By Elvis Evbaruovbokhanre Asia
Case: United Bank for Africa v Oni Oluwatosin Olubunmi [1]
Judge: Justice R. H. Gwandu
Date: 17/06/2025
Main Issues of Law
- Claim of interest on employee indebtedness
- Whether unearned benefit constitutes a loan
Summary of Facts
The Claimant’s employee handbook provides that upon resignation or retirement, an employee is entitled to various benefits, less any unearned allowances. The Claimant alleged that the Defendant was indebted in the sum of ₦2,256,201.66 (Two Million, Two Hundred and Fifty-Six Thousand, Two Hundred and One Naira, Sixty-Six Kobo), being unearned allowances credited into his salary account.
The Claimant further asserted that the said amount began to attract interest, and consequently claimed a total sum of ₦12,941,590.80 (Twelve Million, Nine Hundred and Forty-One Thousand, Five Hundred and Ninety Naira, Eighty Kobo) as at 31st May 2019.
Court’s Decision
The Court held that from the Claimant’s pleadings and unchallenged evidence, there was no proof that the Defendant agreed to or was informed of compound interest at the rate charged by the Claimant. Additionally, there was no loan document evidencing that the Defendant obtained a loan from the Claimant.
Accordingly, the Court dismissed the claim, despite it being undefended
Legal Principles Relied Upon
- Claim of Interest on Employee Indebtedness
For interest to be claimed there must be evidence that shows the Defendant (employee) agreed or was informed of compound interest at the rate charged and there must be Loan document showing the Defendant collected any loan from the Claimant.
- Whether unearned benefit is a loan
An unearned allowance does not translate to a loan that attracts high interest.
Commentary:
This decision is significant as it underscores the recurrent confusion when banks act both as employers and creditors. In many cases of employee indebtedness, banks credit employees’ accounts and begin charging interest, sometimes even freezing such accounts.
The ruling makes clear that banks cannot unilaterally impose interest charges unless there is a clear commercial loan agreement stipulating such terms. Loans granted to employees as banking customers must be distinguished from adjustments of employment benefits.
Importantly, it must be pointed out that the Court of Appeal has since held that the National Industrial Court lacks jurisdiction to adjudicate disputes relating to commercial loans granted to employees by banks in their capacity as financial institutions [2].
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’
[1] SUIT NO NICN/LA/132/2021. Available online at https://nicnadr.gov.ng/judgement/judgement.php?id=10250
[2] MR. Nonso Odigboh v Keystone Bank Limited, Appeal No. CA/LAG/CV/163/2021, delivered by the Court of Appeal on December 6, 2022
