July 2, 2021
The Practice Of ‘Refusal To Pay An Employee His Outstanding Salary And Entitlements After An Involuntary Disengagement’ And A Glance Into A Recent Decision Of The National Industrial Court Of Nigeria.
by Ajike Ukonu, AIDR. (Abuja)
Udoka Oguekwe & Co.
Having involved in Labour/Employment related suits/practice, mostly at the National Industrial Court of Nigeria for years, there seems to be this trend/practice among some employers; the practice of ‘Refusal to pay an employee his salary and entitlements after an involuntary disengagement’.
This paper will be looking at some of the reasons raised by employers for the said refusal, alongside the recent Decision of the National Industrial Court of Nigeria, Abuja Division in Suit No: NCIN/ABJ/42/2020 between Destiny Uhunamure Okumoghae V. LAPO Microfinance Bank Limited, delivered on the 11th of June, 2021 and which our Law Firm (Udoka Oguekwe & Co.) represented the Claimant (a former employee of the Defendant).
Reasons are abound for the termination of employment. From economic downturn which may lead to the termination of the employment of redundant staff to resignation, retirement, incompetence and other reasons.
Termination of employment is the process of bringing to an end of employment. It can either be voluntary or involuntary. Voluntary termination of employment is one that is initiated by an employee. It may be by resignation, retirement etc … on the other hand, involuntary termination of employment is one initiated by the employer. In involuntary termination, an employee has no choice in the matter.
The Section 1 to 4 of the Labour Act, Cap 198, LFN 1990 made provisions for the payment and protection of the wages of employees in Nigeria. An employer is liable to pay salaries for work done at the agreed period. Section 7 of the Labour Act requires an employer to inform his employee the exact amount he is entitled to as wages.
An employee during the period of his employment is entitle to his wages, bonuses and other entitlements for the work done and as agreed by the parties or in accordance to the law. The Scripture in 1 Timothy 5:18 emphasized the important of payment of wages when it said “Do not muzzle the ox while it is treading out the grain and “The Worker deserves his Wages.”
The employer – employee relationship, mostly in the private sector is one that cannot be forced on any of the parties. It is a common knowledge that an employer can hire and as well fire an employer at any time. However, while it is true that no employer should feel compelled to retain an employee whose services are no longer required, if such appointment must be terminated, it should be with the dignity and respect and all entitlements fully paid to the employee.
Over the years, I have come across plethora of cases whereby many employers refuse to pay their employees their due wages/salaries and other entitlements upon involuntary termination of their employments.
Most of these employers often times give lots of reasons to justify their refusal to pay their employees upon termination of their employment. Below are some of the reasons being given by these employers:
Fraud
Insubordination
Misconduct
Incompetence
Nature of employment (for instance non-confirmation as a full staff after probation period) etc.
In the case under review, the Claimant (the employee) was employed by the Defendant (the Employer) in 2013. And during the course of her employment, she was awarded with the best staff in Abuja Zone and equally promoted. Her salary was also increased and was subsequently transferred to head a new branch.
That in 2018, that is after 5 years of working for the Defendant, the Claimant was disengaged via a letter dated 9th February, 2018 due to re-organization in the bank. The said Letter of Disengagement is worthy of being reproduced here.
“LETTER OF DISENGAGEMENT
In view of re-organization within LAPO Microfinance Bank Ltd, this is to inform you that your services would no longer be required with effect from 9th February, 2018.
You are requested to hand over the entire Bank’s property, including your staff identification card in your possession to your immediate supervisor FCT and receive three weeks’ salary in lieu of notice.
Management wishes you the best in your future endeavors”.
That upon the disengagement of the Claimant, she demanded for her outstanding salary and other entitlements. However, the Defendant in a reply letter to the Claimant’s demand letter, accepted being indebted to the Claimant but alleged that there are some monies that the Claimant could not account for, and as such will deduct the said sum from the Claimant’s outstanding salaries and entitlements.
The Claimant refused to collect nothing less than her full outstanding salaries and entitlement. After several demand letters were written to the Defendant and the Defendant’s refusal to pay her all monies, the Claimant on the 19th of February, 2020 took out a Complaint against the bank at the National Industrial Court of Nigeria, Abuja Division.
The parties led evidence in support of their cases and equally tender some documents in support. The Defendant who is into micro and medium loans and savings among several allegations raised the issue of FRAUD. The Defendant alleged that there are monies the Claimant could not account for and as such was disengaged due to fraud. And due to the fact that her employment was terminated due to fraud, she is not entitled to any payment whatsoever.
At the end of the trial, we submitted on behalf of the Claimant that among many issues, that the Defendant has an obligation to pay the Claimant all her outstanding salaries, bonus, salary in lieu of notice on or before the termination of her employment without notice. Section 11 subsection 7 of the Labour Act, Cap L1 LFN 2004 is clear enough when it provides that;
(7) All wages payable in money shall be paid on or before the expiry of any period of notice.
In Amaka P Ohaneje V. Bratim Professional Education Limited (where we also represented the Claimant) Per Sanusi J delivered on the 30th September, 2020 in Suit No. NICN/ABJ/247/2017 has this to say “The law require payment in lieu of notice dispensing with period during which the notice is supposed to run and expire, by paying a monetary sum agreeably commensurate with that period, must be paid at the very time the notice of the termination is given otherwise it will be invalid. It Is not enough that the letter of termination has offers to pay salary in lieu of notice.” The Court made reference to the case of Ben Chukwumah V Shell Petroleum Development Company of Nigeria (1993) 4 NWLR (Pt. 289) 512.
In the instant case, we went further to argue that often times, in the private sector, an employer just like the Defendant is not compelled by the law to give reasons before terminating an employee’s employment. But however, where the employer gives reasons for the termination of an employee’s employment, the Court cannot go outside the letter of disengagement to discover the reasons for the termination of employment. This principle was emphasized as follows in Iwuoha V. Mobil Producing (Nig.) Unltd (2013) All FWLR (Pt. 664) 144 at 150-151, (2011) LPELR-4477(CA): “the court must confine itself to the letter terminating the appointment and not go outside it to look for other reasons which the appellant thinks or suspect may have been behind the termination. This represents the correct position of the law. It is settled that where no other reason is stated for the termination of appellants appointment, except that his services “were no longer required”, the court cannot go outside the said letter to discover the reasons for the termination”.
In the instant case, the Court Per Oyewumi J while delivering its judgment has this to say: “it is important for me to state here that it is obvious from the content of this disengagement letter that the defendant did not state or give any reason for determining its relationship with the claimant except for the fact that it was due to reorganization. This means that all the allegations of misconduct and offences of fraud, misappropriation, cash suppression and concealment of client’s loan forms, self and multiple disbursement of loans to clients, collection of undue fee, self in plantation of union’s members, unremitted fund collected from clients, concealment of union overdue of the sum of N240.182.18k are all afterthought.”
The Court while granting the reliefs of the Claimant stated that “it is obvious that issue of fraud raised by the defendant at this stage is an afterthought geared towards denying the claimant of her entitlements already admitted by it, hence the discrepancies in figure and inconsistent evidence. I must say that the defendant is obviously clever by half”.
The Court entered judgment in the favour of the Claimant and awarded cost against the Defendant.
On a general note, there is nothing wrong for an employer who do no not want an employee to continue to be part of his company to disengage such employer, but such should be done with integrity and dignity and not with rancor. Same also applies to an employee. And any entitlement due to any of the parties as at the time of the termination should be paid accordingly.
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.
Ajike Ukonu, AIDR.
Author
