Okon Amos Nkanta & ORS -VS- Mainstreet Bank Estate Company

IN THE NATIONAL INDUSTRIAL COURT OF NIGERIA

IN THE LAGOS JUDICIAL DIVISION

HOLDEN AT LAGOS

BEFORE HIS LORDSHIP HON. JUSTICE K. I. AMADI

DATED: June 11, 2019 SUIT NO: NICN/LA/27/16

OKON AMOS NKANTA
MRS. OLUWATOSIN OLA-OJO } CLAIMANTS

MAINSTREET BANK ESTATE COMPANY LIMITED
AEC SECURITY SERVICES LIMITED } DEFENDANTS
SKYE BANK PLC

Representations:

Silas Udoh with O. Ogunkayode and A. A. Adeniyi for the claimants.

Prince Aderemi Adekile with Okon Uye with O. Oyebowale for the defendants.

JUDGMENT

The Claimants in this case commenced this suit by a general form of complaint dated 21^st day of January, 2016 wherein they claimed the following reliefs:

An Order that the Defendants having taken over Afribank Estate Company Limited and AEC Security Services Limited the employers of the claimants equally, took over the assets and liabilities of the said Companies.
An Order of this Honourable Court compelling the Defendants to pay the 1^st Claimant the sum of ₦5,085,847.15 being the unpaid balance of the 1^st Claimant’s entitlements.
An Order compelling the Defendants to pay to the 2^nd Claimant the sum of 5,522,819.03 being the unpaid balance of her entitlements.
General damage in the sum of ₦9,391,333.82

An Order directing the Defendants to reinstate the Claimants in their employment with 1^st Defendant.

The Defendants filed their Statement of Defence dated 20^thday of April 2016 and filed on the 22nd day of April 2016.

The Claimants then filed a reply to the Statement of Defence and Claimants’ further statement on oath dated 11^th day of July 2016.

The case was mentioned on the 19^th day of April 2016 and hearing commenced on the 20^th day of January 2017. Claimants opened their case and testified for themselves as CW1 and CW2 respectively. They tendered some documents in evidence as exhibits which were marked accordingly. They were cross examined and thereafter they closed their case.

On 6^th October 2017, the defendants opened their case and called one witness in the person of Patrick Ogu. He tendered 7 seven documents marked exhibits DA-DG. He was equally crossed examined. After which the defendants closed their case. Thereafter the parties adopted their final written addresses on October 26, 2018, this judgment could not be delivered within the 90days window allowed for delivery of judgments for reasons stated in my letter to the Chief Justice of Nigeria in that regard.

FACTS OF THE CASE

The brief facts of this case according to the claimant are as follows:

That the 1^st Defendant was formerly known as Afribank Estate Company Limited a subsidiary of Afribank Nigeria Plc before it was taken over by the Central Bank of Nigeria and handed over to Asset Management Corporation of Nigeria and the name was changed to Mainstreet Bank Limited while Afribank Estate Company Limited was changed to Mainstreet Bank Estate Company Limited which is the 1^st defendant, but the 2^nd Defendant was retained as AEC Security Services Limited and in 2015, the 3^rd Defendant Skye Bank Plc bought over Mainstreet Bank Estate Company Limited and AEC Security Services Limited the 1^st and 2^nd Defendant in this suit.

That the 1^st Claimant was employed by Afribank Estate Company Limited which is now known as Mainstreet Bank Estate Company Limited (1^st Defendant) with letter of appointment dated 19^th April, 1991 while the 2^nd Claimant was employed by the 1^st Defendant as a stenographer with a letter of appointment dated 8^th March 1991.

That on 24^th of March 2010 Afribank Estate Company Limited now the 1^st Defendant in its internal mail directed that the 1^st Claimant to be deployed to AEC Security services Limited which is a subsidiary of Afribank Estate Company Limited (the 1^st Defendant in this suit) but the said internal mail did not terminate the employment of the 1^st Claimant before sending the 1^st Claimant to AEC Securities Services Limited. The 1^st Claimant resumed duty with the said AEC Security Services Limited on the 1^st April 2010.

