- November 28, 2019
- Posted by: Stephen Azubuike
- Category: Case Law Blog
One of the common problems in termination of employment contracts is the calculation of employee’s entitlements upon termination of the employment. Oftentimes, the employee and employer are at loggerheads as to the correct amount the employee is entitled to. Usually, in a standard written employment contract, details of the employee remuneration and other employment benefits as well as other terms of engagement are clearly spelt out.
The employee’s earnings are simply a matter of figures, mainly manifesting itself in the country’s medium of exchange – Naira and Kobo. The attendant mathematical computation may not be so easily comprehended, especially by persons who have phobia in dealing with numbers, called arithmophobia.
When disagreements ensue as to the exact calculation of the entitlements, the employees are mostly at the receiving end, in that it is the employers who hold the key to the vault – The employer determines the pay and decides when to pay. Upon being aggrieved, the employee would approach the court for assistance in recovering whatever entitlement (or part of the entitlement) that might have been withheld by the employer. This was the situation in the recent case of Odeh v. Gasstocks Ltd. Suit No: NICN/PHC/51/2019 decided on 12 November, 2019 by Hon. Justice N. C. S. Ogbuanya of the National Industrial Court, Port Harcourt Division.
Odeh v. Gasstocks Ltd.
The case of the Claimant (Mr. Francis Ejeh Odeh) was that he was employed by the Defendant (Gasstocks Ltd) vide an Offer Letter dated 30th October, 2012. He worked for a period of 4 years 5 months until he resigned vide a Resignation Letter dated 30th January 2017, which took effect on 30th April 2017. The relevant clause on compensation read:
“…(1) Compensation: …
- Your Annual Base Salary will be N1, 200,000.00, payable in twelve monthly instalments of N100,000…
- Your Annual Bonus (i.e., 13th month pay) is paid at 1.00 of Monthly Base Salary. This is pro rata to number of months of employment in a year. This is paid in the November pay roll.
- Your Vacation Travel Allowance is paid at 1.00 of Annual Base Salary. This is paid on your anniversary date, usually after one year of employment.”
The Claimant’s contention was that contrary to the provision of the employment contract, in settling his entitlement after resignation, the Defendant unilaterally interpreted 1.00 as 1% instead of one whole number as 100% in paying his entitlements. The implication being that he was underpaid. Due to the said erroneous calculation and interpretation of 1.00 as 1% by the Defendant, the Claimant sought professional advice from one I. J. Adejroh & Co. (Chartered Accountants & Tax Practitioners), and obtained an expert interpretation of ‘1.00 of base salary (Monthly/Annual) and 13th month’. The Accountant interpreted the expression to mean one whole of the amount it applies to and not 1/100 (1%) of that amount.
Aggrieved by the Defendant’s insistence on its own interpretation, the Claimant instituted an action in Court for judicial interpretation of the expression, ‘1.00 of base salary (Monthly/Annual) and 13th month’ – an expression which the Court described as “mundane arithmetical computation.”
After due consideration, the Learned Judge – Ogbuanya J., relying on the provisions of the relevant clause in the Offer Letter and the expert opinion of the Accountant, reasoned:
“Accordingly, in my considered view, 1.00 of an amount means one (1) whole number and not a fraction (1/x); and when converted into per cent, it means 100%, and not 1%. And 13th Month as so expressed in exh.OJ1 (Offer Letter) means, an Additional Month of equivalent value in sum with every other month of the 12 months of a year. Thus, as this is a mathematical issue, I hold that ‘1.00 of base salary’ means 100% and not 1%. Applying this interpretation would entail that:
The expression 1.00 of Monthly Base Salary is N100, 000.00, which is for 13th month; where monthly salary is N100, 000.00.
The expression 1.00 of Annual Base Salary is N1, 200,000.00; where monthly salary is N100, 000.00 x 12 months. I so hold.”
The Court therefore directed the Defendant to pay the Claimant the shortfall resulting from the Defendant’s erroneous calculation.
