UNDERSTANDING THE LEGAL MAZE OF PROBATIONARY PERIODS IN NIGERIAN EMPLOYMENT LAW: A GUIDE FOR MODERN DAY EMPLOYERS OF LABOUR

INTRODUCTION

Picture this, an HR Manager sits in her office, reviewing the files of new hires who started their probationary periods three months ago. The company has, no doubt, invested considerable resources in its recruitment, onboarding and training. While some employees show promise, others are struggling significantly. With their probationary periods halfway through, critical decisions loom: “Should their employment be terminated or confirmed?”. Like many Nigerian employers, she knows these decisions will impact not just the company\’s bottom line but also team dynamics, productivity and potentially even legal liability.

This scenario plays out daily across businesses in Nigeria, where employers must navigate the delicate balance between protecting organizational interests and fulfilling legal obligations during and even after the probationary period[1]. For many organizations, this period represents both opportunity and risk – a chance to assess potential employees thoroughly and also a time of significant investment with somewhat uncertain returns. The aim of this article is to educate and sensitize employers on the legal implications of their decisions or lack thereof as well as the legal framework governing this quintessential stage of employment.

PROBATIONARY PERIODS: MORE THAN JUST A TRIAL PERIOD

Pertinently, the legal stakes during this crucial period have never been higher. The probationary period, often viewed simply as a trial phase[2], carries significant legal implications that many Nigerian employers overlook. Recent decisions of the Nigerian Courts, particularly the recent decision of the National Industrial Court of Nigeria (NICN) in the case of Ann Chiamaka Nwanguma v Artee Industries Limited[3], have  transformed this seemingly straightforward phase into a legal minefield requiring careful understanding and navigation.

Ordinarily, employment contracts form the foundation of the relationship between employers and employees[4]. The contracting parties have the liberty to include and define the terms of the contract, and as long as these terms are documented in writing, they are largely enforceable under Nigerian law[5]. This seems simple enough, however, in the earlier alluded case of Ann Chiamaka Nwanguma v Artee Industries Limited (supra); the employment contract stipulated a probationary period of six months and afforded the employer the discretion to extend it by an additional three months. The Claimant, however, worked for the Defendant for a period of 17 months without receiving confirmation of her employment before her contract was eventually terminated.

In a lawsuit alleging wrongful termination, the (NICN) held that any clause in an employment contract permitting the employer to perpetually extend the probationary period constitutes an unfair labour practice and is therefore void. As held by the Honourable Court:

“The defendants did not confirm the claimant’s appointment, who had served for a total of 17 months, 11 of which months was above the contractual 6-month probation, before the discharge [para 2 of the Letter of Appointment-Exhibit CL], claiming that they extended her probation because her performance was not satisfactory and that, there was a clause in the letter of employment that allowed them to do this. This is an instance of unfair labour practices, which S. 254C-(1)(f) of the Constitution forbids in labour relations in Nigeria. It is an unfair labour practice to retain the right to perpetually extend probation period.”

Before now, at the effluxion of the probationary period the options available to the employer were clear cut; (a) to confirm the employment either expressly or impliedly, (b) extend the probationary period where such clause is explicitly contained in the contract of employment[6] or (c) terminate the employment altogether. However, the recent decision of the NICN, has not only seemingly, with respect, muddied the waters with regards to the right of the employer to extend the probationary period but has also called into question the foundational principle of “Sanctity of Contract” between contracting parties who voluntarily entered into a binding contract.

The principle of sanctity of contract denotes that parties are bound strictly by the terms and conditions of the contract entered into by the free will of parties[7]. The Honourable courts are in turn enjoined to respect this principle by enforcing contracts as they are, provided they are lawful and entered into without duress, undue influence, fraud, or misrepresentation.[8]

This principle also acts to preclude the courts from rewriting and/or altering the terms of a contract to impose outcomes that were not originally intended by the parties. Instead, the court’s role is to interpret and enforce the terms as agreed, giving effect to the mutual intentions of the contracting parties.

In further expounding this principle, the Supreme court in the case of AG RIVER STATE v. AG AKWA IBOM STATE[9], held thus:

“Where parties have entered into a contract or an agreement voluntarily and there is nothing to show same was obtained by fraud, mistake, deception, or misrepresentation they are bound by the provisions or terms of the contract or agreement. This is because a party cannot ordinarily resile from a contract or agreement just because he later found that the conditions of the contract or agreement are not favourable to him… Moreover, a Court of law must respect the sanctity of agreement reached by parties, where they are in consensus ad idem as regards the terms and conditions freely and voluntarily agreed upon by them and expressed in written form.”

Premised on the foregoing judicial authority of the apex court re-echoing the settled principle of law, we respectfully beg to hold a different view with the erudite conclusion of the NICN, and thus, opine that the decision of the NICN in the case of Ann Chiamaka which voided the “extension clause” that was for a period of 3 months only, amounts in our respectful view, to imposing an outcome not intended by the contracting parties and contrary to the mutual intentions of said parties. An extension clause in an employment contract that provides for an extension by an additional “fixed term” of three months should not be construed as an unfair labour practice or an attempt by the employer to “perpetually” extend the probationary period.

