Introduction to Probationary Period Clauses
Navigating probationary period clauses in employment contracts requires a nuanced understanding of the legal framework. A probationary period clause is a provision included in an employment contract that outlines the terms and conditions of a trial period at the beginning of employment. These clauses serve as both a gateway for employers to evaluate new hires and an opportunity for employees to demonstrate their capabilities. Essentially, employers often hire new employees on probationary periods to determine if they are a good fit for the role. These periods are also beneficial for new hires, providing an easy way to leave the company if the job doesn't meet their expectations as presented during the interview process. During this time, both the employer and the new employee can end the employment with a shortened notice period. However, recent shifts in judicial interpretation, particularly spearheaded by the National Industrial Court of Nigeria (NICN), have ushered in radical changes that demand a closer examination. This article explores the purpose, legal framework, and strategies for both employers and employees, aiming to provide clarity and guidance for navigating this crucial phase of employment.
Legal Framework and Purpose of Probationary Clause in Employment Contracts
In Nigeria, employment contracts serve as the primary framework governing the relationship between employers and employees.1 Parties have the freedom to establish contract terms, which, if written and free from invalidating factors, are enforceable by Nigerian courts. 2
A key feature often included in these contracts is the probationary or qualifying period which benefits both employers and employees. It allows employers to assess new hires' suitability for permanent roles,3 employ the most competent workforce and correct recruitment errors without significant costs attached to the business.4 For employees, it offers a chance to showcase skills and evaluate job fit with their career goals and satisfaction levels. 5
In Nigerian employment law, the probationary period is governed by the terms of the employment contract,6 rather than specific provisions under the Labour Act.7 Therefore, employers cannot unilaterally modify or extend probationary terms without the probationer's consent, breaching the contract terms and inadvertently confirming the employee's status. 8 Typically, probationary clauses will outline the duration of the period, benefits included, and termination procedures, often allowing for termination without the usual notice requirements. During this period, employees have limited rights or benefits9 and can be terminated according to contract terms.10 Performance evaluations are common during this period, aiding both parties in gauging progress and meeting expectations.
At the end of probationary period, three primary outcomes are typically considered, each depending on the employee's performance: formal confirmation, extension of the probation period, or termination. However, delays in confirmation without termination may result from employer hesitancy or administrative oversights from the organization's human resources department,11 potentially constituting unfair labor practices. If not addressed promptly and clearly, such situations might result in the employee being deemed a confirmed staff member by default.12 When considering extending the probationary period, it is essential that the reasons are directly related to its initial purpose. Extensions should be reasonable and aligned with assessing the employee's suitability for the role. Employers must ensure that such decisions are solely for evaluating the employee's compatibility and performance and are clearly communicated and documented to prevent any perception of unfair treatment.
Radical Changes Introduced by the NICN
The National Industrial Court of Nigeria (NICN), with exclusive jurisdiction over labour and employment matters, has recently adopted a stringent approach to interpreting probationary period clauses in employment contracts. By leveraging its constitutional powers to integrate international principles, notably from the International Labour Organization (ILO), and global best practices into its decisions, 13 the NICN has made significant changes to the regulatory framework governing probationary periods in Nigerian employment contracts.
According to the NICN's jurisprudence, if an employer fails to either confirm or terminate an employee following the probationary period, while still benefiting from the employee's services, it will be considered as tacit confirmation of employment by conduct. Consequently, the employer cannot deny the employee's confirmation.14 The NICN has further articulated that if an employees' services continue beyond the probationary period without a new contract confirming employment, it is seen as a formation of a contract of indefinite duration, deemed to have been formed from the probationary period's start date and entitling the employee to full termination benefits. 15
The NICN's position holds that employment can be confirmed by conduct immediately after the probationary period, even if just one day has passed. In the case of Ipinlaye Ayodeji Oluseun v. Hallmark Health Services Limited,16 the NICN ruled that allowing an employee to work beyond the probationary period implies confirmation of employment. Therefore, any additional conditions for confirmation, such as medical examinations or reference checks, must be completed within the probationary period. Any termination following the probationary period based on negative outcomes from these checks is deemed an acknowledgment of employment confirmation. 17
Given the NICN's employee-centric and liberal stance on employment issues, it is crucial for employers to make timely decisions at the end of the probationary period. Employers must either confirm, terminate, or extend probation within this period, as failure to do so may result in employment being deemed confirmed.
Global Perspectives: What does the ILO say?
The ILO, a specialized agency of the United Nations, focuses on protecting the interests and welfare of the global workforce while promoting human dignity and labour rights. One of its conventions, ILO Termination of Employment Convention of 1982 (No. 158) ("Convention 158"), 18 focuses on employer-initiated termination of employment. Although Nigeria has not ratified Convention 158, the NICN has incorporated its provisions into employment dispute resolutions. 19
Article 2(2) of Convention 158 permits member countries to exclude certain groups of workers, including probationary employees, from its termination rules. While the Convention outlines three core termination principles – valid reasons,20 opportunity for defense against employer's allegations, 21 and right to appeal22 – these do not apply to probationary employment under the Convention. Consequently, probationary employees have less protection in terms of pretermination procedures, highlighting the distinction between regular and probationary employment. 23 This exclusion acknowledges the need for flexibility in assessing new hires' performance. However, it also leaves probationary employees vulnerable, giving employers more discretion in terminations without the stringent requirements of Convention 158.