That on 14^th May 2010, the 2^nd Claimant was redeployed to AEC Security Services Limited a subsidiary of Afribank Estate Company Limited now Mainstreet Bank Estate Company limited as secretary.

That the Claimants served the Defendants for about 20 years, and were promoted many times and they also received several awards based on their meritorious services.

That on 24^th March 2011, AEC Securities Services Limited the 2^nd Defendant terminated the Claimants’ appointment. The Claimants stated that AEC Security Services never employed them and had no capacity to terminate their appointment. That they were not paid their full terminal benefits by the Defendants as contained in the procedural and main collective agreement.

In his final written address, the learned counsel for the defendants raised two issues for determination as follows:

Whether the 1^st Defendant has legitimately terminated the employment of the Claimants rendering the claim of the Claimants a sham.
Whether assuming the employment was not validly determined, being an employment and/or master-servant relationship, the Claimant is entitled to a reinstatement.

In respect of issue one, the learned Counsel submitted that there has been no serious dispute as to the following facts:

The Claimants were employed by the 1^st Defendant. It was the 1^st Defendant that paid all their salaries and also paid their terminal benefits.
The Claimants were only at the behest of the 1^st Defendant moved at the 2^nd Defendant’s office. The 1^st Claimant was redeployed on 24/3/2010 and the 2^nd Claimant on 14/5/2010.
There has never been any employment relationship at all between the Claimants and the 3^rd Defendant.

The employment of the Claimants was terminated on the basis of service no longer required and certainly not on the basis of redundancy.

Though the letter of termination was done under the letter head of the 2^nd Defendant, the 1^st Defendant ratified the termination of the Employment of the Claimants and paid all the terminal entitlements.

Further counsel argued that from Exhibit DD and Exhibit DE, it is clear that the Claimants agreed that the computation of their terminal benefits as done by the 1^st defendant was correct. That on Exhibit DE, the 1^st claimant noted:

“Original copy and the computation have been confirmed and agreed by me” signed 13/11/11”

Counsel submitted that having admitted and confirmed that the computation was correct, the court is invited to look no further but to agree with the Defendant that the employment of the 1^st and 2^nd Claimants has been terminated and their benefits paid in full. That the Claimants are estopped from raising any issue inconsistent with Exhibit DE.

The Defendant (DW1) in his credible evidence states:

Continuing counsel referred to Exhibit DC-DC 25 (Handbook) page 20 of the handbook dealing with Gratuity which provides that:

“Staff at exit from the Company and provided that such staff has put in 5 years of service is entitled to gratuity which shall be calculated as 5% of the total emolument (addition of annual basic salary, housing allowance, transport and lunch allowance) of the exist multiplied by the number of service rendered”.

Counsel submitted that the defendants applied the above in the calculation of the Claimant’s terminal benefits. But that Claimants on their own decided to introduce a head of claim called redundancy/severance package, 3 months’ salary in lieu, and non-refundable loan and 20 years long service award. That the Claimants’ employment was terminated for service no longer required and certainly not for redundancy (involuntary and permanent loss of employment caused by excess of manpower).

Continuing counsel submitted that Section 20 (3) of Labour Act provides that where the company declares the position of an employee redundant, the employee must be informed accordingly. It is the sole act of the employer to declare redundancy and this is not the situation in this case.

On the other items claimed Counsel submitted that:

a) 20 years long service award: is not a right due to the Claimants but a privilege at the discretion of the management.
b) 20 years leave allowance: that there is no fact pleaded and proved to show that the Claimants for were not paid leave allowance for 20 years.
c) 3 months’ salary in lieu: nothing in the condition of service that entitles them to such.
d) Paye, NHF and PTF: they are statutory deductions which are remitted to appropriate departments of Government and the deductions have since being remitted to the institution.

Counsel submitted that the Collective Agreement covers employees of Banks. That the 1^st and 2^nd defendants are not banks. Secondly that the said collective agreement took effect from 1^st June, 2005 and with 2 years operational effect so the provisions are expired and defective and those not apply the Claimants. Apart from the foregoing that the collective agreement was not made a part of the terms and conditions of service of the Claimants. That in the case of Unity Bank v. Ovie (2011) 5 NWLR PT 124 at pg 273 the court held that “in essence, the basic requirement under established case law is that there must be a legal nexus between conditions of service and the terms of a collective agreement”.

