment because of his redundancy. However, no such regulation is in place in respect of redundancy. It expected that stakeholders would take up this matter with the Minister to ensure that a standard regulation is put in place in line with international best practice. In the absence of the regulation, employers may do well to abide by the provisions of collective bargaining agreements made with representatives of trade union; the employment contract and indeed the extant employment handbook.

It is pertinent to note that section 20(1)(a) would only apply if the affected employees belong to a union. In this respect, section 3(3) of the Trade Union Act appears to restrict employees recognized as “management” staff from becoming members of a trade union. This however would seem contrary to the provision of section 40 of the 1999 constitution which provides that every person is entitled to associate with any other persons or form or belong to an association for the protection of his or her interests.

In Alhaji A. Odutola v Nigeria Telecommunications Plc. FWLR 2006 pt. 335, the court adopted the definition of an executive employee in the Black’s Law Dictionary as “an employee whose duties include some form of managerial authority and active participation in the control, supervision and management of the business – often short to executive.” t

In the circumstances where there is no union/employee representative, or when a management staff is involved, it may be prudent for an employer to resort and indeed rely on the provisions of any applicable contract of employment and employment handbook in negotiating the processes of disengaging management employees on grounds of redundancy.

In addition, the effect of section 20(1)(b) is that the employee who was employed last shall be the first to be considered for discharge during a redundancy exercise. Despite this general rule, the employer is entitled to consider other factors like the relative merit, skill, ability, and reliability of the employees in adopting the “last in, first out” principle. The employer is also obligated by the provisions of section 20(1)(c) to use its best endeavours to negotiate redundancy payment to the discharged employees who are not protected under any extant regulation made pursuant to the Act

In essence, all that is required of an employer in a redundancy procedure is to firstly give a notice to the affected employees stating the reasons for their discharge on the ground of redundancy; and secondly, apply the “last in, first out” principle as elucidated above; and thereafter use his best endeavours to negotiate redundancy payment to the discharged employees who are not covered by any existing regulation.

It has been observed that, where an employee is discharged on the ground of redundancy, the employee is only entitled to his redundancy benefits as stated in the contract of employment, collective bargaining agreement or regulation. In Mr. J. M. J Asinobi & Ors v. Nigerian Breweries Plc (2018) LPELR – 45876 (CA) the court held that, apart from what a collective bargaining agreement stipulate as compensation for affected employees in the event of redundancy or additional ex-gratia payments flowing from a redundancy policy, the redundant employees cannot claim other benefits. As such, the affected employees do not have any right to reinstatement or any other benefit as it is a settled law that the court cannot force a willing employee on an unwilling employer and vice versa.

International Best Practice

In recent times, the National Industrial Court and indeed the Court of Appeal have adopted and pronounced on provisions of the International Labour Organization Convention (“the convention”) and other labour law conventions, even though the convention has not been ratified and domesticated in Nigeria in line with section 12 of the 1999 Constitution. The adoption of these international conventions flows largely from the provision of section 254C(f) and (h) of the 1999 Constitution.

In the case of Bello Ibrahim v Ecobank Plc, the National Industrial Court (NIC) in Suit No. NICN/ABJ/144/2018 deviated from applying the common law principle of “he who hires, can fire, for good reason, bad reason or no reason at all” and the court relying on Sections 254C(1)(a)(f)(h) & (2) of the 3rd alteration of the 1999 Constitution of Nigeria and Section 7(1)(a) & (6) of the National Industrial Act 2006 (NIC Act) held that the dismissal of the Plaintiff was wrongful as it did not comply with C158 – Termination of Employment Convention,1982 (No. 158). The Court employed the Termination Convention as a basis to determine what amounts to “international best practice” for dismissal under Nigerian employment and labour law.

It is expedient to consider some salient provisions of the ILO Convention No. 158 as they relate to redundancy. The procedure for redundancy is provided for in Article 13 and 14 of the convention. Article 13 of the convention provides that; when the employer contemplates terminations for reasons of an economic, technological, structural, or similar nature, the employer shall:

a. Provide the workers’ representatives concerned in good time with relevant information including the reasons for the terminations contemplated, the number and categories of workers likely to be affected and the period over which the terminations are intended to be carried out;

b. Give, in accordance with national law and practice, the workers’ representatives concerned, as early as possible, an opportunity for consultation on measures to be taken to avert or to minimize the terminations and measures to mitigate the adverse effects of any terminations on the workers concerned such as finding alternative employment.

Article 14 of the convention provides that; “When the employer contemplates terminations for reasons of an economic, technological, structural or similar nature, he shall notify, in accordance with national law and practice, the competent authority thereof as early as possible, giving relevant information, including a written statement of the reasons for the terminations, the number and categories of workers likely to be affected and the period over which the terminations are intended to be carried out.”

From the foregoing, the obligation of an employer under the convention includes information, consultation, and notification. An important improvement on the position under the Act is the requirement for the employer proposing redundancy to enter into consultations as to efforts to mitigate the job losses.


The aftermath of redundancy could be complicated, especially in situations where the employer has failed to comply with procedure laid down by law in carrying out a redundancy exercise. For the avoidance of conflict and possible litigation, an employer must ensure strict adherence to the procedure for discharge of employees on the ground of redundancy, otherwise, the affected employees may be entitled to approach the court to seek relief against the employer, or at worst, such failure on the part of the employer may be a basis for industrial action by the organized labour union.