National Industrial Court reinforces foreign employees' right to receive redundancy benefits

Facts
Decision
Implications
Comment

A foreign employee (the claimant) recently secured a landmark judgment in the National Industrial Court in relation to redundancy benefits that he had claimed while employed by an oil and gas company (the defendant).

Facts

On being made redundant, the claimant sought to recover the redundancy benefits and three months' salary in lieu of notice that he was entitled to under his employment contract, which the defendant refused to pay. Instead, the defendant – contrary to the employment contract and its redundancy policy – offered to pay only the employee's salary in lieu of notice, despite its admission that the termination was a redundancy.

The claimant contended that he was fully entitled to his redundancy benefits because:

• the disengagement letter made clear that he was being made redundant;
• the employee's redundancy policy clearly set out how it should apply; and
• the defendant had put the policy into practice by paying full redundancy benefits to all employees declared redundant within the past two years.

The defendant contended that the redundancy policy was not intended to have a retrospective effect; rather, it was intended to apply only to employees that were engaged after its issuance.

As such, the defendant contended that the redundancy policy did not apply to the claimant based on its date of execution. Therefore, payment should be calculated from the date on which the redundancy policy had been issued.

Alternatively, the defendant contended that even if the redundancy policy applied to the claimant, it would apply only from the date on which it had come into effect and not from the date on which the claimant had signed his employment contract.

Decision

In his decision, Justice Bassi relied on the well-established judicial principle of interpreting the plain and ordinary meaning of contracts and awarded the claimant:

• the claimed sum of £131,100;
• post judgment interest at the rate of 10%; and
• N100,000 in legal costs.

The court relied on Rene Antoun v Benson Oghene, in which the Court of Appeal had stated that "if an Agreement has been reduced into writing, it is the terms 3 and conditions as contained in the document that is the determinant factor and no oral or extraneous evidence is permissible".

In addition, the court upheld the principle that more than one document can constitute an employment contract and terms thereof between an employer and an employee. On this basis, the court found that:

• the redundancy policy executed by the defendant had modified the contractual relationship between the parties; and
• the claimant's contractual relationship had therefore been terminated by virtue of redundancy.

Contrary to the defendant's contention, the court stated that "for an employee who was in service when the exhibit came into effect, it must apply to such employee in the absence of any express clause to the contrary".

Implications

The National Industrial Court's judgment reinforces the well-established principle in Nigeria of interpreting the plain and ordinary meaning of employment contracts. Based on similar cases, it is clear that the Nigerian courts are averse to looking beyond the ordinary meaning of the wording of employment contracts and interpreting them in a manner that exceeds the ordinary usage of the language. Under the plain meaning principle, statutes must be interpreted using the ordinary meaning of the statute's language unless the statute explicitly defines some of its terms otherwise. According to the principle, absent a contrary definition within the statute, words must be given their plain, ordinary and literal meaning. If the words are clear, they must be applied – even if the legislature's intention may have been different or the result is undesirable.

Further, this judgment strengthens the position of domestic and foreign employees seeking to enforce their rights where these are clearly provided for in their respective employment contracts, policies or handbooks. The protections provided by the courts should provide a greater level of confidence and assurance to all employees, but particularly where foreign nationals have entered into clearly defined employment contracts with local employees. This is because binding employers to the literal terms of a contract prevents them from reneging on their clearly stated obligations.

Comment

The National Industrial Court's judgment is well-considered, as it reinforces the position of employment contracts as a primary source of obligations between the parties.

In addition, the judgment adopted the plain meaning principle with regard to the interpretation of employment contracts. This is a logical and well-thought-out approach to the law and provides assurance regarding employment contracts and relationships.

Finally, the judgment reinforces that fact that employees have a right to receive redundancy benefits and that the denial of such benefits constitutes unfair behaviour in accordance with employment law.

For further information on this topic please contact Adekunle Obebe at Bloomfield Law by telephone (+234 1 454 2130) or email (kunleobebe@bloomfield-law.com). The Bloomfield Law website can be accessed at www.bloomfield-law.com.