On the whole counsel urged the court to discountenance Exhibit CC-CC20 (collective agreement) and hold that same is not part of the Claimants’ terms of employment.

In respect of issue two; the learned Counsel submitted that the contract of employment between the Claimants and 1^st Respondent was basically that of master-servant relationship which was not subject to the regulation of any statute. Counsel referred to the case of New Nigeria Ltd v. Atoyebi (2013) LP ELR – 21489 (CA) where the court held that

‘The law regarding master and servant is not in doubt. Under this class of employment there cannot be specific performance of a contract of service. The master has the power to terminate the contract with his servant at any time and for any reason or for none”.

Counsel urged the court to uphold his submission that in the circumstances of this case and based on the contract of employment, the claimant is not entitled to be reinstated back to his employment.

The learned counsel for the claimants on the other hand raised one issue for determination thus; Whether the Claimants have proved their case so as to be entitled to payment of their unpaid entitlements and whether their employment was validly terminated.

In arguing this sole issue counsel submitted that based on the evidence the claimants were employed by Afribank Estate Company Limited in 1991 and that they were subsequently deployed to AEC Security Services Limited while their appointment was retained by Afribank Estate Company Limited which was a subsidiary of Afribank Nigeria Plc but that Afribank Nigeria plc was later changed to Mainstreet Bank Limited while the subsidiary was changed to Mainstreet Bank Estate Company Limited (the 1^st Defendant in this suit). That the 3^rd defendant Skye Bank Plc (which is now Polaris Bank Plc) later bought over Mainstreet Bank Limited and its subsidiaries namely: Mainstreet Bank Estate Company Limited and AEC Security Services Limited.

That the 1^st Claimant served the Defendants diligently and meritoriously with award and promotions. That 2^nd defendant terminated his appointment on 24^th March 2011 and refused to pay his full entitlements. To support his claim the 1^st Claimant tendered exhibits CA (Letter of Appointment), CC (Letter of Promotions), CD, CE, CF and CG (Letter of Awards and long service awards), CH and CJ (Internal memo for deployment to AEC Security services limited), CK – CKL (Letter of termination), CL-CL 29 (Procedural and main collective agreement), CM (the pay slip), CN (Letter of Appeal), CX(Agreement between the Claimants Employer 1^stdefendant and National Union of Bank Insurance and Financial Institution, CY (Internal Circular of the 1^st Defendant directing the management to pay redundancy), CZ (Letter from Federal Ministry of Labour and Productivity), CCA –CCA 1 (the protest letter), CCB – CCb16 (Official Gazette), CCC (Salary Structure) CCD (Picture showing when 1^st and 2^nd Claimants attended training course on redundancy).

Also that the 2^nd Claimant also gave evidence and supported her evidence with the following Exhibits CO (Letter of Appointment), CP (Confirmation Letter), CQ (Long Service cash award letter for the period of 1991-2001), CR (15 years Long service cash award letter), CS (Letter of promotion), CT (Letter of Redeployment), CU (Letter of Termination of Appointment) and CV– CV3 (Pay Slip).

Counsel submitted that the evidence of the Claimants to the fact that the 3^rd Defendant acquired the 1^st and 2^nd Defendants was not denied by the defendants, that it is trite that he who acquires assets also acquires liability.

Arguing further counsel submitted that the alleged termination of the claimants’ employment is not only invalid but wrongful as it did not comply with the provision of Section 9 of Defendants Staff Handbook (Exhibit DC-DC 25) which prescribes procedure for termination to include caution, warning and then termination and the Claimants were neither cautioned nor warned before termination. It follows therefore that the Defendants terminated the appointment of the Claimants based on redundancy contrary to the impression created by the defendants that their termination was based on services no longer required.

Counsel submitted further that the Defendants’ Handbook is subject to the procedural and main collective agreement which the Defendants are a party to and that it is binding on them. Counsel further submitted that Exhibit CCD (Photograph of participation), CX, CY (Internal Mails), and CZ (A letter from Ministry of Labour and Productivity), confirmed that the 1^st defendant is a member of National Union of Banks Insurance and Financial Institutions Employees (NEABIFIE) by sending both 1^st and 2^nd Claimants to be part of trainings by the union.

