By Elvis Evbaruovbokhanre Asia
Case: Zakariah Ishaya v. Fidelity Bank Plc & ors
Judge: Justice J.T. Agbadu Fishim
Date: 14/10/2024
Main Issues of Law
1. Application of the Concepts of Triangular Employment and Co- Employment
2. The legal effective date of a resignation letter
3. Loss of Gratuity and Terminal Benefits due to Improper Notice of Resignation
Summary of Facts
The Claimant’s resignation letter, dated January 27, 2024, was acknowledged on January 30, 2017. On the same day, the Claimant accepted another employment without providing payment in lieu of notice, as required by the terms of employment. The Claimant subsequently filed an action against Fidelity Bank (1st Defendant), Fidelity Union Securities (2nd Defendant), and Fidelity Pension Managers (3rd Defendant) for gratuity, employment benefits, and damages for hardship suffered due to the non-payment of these benefits.
Fidelity Bank denied the claim, asserting that the Claimant was employed by the 2nd Defendant. However, evidence presented in court revealed that, although the Claimant’s employment letter was issued on the 2nd Defendant’s letterhead, the letter referred to the bank and the bank was responsible for paying the salaries. Additionally, the confirmation and promotion of the Claimant were under the control of the bank. The bank further exercised control by redeploying the Claimant to a different branch without consulting the 2nd Defendant.
Court’s Decision
The court held that both the bank and the 2nd Defendant were co-employers. It determined that the 2nd Defendant was merely an instrument through which the bank exercised its powers and duties as the actual employer. However, the court dismissed the Claimant’s claims because he failed to give the required notice of resignation, as stipulated in his employment terms. By terminating his employment immediately upon acknowledgment of the resignation and accepting new employment the same day, the Claimant forfeited all terminal benefits except for his earned salary, less any debts owed to the Defendants.
Legal Principles Relied On
Application of the Concepts of Triangular Employment and Co- Employment
a. Where a subsidiary company is so integrated into and controlled by its parent company, the court will recognize the existence of co-employment. Both entities will be bound by employment-related obligations. In assessing this relationship, the court examines:
i. The policies under which the employee operates
ii. Who pays the employee’s salary
iii. Who exercises control and disciplinary powers
b. In determining the nature of relationship between parties in employment dispute, the court emphasizes the primacy of facts—the facts of the relationship take precedence over contractual documentation in determining whether a person is in an employment relationship. Where appropriate, the court applies the concept of triangular employment to ensure fairness to employees.
The legal effective date of a resignation letter
c. A resignation letter becomes effective not on the date it was written or accepted but on the date it is received by the employer or their authorized agent.
Loss of Gratuity and Terminal Benefits due to Improper Notice of Resignation
d. An employee who fails to resign according to the prescribed notice period remains in the employer’s service for the requisite period. Such an employee cannot claim to have validly resigned. It is established law that failure to give the required notice results in the forfeiture of gratuity and other terminal benefits
Commentary
This decision highlights two significant aspects of employment law in Nigeria.
1. Triangular Employment and Co-Employer Concept
The judgment aligns with the National Industrial Court’s approach to curbing disguised employment practices. Some employers attempt to evade legal obligations—such as paying fair wages, taxes, and pensions—by outsourcing workers who perform essential functions. These arrangements are often exploitative, with outsourced employees performing identical tasks as permanent staff.
However, the court’s ability to address such practices suffered a setback in Luck Guard Ltd v. Adariku & Ors. , where the Court of Appeal ruled that there was no documentary evidence to support the claim of employment in a case against Total E&P Nigeria Limited, consequently applying the doctrine of privity of contract. Since that decision, doubts have arisen about the NICN’s ability to apply the concept of triangular employment.
Nonetheless, as this case demonstrates, when clear evidence shows that a party exercises control over an employee—regardless of the employer named in the employment letter—and the letter itself or its application expressly or impliedly refers to another party, the concept of triangular employment can still be justifiably applied. This conclusion is supported by section 91 of the Labour Act, which contemplates the possibility of oral and implied employment contracts, and by the established legal position on determining the existence of an employment relationship.
It is worth noting that the Court of Appeal’s reasoning in the Luck Guard case did not fully address the complexities of the issue, and the decision does not preclude the NICN from invoking triangular employment principles in appropriate cases.
2. Impact of Improper Resignation on Employee Benefits
The court also addressed the consequences of resigning without following proper notice requirements. It demonstrated that the NICN is not generally biased in favor of employees but ensures that both parties honor their contractual and legal obligations. Employees must adhere to the terms of their employment when resigning, and failure to do so can result in the forfeiture of terminal benefits beyond earned wages.
This judgment serves as a reminder that abrupt resignations have legal consequences. However, it is argued that beyond the forfeiture of terminal benefits, employers—especially those impacted by the sudden resignation of key staff—should have grounds to pursue breach of contract claims if they suffer damages due to improper notice.
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’