Promotion at workplace is one of the rewards of a diligent employee who meets the employer’s expectations. Typically, this promotion attracts salary raise and improved conditions of service as may be contained in some standard employment contracts. Thus, increment in salary accounts for the reason the promotion is a subject of celebration, especially by the employee, in the first place. Employers sometimes key into this celebration as the promotion goes to prove how well the establishment manages the staff, thereby giving the employees a sense of belonging and something to look up to. More so, staff promotion could be a pointer on how well the business is progressing.

Beyond the pecuniary gains associated with promotion, employees also get to enjoy the change in title, and from a lower status to a higher status. In fact, this change in nomenclature tends to improve the employee’s chances of being considered for higher positions in other organisations (s)he may be aspiring to join. Above all, the promotion brings some satisfaction that evidently shows the employee’s career advancement.

The problem sometimes encountered is that certain employers across different sectors (including the legal industry) mischievously promote an employee without accompanying the same with the necessary salary increment. The situation is such that the employer seems to be insinuating that the promoted employee should simply enjoy the “naming ceremony” and all the associated recognition only, without bordering about improved pay. At first, the unsuspecting employee may be basking in the euphoria of a new higher title until the reality of no improved income breaks like dawn. Dissatisfaction would naturally set in at this stage.

The Court of Appeal has recently declared such a move by any employer as “incomprehensible” and “absurd”. This was in the case of Mrs Josephine Kofo Abayomi v. Saap-Tech (Nig.) Ltd. [2020] 1 NWLR (Pt. 1706) 453.

Abayomi v. Saap-Tech (Nig.) Ltd.

The facts of the case are that the Appellant was an employee of the Respondent (“The Company”). Within a space of 11 years, she rose through the ranks until she was promoted to the position of a Managing Director (MD). No formal letter was issued to the Appellant concerning her promotion, and setting out her salary and allowances as MD. This was found to be the Company’s usual practice at the time with regards to the remuneration of the members of the Company’s management team. In what appeared to be an attempt to put things right, the Board of Directors later directed the management team to provide details of total remuneration of the management team from the date of their appointment, their current earnings and a proposal on what their remuneration should be.

The Appellant submitted her report in which it was found that members of management team earned a different and better remuneration compared to the previous positions held before being appointed to management level. The Appellant also recommended a higher pay for herself in her position as the MD in the report.

It happened that the Appellant’s proposal was not considered or approved by the Board. But to the Board’s knowledge, she received salaries and allowances (which were found to be above the amount she had proposed) and the Board did not raise any eyebrows.

Subsequently, the Appellant resigned her employment as the MD after serving for a period more than 2 years in that position. But the Respondent owed her about 4-month salary. Upon her resignation, she sued the Company to recover the money. The Company filed a defence and counter-claim against the Appellant.

In its Judgment, the trial Court found that because the Respondent’s Board did not issue the Appellant a letter of promotion/appointment as the MD and did not expressly consider and approve the remuneration presented to it by the Appellant, the Appellant was not entitled to earn or claim the salary for the position of the MD.

The Court of Appeal unanimously held that the above findings by the trial Court was wrong. Garba, JCA reasoned:

However, in the Appellant’s case, since the Board of the Respondent failed/neglected/refused to give her a letter of promotion/appointment to set out the terms and conditions of the office/position she was promoted/appointed to and she accepted and performed the duties of the office without complaint from the Respondent up to the time she resigned, the Respondent cannot deny her the benefits of the salary of the office/position which was placed before the Board by the Appellant immediately after the promotion/appointment.

The Court was persuaded by the fact that the Respondent never opposed the proposed salary/remuneration by the Appellant. It held that there was an implied approval by the Board of the sum she received as MD before her resignation, and as such, it would be inequitable to hold otherwise. The Respondent was estopped from contesting what it acquiesced to.

The Court of Appeal also held that the Appellant was only entitled to earn the salary as proposed and presented to the Board until it expressly sets out the terms and conditions for the position of MD to which the Appellant was promoted. The implication of this holding is that all hope is not lost in such circumstances. The Board reserves the power to subsequently set out the terms of remuneration. In doing so, the current amount may be reduced (if necessary and justified) compared to the controversial sum but it must certainly be higher than what was earned before attaining the new status by promotion. The Court directed the Appellant to refund to the Respondent the sum being the excess of salaries received by her (contrary to what she proposed) before she resigned. By this Order, the Court clearly disapproved of the Appellant’s conduct of receiving excess salary.

The Respondent had urged the Court of Appeal to discountenance the Appellant’s claims of higher pay based on her new status as the MD. This was on the ground of lack of prior approval and knowledge by the Board of the higher salary being received. The Court rejected the contention. Garba, JCA seized the opportunity to explain what is expected upon promotion. His Lordship was unequivocal:

In addition, it is very strange in company law and practice that an employee of a company appointed/promoted to the position of an MD of the company from a much lower position of Assistant or Acting General Manager in the same company, would or should continue to earn the same remuneration for the former or previous position, in his new office, in the absence of express agreement between the appointing authority and him to that effect. It is certainly absurd and incomprehensible that such a promotion would be merely a nomenclature only.

The above position applies not only to company MDs. The principle can be accommodated in the whole body of employment law. We must note that although Garba, JCA mentioned express agreement, it is not ideal for any employer to promote an employee without increasing salary. Thus, there is a chance that any such agreement to the effect that there may be promotion without increased pay may be struck down by the courts for being an unconscionable bargain. The courts frown at upholding absurdities and promotion without salary increment is one of them.

Stephen Azubuike
Author: Stephen Azubuike
Stephen is a lawyer with expertise in Commercial Dispute Resolution and Technology Law practice. He is a Partner at Infusion Lawyers. He has successfully argued cases from the High Courts of various jurisdictions to the Appellate Courts on behalf of financial institutions, other corporate bodies and multinationals. He has advised a number of both established and startup tech companies. He tweets @siazubuike.
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