Counsel argued, that though the defendants claimed that Exhibit DC is evidence to show that the 1^st defendant ratified the termination but that Exhibit DE cannot rectify what was originally wrongful more so that the said exhibit DE did not expressly state in any part of it that the illegal act of 2^nd Defendant (unlawful termination of the Appointment) of the claimants was ratified, but rather merely responded to the complaint of the 1^st Claimant.

Continuing counsel referred to article 1 (a) and (b) of page 50 of exhibit CL-CL 29 (procedural and main collective agreement) which provides that until a new agreement is reached and signed into law, the present main or procedural agreement shall remain in force.

Counsel submitted further that the defendants failed to remit the Claimants’ deduction on housing fund, pension trust fund and PAYE (tax) to the relevant institution since there is no document to show payment or remittance to those institutions, and that the Claimants are entitled to the refunds, as records show that the last remittance was done in 2008 whereas the Claimants appointment was terminated in 2011. That failure to remit the deductions to the relevant authorities particularly deduction on PAYE (tax) has deprived the claimants’ opportunities of carrying on business in Nigeria and even training of their children in school since they have no tax certificate.

Counsel submitted further that the outstanding Car loan of ₦683,515.70 which the defendants deducted from the 1^st Claimants entitlement was in breach of the loan agreement which is to the effect that the defendants shall forfeit the loan if they disengage the service of the claimant and so urge the Honourable Court to hold that the 1^st Claimant is entitled to a refund of the said car loan. Also, that 20 years long service award is part of the defendant’s management policy for which the defendants provided for 10 years’ service award 15 years and 20 years long service award. The Claimants were paid the 10 years and 15 years long service award. The 1^st Claimant was paid 20 years long service award while the 2^nd Claimant has not been paid which is N195,919.60 and which has not been stopped before the termination as Exhibits C(d), C(e), C(f), C(g), C(q) C(R) are evidence of payment for other years. Counsel urged the Honourable Court to hold that 2^nd Claimant is entitled to the 20 years long service award.

Counsel concluded by urging the Honourable Court to grant the claim of the Claimants.

COURT’S DECISION.

I have read all the processes filed by the parties in this suit. I have also reviewed the evidence presented by them. I am of the view that all the issues raised by the learned counsel for the parties can be summarized into one issue, that is; whether the claimants have proved their case to be entitled to the reliefs sought in this case.

Consequently, I shall treat the claims of the claimants seriatim as follows:

Claim one is for an order that the Defendants having taken over Afribank Estate Company Limited and AEC Security Services Limited; the employers of the claimants equally, took over the assets and liabilities of the said Companies. The defendants did not deny nor dispute the acquisition of the said Afribank Estate Company Limited and AEC Security Services Limited. It is trite that benefit and burden run together, claim one therefore has succeeded to that extent.

The second and third claims shall be treated together. They are for an order of this Honourable Court compelling the Defendants to pay the 1^st Claimant the sum of ₦5,085,847.15 being the unpaid balance of the 1^st Claimant’s entitlements and for an Order compelling the Defendants to pay to the 2^nd Claimant the sum of 5,522,819.03 being the unpaid balance of his entitlements.

The claimants pleaded and gave evidence of the fact that they were members of The Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI). They tendered exhibits CM and CV-CV3 (pay slips for the months of February and March 2011) which clearly showed N500.00 check off dues deducted from their salary for those months for ASSBIFI membership. They submitted that based on paragraph 5(g) of exhibit CL-CL29 (Procedural and Main Collective Agreement) and exhibit CY (Internal mail of January 9, 2009), they are entitled to redundancy pay as against ordinary gratuity paid to them.

The defendants are challenging these claims on two grounds; the first being that the claimants were disengaged and or terminated from their employment on the ground of service no longer required and not on redundancy. Secondly, that the said collective agreement (exhibit CL-CL29; Procedural and Main Collective Agreement) having not been incorporated into their terms of employment is not binding on the defendants.