Termination Process: The Need for Employers to Exercise Caution.
While probationary employees may have less protection under Convention 158, employers are still expected to act fairly, transparently, and observe due process as outlined in the contract of employment during the termination process. Dismissing employees after their probation periods and replacing them is inconsistent with the objectives of a probationary period and constitutes unfair labour practice. Employers should provide probationary employees with a fair and reasonable opportunity to demonstrate their capabilities through regular feedback, training, and guidance, respecting employees' rights to fair labour practice. Reasonable performance standards24 should be set for new hires, considering factors such as job nature, required skills, industry norms, and individual circumstance.
Further, employers should not exploit the contractual framework of probationary periods by unnecessarily prolonging them, potentially leading to deprivation of employees' permanent employment status. The period of probation should be reasonable, considering factors such as industry standards, job complexities, statutory regulations where applicable, requisite training and learning curve, performance evaluation against predetermined criteria, feedback mechanisms, and the employee's proficiency level. 25 These factors would aid employers in determining the appropriate probationary period, while providing employees with a fair opportunity to demonstrate their capabilities.
Ensuring Fair and Effective Probationary Practices
In Nigeria, employers face increasing scrutiny and legal obligations regarding probationary periods. The National Industrial Court's assertiveness emphasizes the need for strict adherence to contracts and fair labour practices. Employers must understand that probation is not just a formality but a crucial phase requiring transparency and fairness. Dismissing employees unfairly or prolonging probation can lead to legal and reputational harm. Instead, fostering a culture of feedback and training during probation enables employee growth.
Staying updated on legal standards is essential to ensure compliance and a respectful workplace. By navigating these complexities well, employers will not only reduce legal risks but also promote talent development and organizational success in Nigeria's evolving labour market.For further inquiries about labour and employment matters, please contact: Dayo Bello at dayo.bello@scp-law.com.
Footnotes
1. Organ & Ors v. Nigeria Liquefied Natural Gas Ltd & Anor (2013) LPELR-20942.
2. Olaniyan v. University of Lagos (1985) (Pt. 9) 599 at 669.
3. Ihezukwu v. University of Jos & Ors (1990) LPELR-146 (SC).
4. Crawford v. Grace Hotel [2002] 21 ILJ 2315, decided by the Commission for Conciliation, Mediation and Arbitration (CCMA), the statutory dispute resolution body for labour disputes in South Africa.
5. Paul Simeon v. College of Education, Ekiadolor, Benin (2014) LPELR-23320 (CA).
6. A similar approach is applicable in United Kingdom and South Africa.
7. Chapter L1, Laws of the Federation of Nigeria, 2004.
8. Taylek Drugs Co. Ltd v. Onankpa (2018) LPELR-45882 (CA).
9. In Ogbonna v. Neptune Software Limited (2016) 64 NLLR (Pt. 28) 511, the court held that employment relationship during this employment phase is inchoate.
10. Olayinka Kusamotu v. Wemabod Estate Ltd (1976) 11SC 279; Benjamin Wayo v. Judicial Service Commission, Benue State (2006) All FWLR 66.
11. Bimbo Atilola, 'Recent Developments in Nigerian Labour and Employment Law', (2017) Pp. 68 – 69.
12. Noruwa v. Mainstreet Bank Plc, (Unreported, Suit No. NICN/LA/390/2018; Taylek Drugs Co. Ltd v. Onankpa (Supra).
13. Section 254(C),(1),(f),(h) and (2) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended); Section 7(6) of NICN Act, 2006.
14. Reliance Telecommunications Ltd v. Adegboyega (2017) LPELR-48360(CA); Momoh Faruk Ikhuemeso v. DAAR Communication Plc (Unreported, Suit No. NICN/ABJ/36/013).
15. Mr. Lawal Gambo v. Federal Inland Revenue Service (FIRS) (Unreported, Suit No. NICN/ABJ/341/2012, delivered on November 5, 2014, coram Hon. Justice P.O. Lifu (JP)).
16. (Unreported, Suit No. NICN/ABJ/86/2019, delivered on November 26, 2020, Coram. Hon. Justice E.N. Agbakoba).
17. Amanze v. Union Bank (Unreported, Suit No. NICN/LA/424/2018)
18. Convention 158 was adopted by the ILO on June 22, 1982, following the 68th International Labour Conference held in Geneva, Switzerland in June 1982.
19. Ebere Aloysuis v. Diamond Bank Plc (2015) 58 NLLR (Pt. 199) 92; Bello Ibrahim v. Ecobank (Unreported decision of NICN, Abuja Division in Suit No. NICN/ABJ/144/2018.
20. Articles 4, 5 and 6 of Convention 158. The three broad valid reasons are related to the conduct of the employee, the capacity of the employee and the operational requirements of the employer.
21. Article 7, Convention 158.
22. Article 8, Convention 158.
23. Paul Smit and Joaquin Grobler, "Dismissal During Probationary Period of Employment in South Africa: An International Perspective" https://repository.up.ac.za/bitstream/handle/2263/85897/Smit_Dismissal_2021.pdf?sequence=1 accessed on April 17, 2024.
24. In Eskom v. Mokoena [1997] 8 BLLR 965 (LAC), the South African Labour Appeal Court affirmed that employers have the right to set performance standards and the court will not intervene unless they were grossly unreasonable.
25. Yeni v. South African Broadcasting Corporation [1997] 11 BLLR 1531 (CCMA).
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.