Impact of Corona Virus on Labour Law in Nigeria: Redundancy Clause in View – Hussain Tijani

It is no news that businesses have become grounded in Nigeria, as with the rest of the world, as a result of the Coronavirus pandemic (also known as COVID-19) , which has practically changed the economic fate of numerous organizations, with the private sector being the most hit.
In a bid to stem the tides of the potential impact, this pandemic might cause, private persons, organizations rallied round and donated collectively and individually into the government’s coffers, among the donors was Access Bank Plc and its CEO, a bank with 600 branches across Nigeria.
Sadly, on the 1st day of May, 2020 a day globally recognized as workers’ day, a leaked conference video call of the CEO of Access Bank found its way into the social media cyberspace.
In the leaked video, the CEO can be heard announcing plans to lay off about 75% of its staff from its payroll, with those remaining, set to receive a significant cut in their wages; an action the CEO believes to be a strategic business decision aimed at ensuring the financial institution’s survival during and after the pandemic.
In his words “what is important is that these adjustments are what is required at a time when we see Armageddon, when we see great difficulty coming in, to make sure that if there is one institution left standing in this country as a bank, it must be Access Bank.”
In his closing remarks he admits that they understand the difficulty people are going through, but they also understand the higher calling of creating an institution that can continue to provide.
I understand that some of the workers and the public may become agitated about the business decision and contemplate a legal action, considering that Access Bank Plc collectively or individually through its CEO, had publicly donated the whooping sum of One Billion Naira to the Government’s coffers, while the Bank itself declared the astronomical profit of Forty Billion and Nine Hundred Million after tax in the first quarter period ended March 31st, 2020, details of this can be found in its financial statement for Q1 2020.
However, it is pertinent to note that:

  • “where an employee claims for wrongful termination entitlements which have accrued to him before the effective date of such dismissal, his claim should be founded in a claim of debt, not as damages for wrongful dismissal.” See NEW NIGERIA BANK LTD. v. OBEVUDIRI (1986) 3 NWLR (Pt. 29) 387 at 402 C. A.; LAKE CHAD RESEARCH INSTITUTE v. MOHAMMED (2004) LPELR-5796 (CA); and Halsbury’s Laws of England, 4th Edition, Vol. 12, Page 413, Paragraph 1103.
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In the light of the facts chronicled above, I shall examine the redundancy clause in Employee/Employment agreements, albeit in recent times this clause is dispensed with in preparing the agreement under reference.
A redundancy clause, sets out what will happen in the event that an employee’s service is no longer needed, and what the employee might get as compensation. Hence its relevance to this article.
Legally, “Redundancy in service is a mode of removing an employee from service when his post is declared redundant by his employer. It is, therefore, not a voluntary retirement, nor is it a dismissal from service.
It is also not a voluntary or forced resignation, nor is it a termination of appointment. Rather, it is a unique procedure whereby the employee is quietly and lawfully relieved of his appointment.
As such, the conditions applicable to redundancy are quite distinct from those applicable to retirement or other modes of relieving an employee from active service, such as termination, compulsory resignation or dismissal.
Consequently, as a general rule, the declaration of redundancy does not carry along with it any other benefit except those benefits enumerated in terms of the contract to be payable to an employee declared redundant where applicable (Italics mine)”. See PAN LTD VS OJE (1997) 11 NWLR (PT 530) 625; ADIBUAH V. MOBIL OIL (NIG) PLC (2015) LPELR-40987 (CA).
The important take from the aforementioned legal position is the phrase “except those benefits enumerated in terms of the contract to be payable to an employee declared redundant where applicable”, which reinforces the fact that before job roles are accepted, employees must ensure that they find provisions which shall protect their status, or employ the services of a legal practitioner to help vet the employment contract and secure for them better terms in their employment contracts.
The Nigerian Labour Act of 1971 defines redundancy in section 20 (3) as “an involuntary and permanent loss of employment caused by an excess of manpower.”
This definition definitely did not envisage an event such as the pandemic corona virus, which has reduced the operation-ability of business organization and invariably rendered ineffective the powers of the Minister for Labour and Employment enshrined in Section 20 (2) to the effect that “The Minister may make regulations providing, generally or in particular cases, for the compulsory payment of redundancy allowances on the termination of a worker’s employment because of his redundancy.”
While I do not know how the 75% of the Access Bank staff set to be laid off and Access Bank Plc would fare after the business decision is implemented. It is my genuine fear that a lot of financial institutions would soon follow in the steps of Access Bank, after all, a business man is only concerned about two things: Profit and Tax reduction.
I believe this pandemic raises an alarming call to the Minister for Labour and Employment, Nigeria Labour Congress, Nigeria Employers’ Consultative Association, and other labour stakeholders to go back to the legislative table, and revamp the Labour Act to meet up with the realities of today, and arrive at a middle ground that protects the employees and much as the employers, as it is worthy to note that without employees, employers are like a vehicle without an engine.
– Hussain Tijani
Principal Partner at H. O. T. Legal Practitioners

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