This court in the case of; The Management Compagnie Generale De Geophysique (Nig) Ltd v. Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) Unreported-suit delivered at the National Industrial Court on 17^th March, 2016 the Court held that:

“The argument that a collective agreement is a gentleman’s agreement is true of the common law dispensation which counsel to the appellant ought to know is no longer fashionable in the current dispensation. Section 254C of the 1999 Constitution, as amended, permits this Court to interpret and apply collective agreements. An agreement that can be interpreted and applied cannot thereby be just be a gentleman’s agreement. It must and does command a status higher than being a gentleman’s agreement to be tossed around as the appellant would want to do.”

From the foregoing, therefore, it is very safe to hold and I hereby hold that, collective agreements are now justiciable and enforceable by this Court.

I shall now deal with whether the claimants are entitled to redundancy pay or not. For the sake of clarity the said exhibit CY (Internal mail of January 9, 2009), is hereunder reproduced:

Through: Head, Finance & Admin.

RE: CONDITIONS OF SERVICE CONCERNING DISENGAGEMNET

The above subject matter refers please;

The president of ASSBIFI of Afribank Estate Company Limited has brought to my notice the recent condition of service as per disengagement of staff. I need to bring it to the notice of management immediately so that it will guide management in all its decision.

There are many issues that were reviewed in the document, however the one that is very relevant to the issues at hand is that of terminal benefits payable to a disengaged staff which specify that.

Article 5 (g) Where a pension and gratuity scheme is in operation, the Employee shall receive either redundancy benefits or gratuity entitlement whichever is higher without prejudice to the payment of pension benefits earned.

This means that we need to revisit how the terminal benefits of those that were disengaged recently were calculated.

Thank you.

AFRIBANK ESTATE COMPANY LIMITED

O. OLUWADARA

Manager, Admin/Personnel

From the content of exhibit CY, it is not in dispute that the termination of the employment of the claimants on the ground that their services “are no longer required” certainly amounts to disengagement. This Honourable Court has in a plethora of its past decisions developed its own jurisprudence by holding that employees whose employment were terminated under circumstances that qualifies as a redundancy situation but their employer instead of complying with the conditions for redundancy stipulated in binding collective agreements by declaring them redundant decides to simply terminate their employment as in the instant case. See the case of National Union of Food, Beverages and Tobacco Employees v. Management of NIDOCO Nig. Ltd. DJNIC (1978-2006) at page 223. Where this Court held that;

“Where the prevailing circumstance in a company justify redundancy, the Court will treat the termination of employment of the workers of such a company as termination on ground of redundancy”

Also see the case of Footwear, Leader and Rubber Products Workers Union of Nigeria v. Management of Waddi Leader Industries Limited. DJNIC (1978-2006) at page 134. Where this Court held as follows;

“Where there is a collective agreement providing for the scale for payment of redundancy benefits to workers, the Court will compel the employer to enforce the provisions of such agreement where an employer wanted to do away with its workers under the guise of closing down its factory”.

Also in Grizi (Nig.) Ltd v. Grizi (Nig) Ltd and Group of Companies Workers Union. DJNIC (1978-2006) page 3 to 4. Where this Court held that “Where workers did not unilaterally and voluntarily withdraw their services but were locked out and dismissed, and the employer is not prepared to reinstate them, then the workers will be entitled to redundancy benefits in the circumstance”.

From the foregoing, I find and hold that the claimants are entitled to redundancy terminal pay as provided by paragraph 5(g) of exhibit CL-CL29 (Procedural and Main Collective Agreement).

I shall now turn to the items as calculated by the claimants.

The 1^st Claimant led evidence in his written statement on oath to show that his total entitlements upon termination was ₦6,791, 818.26 and that he was paid ₦1,705,971.11 leaving a balance of ₦5,085847.15.

The 2^nd Claimant also led evidence to show that upon termination of her appointment, the defendants paid her only ₦1,612,017.65 leaving a balance of ₦5, 522,818.93.

It is very important to state that by paragraph 5(g) of exhibit CL-CL29 (Procedural and Main Collective Agreement). The Employee shall receive either redundancy benefits or gratuity entitlement whichever is higher without prejudice to the payment of pension benefits earned (underlining mine).However by the calculation of the claimants as contained in their pleading they included both gratuity and redundancy pay together in their claims that is wrong, since the redundancy pay is higher than gratuity, the claimants shall be entitled to redundancy pay without gratuity.