One interesting finding by the Court was that the Defendant did not submit any other expert opinion to counter the expert opinion submitted by the Claimant. The Defendant relied on its own position. The point must be made that the Defendant is not bound to produce expert opinion in support of its contention. Although it would have presented the Court with another option. Nevertheless, the Court is also not bound to rely on the expert opinion. It has a discretion to accept or reject the opinion.
On its own, the Court showed a good grasp of the situation by its decision. 1.00 means 1. 100% (100/100) equals 1. 1.00 of any number is equal to that number as the word “of” in maths (especially when used in percentage problems) means multiplication. Thus, 1.00 of 100,000 means 1.00 x 100,000 = 100,000.
From the contentions of the Defendant, it seems what the Defendant intended was 1.00 percent (1%) of 100,000. This would mean 1/100 x 100,000 which would be equal to 1,000. However, not adding the percent or % to 1.00 in the Offer Letter was fatal. Any attempt to uphold this position would mean adding to the contract what was not there. The courts are not allowed to rewrite contract for the parties. Alade v. Alic (Nig.) Ltd. (2010) LPELR-399(SC).
Reliance on estoppel
The Defendant relied on previous payments to advance the argument that the Claimant was estopped from complaining in that the Claimant had in the past accepted payments based on interpretation of 1.00 as 1% and not as 100%. The Learned Judge would have none of that contention. His Lordship held:
“I have read paras. 4 and 5 of the Counter-Affidavit relied on as containing facts setting up a defence of estoppel. I am however, unable to see a representation made by the Claimant for which the Defendant relied on that would constitute an estoppel against the Claimant, to foreclose him from troubleshooting this issue seeking judicial interpretation of the controversial ‘1.00’ in their contract. What I rather find is the fact that the Defendant had maintained its position and insisted that its own version of interpretation was correct, and as the pay master, it proceeded to pay what it wanted to pay, not really what the Claimant expected it to pay. In that scenario, does the Defendant expect it to reject payment out rightly, until its own version as employee is paid, for the period it had rendered service or to fight back the Defendant to express displeasure? Note that an employee in service is not an independent contractor and as such, is still subject to internal disciplinary measures for any unruly behaviour while pursuing legitimate claim in the service. In my view, the fact that the issue came up for argument between the parties as shown in exh. OJ3 [Defendant’s letter of 30th February 2018 containing the calculation] shows that the issue was far from being settled to constitute estoppel. Defendant’s Counsel also did not show how the issue has become settled, since exh. OJ3 was written on 30th February 2018 after the Claimant has left its services by resignation in April, 2017 (exh.OJ2). On that note, I discountenance the defence of estoppel by conduct relied on by the Defendant.”
By the above holding, his Lordship demonstrated a perfect understanding of what truly obtains in the work place and is thus highly commended for his sense of justice.
Mathematics is good for lawyers
His Lordship expressed the view that gaining some background in mathematics is good for lawyers. Hear him:
“Let me quickly observe that the mathematical issue presented for adjudication herein has once again provided justification for requiring performance in mathematics as a qualifying subject to study law in Nigerian Universities, contrary to the erroneously held belief in some ill-informed quarters that those who opt to study law are bereft of mathematical and scientific abilities. That is far from the reality, considering the likes of legendry jurists; Lord Denning MR, and our own Hon. Justice Augustine Nnamani JSC (of blessed memory), including my humble self.”
In conclusion, it is clear that the Offer Letter issued by the Defendant did not appear to have reflected what the Defendant intended. However, it is the Defendant’s funeral. Most times, contracts of employment are standard form contracts with little or no input from the prospective employee. Thus, the Court would naturally invoke the rule of interpretation that states that a contract would be strictly construed against its maker.
It is advised that employers of labour should consider it necessary to engage the services of an expert in figures to ensure that its true intention as to remuneration is actually reflected in the employment contract. Lastly, the clause on remuneration (as well as other clauses) should be more elegantly drafted, and in simpler terms, to eliminate ambiguities and needless confusion.
Featured image credit: NICN.