By: ‘Mayowa Arokodare
Introduction
Any employer is entitled to terminate the appointment of an employee in accordance with the terms of the relevant contract of employment. In Duru v. Skye Bank Plc [2015] 59 NNLR (Pt.207) at 680 NIC, the National Industrial Court (“NIC” or the “Court”) applied Article 4 of C158 – Termination of Employment Convention 1982 and Recommendation No. 166 of the International Labour Organization and held that an employer should not terminate the appointment of an employee unless a valid reason exists for such termination connected with the employee’s capacity or conduct or based on the operational requirements of the employer.
Many businesses suffered untold hardship on account of the partial or total shut down of business immediately following the outbreak of the corona virus (covid-19) pandemic (the “Pandemic”). Consequently, several Nigerian employers have been constrained to lay off a good number of their employees on account of the economic impact of the Pandemic. Predictably, far fewer Nigerians were working at the time of a study carried out by the National Bureau of Statistics (“NBS”) in August 2020 than prior to the outbreak of the Pandemic. 60 per cent of respondents to the NBS study experienced periods without work, while 6 per cent have been totally unemployed since the outbreak of the pandemic.
Who is a Periodic Employee?
A periodic employee is one who receives salary per calendar month that is, whose salary is not calculated by number of days. The prevalent practice is that a periodic employee whose appointment is terminated in the course of a particular month receives a pro rata/fractional payment for the number of days he has worked in that exit month. In Abe Adewunmi Babalola v. Equinox International Resources Limited (Unreported Suit No: NICN/LA/166/2015, the judgement of which was delivered June 17, 2020) (“Babalola’s Case”), the NIC had cause to consider the question of the quantum of salary due to a periodic employee whose employment is terminated after working for a number of days in (that is, not the entire duration of) the exit month.
What Did the NIC Decide in Babalola’s Case?
By a letter dated September 7, 2012, the defendant had terminated the appointment of the claimant who was its erstwhile Head of Human Resources and Administration. The claimant who had worked for 7 days in September 2012 claimed for recovery of arrears of salaries and entitlement from June to August; and a pro-rated portion of the salary for September 2012. His Lordship, Justice N.C.S Ogbuanya took the opportunity to review and restate the law on payment of salary in a periodic employment. His Lordship called to mind the reasoning of the NIC in the earlier case of Grant Mpanugo v. CAT Construction Nigeria Limited & Anor. (Unreported Suit No. NICN/LA/660/2015, the judgment of which was delivered on September 20, 2019), which case was incidentally decided by His Lordship as follows:
“…pro-rata/fractional payment of salary is not applicable to workers in periodic employment who receive salary per calendar month; not calculated by the number of days, otherwise there will be no equal salary monthly per year, given that the twelve months of a year do not have equal days, particularly the month of February, with days as low [sic] as 28 or 29 days…”
The Court in Babalola’s Case held that an employer is liable to pay full salary to the employee for that exit month and not a fraction (corresponding with the days on which the employee worked during that month). On this basis, the Court held that the claimant was entitled to payment of his full salary for September 2012, being the last month of his employment before his exit by way of termination on September 7, 2012.
Commentary
Where the foregoing decisions of the NIC leave us is at the juncture where we would have no option but to, by parity of reasoning, infer as a preliminary point that a periodic employee is equally precluded from making fractional payment at the point of his resignation after working for a number of days in (that is, not the entire duration of) the exit month. He will, in addition, be required to pay salary in lieu of notice where he fails to give the required length of notice, as per the contract of employment. As the English man says, what is good for the goose is also good for the gander. Secondly, it would appear that an employee who works for a day or two in a resumption month will now be entitled to receive full salary in that month. Furthermore, where a periodic employee is dismissed on the ground of gross misconduct having worked for a number of days in the exit month, in addition to receiving all his entitlements without loss of benefit (including arrears of salaries), he will be entitled to receive full salary for the exit month. This is on the basis of the earlier decision of the NIC in Adebayo Boye v. FBN Mortgages Limited (Unreported Suit No. NICN/LA/496/2012, the judgment of which was delivered on April 7, 2016), where the Court held that the rule that a dismissed employee lost it all is largely no longer good law.
Upon a careful review of the judgement of the NIC in Babalola’s Case, it does not appear that the Court relied on any statutory authority or international convention (whether duly ratified by Nigeria or applicable by the Court in furtherance of its constitutional powers to apply international best practice and international labour standards) in arriving at its decision on this point. It is the opinion of the writer that the Court merely directed itself to the task of doing substantial justice by reason of the peculiar fact-situation of the case – the Court found that the defendant had wrongfully withheld the claimant’s accrued salaries and that the defendant did not pay the claimant off at the point of terminating the claimant’s appointment. It should be borne in mind that the Court of Appeal had held in NEPA v. Isiereore [1997] 7 NWLR (Pt. 511) 135 CA that where an employer opts for the payment of salary in lieu of notice, the payment must be made contemporaneously with the termination.
It is, therefore, the opinion of the writer that the decision in Babalola’s case might have been different in the absence of the foregoing peculiar fact-situation. A related point that is necessary to be made in this regard is that although the claimant did not make a case for full salary payment for the month of September 2012 in terms of his reliefs before the Court, the Court deemed it fit to make an order as to full payment of salary for the exit month presumably on the basis that the justice of the case so demands.
Conclusion
The significance of the decision in Babalola’s Case is that where an employee in a periodic employment has worked for a certain number of days in a month (e.g. 10 days) and his employment is terminated, he is entitled to the full salary for that month notwithstanding that he only worked for a 10 day period in that month. Thus, if the appointment of such employee is terminated without the required notice, in addition to the full salary for the exit month, the employer is required to pay salary in lieu of notice for the termination of his employment without the required notice.
It is important to note that the decision of the Court in Babalola’s case is subject to change to the extent that appeals from the decisions of the NIC lie to the Court of Appeal. However, until such a time as the decision is overturned, the decision in Babalola’s Case remains the position of the law.
Mayowa Arokodare, ACITN is Senior Counsel at a leading commercial law firm in Lagos, Nigeria. He is a Finance, Corporate & Commercial Law specialist.