I agree with the submission of the leaned counsel for the defendant that long service award is a privilege and not a right it is consequently dis countenanced.

The claimants further argued that the defendants should write off their liability in repayment of the loans granted to them. It is not every debt that the employer is estopped from recovering. This Court has in a long list of cases applied the concept or doctrine of non-recoverability of enhancement allowances or facilities. This Court first enunciated this doctrine in the case of Ebenezer Aina Oladigbolu v Union Registrars Ltd (unreported) Suit No. NICN/LA/440/2012 delivered on June 19, 2014 and expounded it more in the case of John Ojuola v Stanbic IBTC Bank PLC & anor. Unreported Suit NO: NICN/LA/444/2012 delivered on July 8, 2016.

The doctrine simply put is where an employer advances a facility in any manner or form aimed at the enhancement of the status and or productivity of the employee such that the facility is tied to the employee’s employment in that repayment is by direct deductions from his salary and other emoluments. However, before the full repayment of the facility advanced, the employee’s employment was unilaterally terminated by the employer, on the ground that the employee’s services were no longer required, the employer is estopped from recovering the balance remaining unpaid on the facility, in which case the employee will be discharged from further obligation under the advanced facility. The reason here being the fact that the repayment has been frustrated and the contract rescinded.

Consequently, the claimants are entitled for a refund of deductions made under the heading of upfront payments that is; Housing, Furniture, and Education. It is important to note that from exhibit DF-DF3 (Retiree Fund Statement) the last pension contribution for the claimants was in August 2008. I have to also state that the defendants did not deny nor challenged the Redundancy pay as calculated by the claimants in their pleadings and evidence as 16 weeks emolument for each completed year amounting to the sum of ₦3,690,185.60 for the 1^st claimant and ₦4,003,741.54 for the 2^nd claimant.

From the pleadings and exhibits DA and DB the correct calculation for the claimants are as follows:

For the 1^st claimant:

Redundancy Pay ₦3,690,185.60

One month’s salary in lieu of notice ₦73,883.33.

NHF deductions from Sept2008-March 2011 ₦17,600.00

PAYE deductions from Sept2008-March 2011 ₦9,018.00

14 outstanding leave days ₦17,000.00

SPF Employee’s contribution ₦37,640.98

SPF Employer’s contribution ₦798,000.00

Total Entitlements ₦4,643,327.91

Less

Vehicle loan ₦216,666.70
Land loan ₦136,850

iii. Sum already paid ₦1,705,971.11

Balance ₦2,583,840.1

I hold that the 1^st claimant is entitled to this balance of ₦2,583,840.1 which I hereby grant to him.

For the 2nd claimant:

Redundancy Pay ₦4,003,741.54

One month’s salary in lieu of notice ₦73,883.33.

NHF deductions from Sept2008-March 2011 ₦17,600.00

PAYE deductions from Sept 2008-March 2011 ₦9,018.00

SPF Employee’s contribution ₦45,626.32

SPF Employer’s contribution ₦924,000.00

Total Entitlements ₦5,073,869.19

Less

Sum already paid ₦1,612,017.65

Balance ₦3, 461,851.54

I hold that the 2nd claimant is entitled to this balance of ₦3,461,851.54

which I hereby grant to him.

Claim four is for general damages in the sum of ₦9,391,333.82, having granted reliefs two and three, this claim is refused.

In respect of the alternative prayer; having granted the principal claims in this suit the alternative claim is liable to be struck out and I hereby strike it out.

In all, I make the following orders:

The Defendants shall pay to the 1^stClaimant the sum of₦2,583,840.01 being the unpaid balance of his entitlements.
The Defendants shall pay to the 2nd Claimant the sum of₦3,461,851.54being the unpaid balance of his entitlements.
The defendants shall pay each of the claimants the sum of N250, 000 being the cost of this suit.
The defendants shall pay all monetary awards in this judgment within 30 days from the date of this judgment failing which they shall attract 20% interest per annum until fully liquidated.

Judgment is entered accordingly.

……………………………………………

Hon. Justice K. I. Amadi, Ph.D.

(Judge)