Extension clauses in employment contracts should ordinarily be enforceable, provided the extension period is reasonable and both parties agree to be bound by it. However, the case of Ann Chiamaka has created an exception, as it highlights the potential for breach and abuse by the employer, which influenced the Honourable court\’s decision. Moving forward, employers must ensure that any extension clause included in an employment contract is not only reasonable but also applied fairly to avoid claims of unfair labour practices.

THE PRINCIPLE OF DEEMED CONFIRMATION

As earlier alluded to, at the end of the probationary period, an employer is faced with three (3) options; to either confirm the status of the employee, extend the probationary period for a fixed term where the contract explicitly provides for same or terminate the employment contract.

Under Nigerian law, where an employer fails to confirm or terminate an employee\’s status at the end of the probationary period, it is implied that the employee’s status has been confirmed. Consequently, the employee is deemed to be under a permanent contract of employment and becomes entitled to all the rights and benefits associated with such status.

In reinforcing this principle, the Honourable Court  of Appeal in the case of Reliance Telecom Ltd V. Adeboyega[10] held thus;

“…In Obafemi Awolowo University v. Dr. A. K. Onabanjo (1991) 5 NWLR (Pt. 193) pg 549 at 569 paras. G-H & pg 570 paras. D-E. Akpabio, J.C.A. (as he then was) in the above case, held thus \”the appellant had delayed unnecessarily in making up their minds whether to terminate or confirm respondent’s probationary period. By keeping him in his employment and continuing to pay him in his employment and continuing to pay him for four months, after the probationary period of three years had expired, they would be deemed by operation of law to have confirmed his appointment and the doctrine of estoppel by conduct would operate to prevent the appellant from alleging or treating him as if he was still on probation. Delay defeats equity. From the above decision of the Appeal court, I am of the view that the Claimants appointment was confirmed by the Defendant immediately after the three months expiration”

KEY TAKEAWAYS

For employers and employees alike, the Ann Chiamaka case underscores the need for a meticulous approach to managing probationary periods. Here are some actionable takeaways:

1.    A Clear and Comprehensive Probationary Clause: Employers should ensure that employment contracts explicitly outline the terms of probation, including duration, evaluation criteria, and the process for confirmation or termination.[11]

2.    Document Performance Evaluations: Employers and HR Managers are enjoined to maintain thorough records of the employee’s performance during probation. This documentation can serve as evidence in the event of disputes.[12]

3.    Follow Due Process and Make Timely Decisions: Adhere to contractual and procedural requirements when making decisions about an employee on probation. This includes providing adequate notice and an opportunity for the employee to respond to performance concerns.

4.    Train Managers on Legal Compliance: Equip managers with knowledge of employment laws and best practices to minimize risks associated with probation-related disputes.

5.    Seek Legal Advice When in Doubt: Consult legal professionals to ensure compliance with the evolving landscape of employment law, particularly in light of recent judicial decisions.

CONCLUSION

The probationary period in Nigerian employment law is not just a simple trial phase but a critical stage fraught with legal implications. Employers must carefully draft contracts, follow due process, and stay informed about evolving judicial interpretations to navigate this phase successfully. By adopting best practices and seeking professional advice, when necessary, organizations can protect their interests while upholding the rights of their employees, fostering a productive and legally compliant work environment.

Please note that the foregoing is not in any way intended as a legal advice. Please contact the underlisted if you require any legal advice.

References

[1] https://Onboard Or Overboard: Navigating the Currents of Probationary Practices in Nigeria – Employee Rights/Labour Relations – Nigeria accessed on the 8th of January, 2025

[2] https://Perspectives on Probation, Confirmation and Promotion in Employment Contract | Kayode Omosehin, Esq. – Legalnaija accessed on the 8th of January, 2025

[3] Suit No. NICN/EN/39/2019; https://Ann Chiamaka Nwanguma -VS- Artee Industries Limited & 3 ORS- National Industrial Court of Nigeria accessed on the 7th of January, 2025

[4] Organ & Ors v. Nigeria Liquefied Natural Gas Ltd & Anor (2013) LPELR-20942.

[5] Olaniyan v. University of Lagos (1985) (Pt. 9) 599 at 669.

[6] Obafemi Awolowo University v Onabanjo (1991) 5 NWLR (Pt. 193) 549.

[7] https://The Principle of Sanctity Of Contract – Contracts and Commercial Law – Nigeria accessed on the 9th of January, 2025

[8] https://Duress and Undue Influence: Void Contracts and Coercive Tactics – FasterCapital accessed on the 7th of January, 2025

[9] (2011) 8 NWLR (Pt.1248) 31

[10] (2017) 8 NWLR (Pt. 1567) 319, (Pp 6 – 10 Paras E – F)

[11] https://The Practice of Probationary Employment in Nigeria.cdr accessed on the 9th of January, 2025

[12] https://HR Documentation: A Complete Guide (With Best Practices) | Indeed.com accessed on the 9th of January, 2025

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Please do not treat the foregoing as legal advice as it only represents the public commentary views of the authors. All enquiries on this Brief should please be directed at: 

Chinedu Anaje
Partner
chinedu.anaje@ao2law.com

Oluwasijibomi Alafe

Senior Associate
oluwasijibomi.alafe@ao2law.com

Chinemeze Eze

Senior Associate
chinemeze.eze@ao2law.com

Kelvin Erue

Associate
kelvin.erue@ao2law.com