OVERVIEW

More often than not, some employers fall into the error of suspending employees without pay whilst actually intending to terminate the employment.

The reason some employers do this rather than outrightly terminating the employment is not clear. It may be a way of avoiding going through the exit process which culminates in the payment of terminal entitlements to the affected employees.  Whatever the reason may be, suspending an employee indefinitely without pay is a costly mistake which not only postpones the inevitable but also increases the liability of the employer.

For employers, when there is an intention to terminate the employment of an employee, it should be done properly to effectively bring the contract to an end. This requires making sure that the provisions of the contract of employment are observed in the process of termination. The employer must ensure that laid down rules for disciplinary measures are complied with and that the employee is paid all the accrued entitlements up until the termination date. Adopting other fanciful termination methods that are contrary to the contract of employment and laid down rules only leads to expensive complications.

CAN AN EMPLOYER SUSPEND AN EMPLOYEE WITHOUT PAY?

It depends on whether the power or right to suspend without pay is contained in the contract of employment. If it is contained in the contract of employment, then an employer can suspend an employee without pay. If it is not contained in the contract of employment, then the employer cannot suspend an employee without pay. The power to suspend an employee without pay cannot be implied in a contract of employment. It must be specifically provided for in the contract.

TWO TYPES OF SUSPENSION

There are two types of suspension. administrative suspension which is used pending investigations and disciplinary suspension which is used as a punitive measure where an employee has been found liable of wrongdoing.

ADMINISTRATIVE SUSPENSION

An employer has the right to use administrative suspension when required for the protection of his business. However, this mode of suspension merely suspends the employee’s obligation to work under the contract of employment pending investigation but does not affect the employee’s entitlements. When investigations are completed, the employee must be paid all outstanding entitlements irrespective of whether the employee is found liable or not. This is of course without prejudice to the right of the employer to take other lawful steps that may be applicable following the outcome of investigations.

DISCIPLINARY SUSPENSION

The same principle applies to suspension as a disciplinary or punitive measure. This type of suspension only affects the obligation of the employee to work under the contract of employment without affecting the entitlements unless otherwise provided for under the contract of employment.

Where it is permitted by the contract of employment, the right or power of an employer to suspend without pay as a punitive measure must be exercised reasonably. The letter of suspension must contain specific details about the terms of the suspension such as the duration of the suspension and whether it is with pay, with half pay or without pay. The suspension without pay must also be for a reasonable period of time and cannot be used as a means of getting rid of the employee and neither can it be used as the notice period for termination. Indefinite suspension without pay is considered by the courts to be an unfair labour practice and as such unlawful.

THE EFFECT OF INDEFINITE SUSPENSION WITHOUT PAY

Indefinite suspension without pay is considered a constructive dismissal in law. However, the bad news for employers, who deploy this means when termination is clearly intended, is that the contract of employment remains valid and binding on both the employer and employee until it is properly terminated.

This means that the salary and entitlements of the employee will continue to accrue, and the employer will remain liable to pay such salary and entitlements.

RECENT DECISIONS BY THE NICN

  • Akinrinade Adebowale V. Orchid Hotels Limited: NICN/LA/63/2020

In the case of Akinrinade Adebowale V. Orchid Hotels Limited, the Claimant was suspended indefinitely without pay on an alleged case of insubordination for a period of over six (6) months before the Claimant approached the NICN for reliefs. In delivering judgement in favour of the Claimant on the 5th of September, 2022, Hon. Justice S. H. Danjidda found that the Defendant had no right or power under the contract of employment to suspend the Claimant indefinitely without pay. The Court, consequently, awarded the Claimant, amongst other reliefs, his salary from the date of the indefinite suspension without pay up until the date the suit was filed at the NICN (August 2019 to February 2020). The judgement in this case can be found at the portal of the NICN: https://nicnadr.gov.ng/judgement/details.php?id=7299

  • Adebisi Kilaso V. Orchid Hotels Limited: NICN/LA/299/2020

In the case of Adebisi Kilaso V. Orchid Hotels Limited, the Claimant was suspended indefinitely without pay on an alleged irregularity in the course of her duties for a period of over twelve (12) months before the Claimant approached the NICN for reliefs. In delivering judgement in favour of the Claimant on the 30th of March, 2023, Hon. Justice A. N. Ubaka found that the Defendant had no right or power under the contract of employment to suspend the Claimant indefinitely without pay. The Court, consequently, awarded the Claimant her salary from the date of the indefinite suspension without pay up until the date of Judgement (August 2019 to March 2023).

  • Favour Bala V. Orchid Hotels Limited: NICN/LA/237/2020

In the case of Favour Bala V. Orchid Hotels Limited, the Claimant was suspended indefinitely without pay for allegedly purchasing a fake cough syrup. The Claimant was suspended indefinitely without pay for a period of over 48 (forty-eight) months before the Claimant approached the NICN for reliefs. In delivering judgement in favour of the Claimant on the 21st of June, 2024, Hon. Justice I. G. Nweneka found that the Defendant had no right or power under the contract of employment to suspend the Claimant indefinitely without pay. The Court, consequently, awarded the Claimant, amongst other reliefs, her salary from the date of the indefinite suspension without pay up until the date the Claimant responded to the defence of the Defendant in the suit; the Defendant having demonstrated its intention to terminate the employment of the Claimant in its defence (July 2017 to December 2020).

In all the three (3) cases referenced above, the Honorable Justices of the NICN agreed to the fact that the Defendant ought to have simply terminated the employment of the respective Claimants rather than suspend them indefinitely whilst their respective contracts of employment subsisted.

The Defendant ended up paying more than it would have paid to each of the Claimants if their employments were terminated properly and their respective entitlements paid at the time of termination.

Chidozie Uzowulu, MCIArb. (UK)

Adetayo Olaoye CUA LEGAL