LEGAL PRINCIPLE: CONTRACT LAW — Termination of Employment — Effect of Accepting Terminal Benefits
PRINCIPLE STATEMENT
An employee who accepts terminal benefits, including salary in lieu of notice, puts an end to any contract of employment, real or imagined, and the contract is completely and validly determined.
RATIO DECIDENDI (SOURCE)
Per Ogwuegbu, JSC, in Agoma v. Guinness Nigeria Ltd (1995) NLC-1891992(SC) at p. 2; Para. A.
"It is the law that she cannot. She had put paid to any contract, real or imagined which she thought or imagined that she had with the respondent. The contract was completely and validly determined when she accepted her terminal benefits which included her two months' salary in lieu of notice."
EXPLANATION / SCOPE
Acceptance of terminal benefits terminates the employment contract. The employee cannot later claim wrongful termination. The principle applies to all employment contracts. The employee is estopped from challenging the termination. The rule promotes finality in employment disputes. The employee may negotiate the terms but cannot accept benefits and then sue. The court will enforce the acceptance as binding. The principle is based on the doctrine of election.
