Introduction:
A recurring issue in many employment relationships in Nigeria is whether an employer can suspend an employee indefinitely without pay. While the Nigerian Courts have, on many occasions, held that an employer lacks the implied contractual right to suspend its employees indefinitely without pay on disciplinary grounds, the issue of suspension without pay continues to arise in practice.
In the case of Mr James Dada v. Dee-Pee Global Packaging Limited (Unreported Suit No. NICN/IB/31/2022), judgment delivered by Hon. Justice J.D. Peters on 13 January 2025, the National Industrial Court of Nigeria had the opportunity to reiterate the position of Nigerian law on whether or not an employer could suspend an employee indefinitely without pay. The Court went further in its judgment by also highlighting the only instance in which an employer could suspend an employee without pay.
Summary of the Facts of Mr James Dada v. Dee-Pee Global Packaging Limited
The Claimant was employed by the Defendant as a Trainee Operator on 18 April 2011 and was placed on indefinite suspension without pay on 30 October 2020. As of the date he filed his lawsuit against the Defendant at the National Industrial Court of Nigeria (NICN), he had been on indefinite suspension for 20 months.
The Defendant’s case was that it had issued several queries to the Claimant in the past regarding conduct which the Defendant considered inimical to its overall interests. However, on the night of 28 October 2020, the Defendant found the Claimant sleeping while the Defendant’s production machine was running empty, resulting in the Defendant incurring significant financial and economic loss. As a result of the Claimant’s action, the Defendant suspended him indefinitely without pay.
As a result of his suspension, the Claimant filed a lawsuit alleging that it was contrary to the terms of his employment and constituted an unfair labour practice. He also claimed general damages as well as his outstanding salaries and allowances up to the date of judgment.
Summary of the Court’s Decision
The NICN agreed with the Claimant’s position that his indefinite suspension without pay for 20 months was wrongful and amounted to an unfair labour practice because his contract of employment contained no provision permitting his employer to place him on such a suspension. Hon. Justice J.D. Peters, at Paragraph 24 of the judgment, held as follows:
“I have carefully examined all the exhibits tendered and admitted in this case. I find nothing in the contract between the parties conferring the Defendant with power to suspend or to suspend indefinitely without pay as the Defendant has done. The conduct of the Defendant is nothing short of denying the Claimant completely of his means of livelihood and hence ability to meet financial obligations both to his immediate family and the society at large. It is an unfair labour practice for an employer to denying an employee his salary and allowances under the guise of exercise some form of disciplinary control through indefinite suspension.”
In addition to its decision above, the NICN further stated that an employer could not even reduce the employee’s salary by half under the guise of a suspension, and it relied on the Court of Appeal’s decision in UBA v. Oranuba (2014) 2 NWLR (Pt. 1390) 1 at 22 where the Court upheld the trial Court’s decision that suspending the Respondent on half salary without giving her a hearing was a breach of fair hearing and natural justice.
Although the Court acknowledged that an employer has a general power to suspend its employee as a disciplinary measure, it clarified that a suspension was neither a demotion nor a termination of the contract of employment. Therefore, an employer cannot rely on suspension to deny employees their benefits under their contracts of employment. In effect, the only instance in which an employer can suspend an employee without pay is where the contract of employment expressly permits it.
After determining that the Claimant’s indefinite suspension was wrongful, the Court ordered the Defendant to pay him all arrears of salary and entitlements from October 2020, when he was placed on indefinite suspension, until the date the Court delivered its judgment. However, the Court also held that his employment would be deemed terminated from the date the judgment was delivered.
Key Takeaways from the NICN’s Decision
- The suspension of an employee cannot be treated as a demotion or termination of employment.
- Although an employer has the right to place an employee on suspension, it cannot withhold payment of the employee’s salary or allowances during the period of suspension unless the contract of employment expressly permits it.
- The indefinite suspension without pay of an employee will be regarded as a wrongful and unfair labour practice unless the contract of employment allows for it.
- Employers must ensure that the duration of an employee’s suspension is specific, as an indefinite suspension will be regarded as wrongful.
- Employers must ensure that any disciplinary measure they impose on their employees is in accordance with their contracts of employment.
- Where an employee’s suspension is found to be wrongful, a court may decline to order reinstatement and may instead deem the employment terminated as at the date of judgment, with the arrears of salary and entitlements limited to that date.
Conclusion
The NICN’s decision serves as a timely reminder to employers that even if the actions of their employees lead to a loss of revenue or business opportunities, they must ensure that they do not place their employees on an indefinite suspension without pay, as the NICN will not hesitate to declare such a practice wrongful and an unfair labour practice. To guard against this risk, employers should review their contracts of employment and employee handbooks to ensure that they expressly provide for suspension as a disciplinary measure and specify the duration of any suspension. An employer that wishes to retain the ability to suspend without pay must also ensure that the contract of employment expressly confers that right.
Please note that this article is for general information only. We do not offer it as advice on any particular matter, whether legal, procedural or otherwise. If you have questions about this article, please contact:
Faruq Abbas (Managing Partner): foa@abdu-salaamabbasandco.com.
George Ayanjompe (Senior Associate): george@abdu-salaamabbasandco.com.
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