By Elvis Evbaruovbokhanre Asia
Case: Crown Flour Mills Ltd v. Gbenga Akinyemi[1]
Judge: Hon. Justice Joyce A. O. Damachi
Date: 12/9/2024
Main issues of law
1. Construction of contract of employment
2. Employees’ implied duty of obedience, fidelity, care and skill
3. Suspension without pay
4. Discharge of employee in a criminal case and dismissal for misconduct on related facts
Summary of facts
The Claimant introduced a “Condonation Scheme” to boost the sales volume of poultry feed. It was a monthly rebate program aimed at encouraging customers to purchase larger quantities by offering a discount. On the instruction of his National Sales Manager, the Defendant, along with other staff, reversed the credit notes that had already been posted by the Claimant’s team to two specific dealers’ accounts with the intent to defraud the company. The Defendant admitted that he carried out the instruction via correspondence with his manager on WhatsApp. Although the Defendant became suspicious of the reversal instructions, he failed to report his suspicions. The allegations were reported to the police, who determined that the Defendant was not a beneficiary of the fraud. The Defendant was subsequently suspended without pay and later dismissed following a disciplinary proceeding. The Claimant instituted legal action to recover N20,000,000 (Twenty Million Naira), which they claimed the Defendant had fraudulently obtained from the Condonation Scheme. The Defendant counterclaimed for his unpaid salaries during his suspension and sought damages for wrongful dismissal, arguing that he had not been given a fair hearing during the disciplinary proceedings. He also contended that the policies relied upon by the Claimant were not part of the terms of his employment and sought damages for false imprisonment and malicious prosecution.
Court’s Decision
The court held that the Defendant had breached the terms of his employment by reversing the credit notes. The Defendant was also found to be bound by the Olam Code of Conduct 2020 (OCOC) and Olam’s Policy on Anti-Bribery and Corruption, as evidence demonstrated that training had been conducted when the OCOC was introduced, and the Defendant should have been aware of the Claimant’s policies, which were accessible via the company ‘workspace.’ The court dismissed the Claimant’s claim for N20,000,000 (Twenty Million Naira) in losses attributed to the Defendant due to a lack of proof but awarded N1,000,000 (One Million Naira) in general damages.
Regarding the counterclaim, the court ruled that the Claimant was wrong to have suspended the Defendant without pay, but it dismissed his claim for wrongful dismissal. The court also awarded the Defendant N100,000 (One Hundred Thousand Naira) for endangerment, finding that the Claimant had illegally procured the Defendant’s arrest and had him transported along the dangerous Abuja-Kaduna highway at night, arriving in Kaduna at 9:30 PM. However, the court dismissed the claims for false imprisonment and malicious prosecution.
Legal principles relied on
a) Construction of contract of employment
While much of modern employment law is contained in statutes and statutory instruments, the legal basis of employment (by whatever means) remains the contract of employment between the employer and the employee. A contract may be contained in more than one document. When this is the case, the court must examine all documents exchanged between the parties and determine whether they reached an agreement on all material points. Documents relating to contracts of employment must be read as a whole to grasp their meaning.
b) Employees’ implied duty of obedience, fidelity, care and skill
Over the years, courts have developed rules of law that are automatically implied in a contract of employment unless excluded by statute or express terms of the contract. The three broad duties are: the duty to obey orders, the duty of fidelity, and the duty of care and skill. In every contract of employment, a term is implied that the employee will serve the employer in good faith and honesty. Therefore, the employee is not supposed to put himself in a position where his personal interest conflicts with that of his employer. There is also an implied term in a contract of service that an employee, when obeying instructions, will not seek to follow them in a wholly unreasonable way that disrupts the system or the efficient running of the employer’s operations. An employee is not bound to obey an unlawful order.
c) Suspension without pay
Modern jurisprudence, as ushered in by the Third Alteration Act, holds that suspension without pay pending investigation is entirely forbidden, even if such provisions exist in the terms and conditions of employment.
d) Discharge of employee in a criminal case and dismissal for misconduct on related facts
The discharge of an accused employee on a no-case submission may not necessarily prevent an employer from terminating or dismissing the employee if the employer concludes that there is more to the matter than the criminal prosecution and subsequent discharge.
Commentary
This is an interesting decision regarding the interplay of the rights of employers and employees. It serves as a reminder that employees must ensure, when obeying the instructions of their superiors, that the instructions come from the appropriate official channels and that they are not bound to obey unlawful orders. Another lesson is that employers cannot suspend employees without pay, even if the employment agreement includes such provisions; the current attitude of the court is to refuse to permit suspension without pay.
Three issues, however, deserve critical analysis. Firstly, the court seems to have overlooked the Defendant’s complaint regarding the fairness of the process that led to his dismissal. The Defendant raised fundamental issues about the way and manner in which the disciplinary proceedings were conducted, focusing on the issue of fair hearing. The court did not evaluate this aspect of the case, simply dismissing it by holding that the breach of the provisions of the OCOC justified the dismissal. The court ought to have considered the claim of unfairness in the process, and if it had done so, it might have had a material effect on the outcome of the case. As Justice Sanusi Kado rightly noted in Mr. Eshiet Etim Ekpenyong v. Cross River Basin Dev. Authority[2], when allegations of procedural irregularities are made, the court is called upon to determine issues external to the truth of the case, focusing instead on a threshold matter. The effect of failing to follow the correct procedure, which amounts to a denial of fair hearing, is the nullification of the dismissal based on the outcome of that flawed procedure, regardless of the truth of the factual basis of the proceedings.
Secondly, the court’s finding that the Olam Code of Conduct 2020 (OCOC) and Olam’s Policy on Anti-Bribery and Corruption were incorporated into the terms of employment is subject to debate. The question is whether the mere fact that an employee is aware of a platform where regulatory policies are stored is sufficient to make the policy binding without more. The court seemed to have made this decision on the premise that one of the regulatory documents, OCOC, was available in the “workspace” accessible to the Defendant and that training was conducted before its introduction. However, contrary to the court’s decision, the principle that a court can construe all relevant documents in a contract to determine its terms does not mean that a document not expressly incorporated into the terms of employment forms part of the contract between the parties. Furthermore, the court’s conclusion appears to relate only to the OCOC. Nevertheless, the court found that the obligations contained in the policies are implied in the terms of employment, with or without the documents in question.
Finally, there is some confusion in the award of damages against the Claimant for the endangerment of the Defendant. If the Claimant indeed procured the illegal arrest of the Defendant and had him transported along the Abuja-Kaduna highway at night, arriving in Kaduna at 9:30 p.m., despite knowing the road was dangerous, the Defendant’s claim for false imprisonment and malicious prosecution should have succeeded. By awarding damages for the procurement of an illegal arrest, the court is implicitly stating that the arrest was unjustified, which should entitle the Defendant to damages for false imprisonment and malicious prosecution.
Elvis E. Asia is the Managing Partner of Law Future Partners and a PartneratBols Attorneys, Nigeria. He has an LLB, Ambrose Alli University; and LLM from the University of Lagos. He is a member of the Chartered Institute of Arbitrators, United Kingdom, Institute of Chartered Secretaries and Administrators of Nigeria and the Chartered Institute of Taxation of Nigeria. Elvis is the author of the book ‘Oil and Gas Insurance and Nigeria’s Local Content Policy’
Footnotes
[1] Suit NO: NICN/LA/478/2022. Available online at https://nicnadr.gov.ng/judgement/judgement.php?id=9189
[2] SUIT NO: NICN/CA/01/2019. Available online at https://nicnadr.gov.ng/judgement/judgement.php?id=9185
