Real Estate Contract: Mr. Dan Ngerem v. Crown Realties Plc [2021] 4 NWLR (Pt. 1767) 476

What was the Contract?

Crown Realties Plc (“The Respondent”) entered into a contract to sell six houses in Crown Estate, Lekki, Lagos to Mr. Dan Ngerem. The houses were sold off-plan (they were yet to be constructed). It was agreed that the houses would be completed within 9 months from the date of the initial deposit. Following these assurances, Mr. Ngerem paid the agreed initial deposit of N39.08 Million.

Unfortunately, Crown Realties failed to complete the houses at the agreed time. The company completed the houses 6 months after the due date. Mr. Ngerem condoned the breach of contract and the contractual relationship continued as if there had been no breach. Upon completion of the houses, Crown Realties wrote to Mr. Ngerem, informing him that the houses had been completed and demanding for the balance of the purchase price.

How the Dispute Emerged

On his part, Mr. Ngerem was unable to pay the balance of the purchase price to Crown Realties. Instead, he proposed to pay the balance in installments. To this end, he paid a deposit of N34 Million, which amounted to a total of N73.08 Million.

When Mr. Ngerem presented further payment, the company returned the cheque and revoked the contract on the ground that Mr. Ngerem was in breach of the payment terms of the contract which did not stipulate payment by installments.

The company applied N28.1 Million of the payments made by Mr. Ngerem as payment for one house, out of the 6 houses. The company proposed to refund the N44.9 Million balance after selling the other properties. For undisclosed reasons, Crown Realties sold the remaining five houses to other interested buyers but failed to refund Mr. Ngerem’s money.

Aggrieved, Mr. Ngerem sued Crown Realties before the High Court of Lagos State. He claimed a refund of the N44.9M, an order of specific performance and damages for breach of contract. among other reliefs.

How did the Nigerian Courts view the Contract?

The trial Court dismissed Mr. Ngerem’s claims on the ground that both parties were caught up in a mixed show of contract breaches. While Crown Realties breached the contract by not delivering within the 9-month period, Mr. Ngerem waived the breach by accepting delivery of the houses after the additional 6-month period. In the same vein, Mr. Ngerem breached the contract by not paying the balance, instead, he opted for payment by installments. The trial Court held that Mr. Ngerem was not entitled to damages for breach of the contract.

Dissatisfied, Mr. Ngerem appealed to the Court of Appeal. The Court agreed with the trial Court’s position on contract breaches by both parties. It held that Mr. Ngerem had the option to treat the contract as breached the moment Crown Realties failed to deliver within the agreed time. This would have entitled him to damages for the breach. But he ignored the breach and kept the contract alive by subsequently proposing to pay the balance by installments. Failure to pay the balance forthwith was also a breach in itself.

The court held that Mr. Ngerem was entitled to a N44.9 million refund. This is because he never received value for the payment. This was due to the revocation of the contract and subsequent sale of 5 houses to other purchasers.

FINANCIAL DISTRESS: PREDICTION, PREVENTION AND CURE

corporate-failure-3-638

A company can be likened to a human body. Financial distress and corporate collapse is usually dramatized in the media as a sudden occurrence, but this is almost never the case. There is usually ample warning of impending doom, but many companies either ignore the warning signals or try to hide the problems using creative accounting.

Financial distress refers to a problem, usually of a financial nature which causes the cash flow position of a company to deteriorate. With proper diagnosis and treatment, this problem can be resolved and the company restored to financial health.

bankruptcy-bccl

The first visible sign of financial distress occurs when a company falls into arrears of interest and loan repayments, there is delay in payment to suppliers, there is a shoddy look to the office and the staff stop being paid on time.

In some countries, companies are not allowed to fail, even though they may be financially distressed. Companies are propped up by a continuous injection of funds in order to preserve jobs. Unfortunately, while cash flow problems may be a problem, investing more money is rarely the solution. A sustainable solution needs to combine investments with more drastic treatment. Failing this, the company will drag on in meaningless existence as good money is thrown after bad.

On the converse side, free market economies dictate that the law of survival of the fittest prevails.

Plunging into Bankruptcy - Financial Speedometer

Can financial distress be prevented?

Financial accounts and reports are supposed to serve the purpose of alerting management to any problems inside the business. However, such reports are usually guilty of hiding a large amount of information from company outsiders. The report may fulfil statutory obligations, but it is often a poor indicator of the company’s health.

The auditor and the accountant may have a role to play, but their usefulness is often limited in the face of corporate politicking and executive greed. The only way of effectively preventing financial distress is to  create a system that gives early warning of an impending financial problem.

tumblr_inline_njbi4b0gja1sy6ab4

Management research shows that financial distress may be prevented when the company has a good management team, a solid corporate strategy and a resolute Chief Executive. Consequently, effective corporate governance plays an effective role in effective business management.

Watch this space for more posts on this topic

Watc th

 

 

 

A History of Insolvency Law

5-laws-of-gold-law-5

Early insolvency law was dominated by punitive approaches and it was not until the early eighteenth century that notions of rehabilitation gained force. Insolvency was seen as an offence little less criminal than a felony and was punishable by detention in person at the creditor’s pleasure in debtors prisons. The prevalent view was that it was not justifiable for any person other than a trader to ‘encumber himself with debts of any considerable value’

Prior to this revolution, common law offered no collective procedure for administering an insolvent’s estate. A creditor could seize either the body of a debtor or his effects – but not both. Creditors, moreover, had to act individually, there being no machinery for sharing expenses.

receivership-1024x455

The idea that creditors might act collectively was recognised in 1542 with the enactment of the first English Bankruptcy Act which dealt with absconding debtors and empowered any aggrieved party to seize the debtor’s property, sell it and distribute the proceeds among other creditors ‘according to the quantity of their debts.

During the 19th century, attitudes towards trade credit and risk of default changed. This was due to the rise of joint stock companies and the resulting de-personalisation of business and credit.

The key statute was the Joint Stock Companies Act 1844 which established the company as a distinct legal entity, although it retained unlimited liability for the shareholders. the modern limited liability company emerged in 1855, to be followed seven years later by the first modern company law statute containing detailed winding-up provisions.

The House of Lords in Salomon’s case confirmed that a duly formed company was a separate legal person from its members and that consequently even a one-man company’s debts were self contained and distinct. However, every insolvent business went into liquidation or receivership automatically. It was the kiss of death for them and the creator of unemployment.

Plunging into Bankruptcy - Financial Speedometer

An insolvency system was later created to administer the range of new procedures be introduced as alternatives to outright bankruptcy or winding up, which would deal with individual cases on their merits. These involved recommendations that private insolvency practitioners should be professionally regulated to ensure adequate standards of competence and integrity; that creditors be given a greater voice in the choice of the liquidator; and that new penalties and constraints be placed on errant directors. This represented a movement towards stricter control of errant directors but also in favour of an increasing emphasis on rehabilitation of the company.

The rationale behind the culture of business rescues was expressed by Sir Kenneth Cork as follows: “When a business becomes insolvent it provides an occasion for a change of ownership from incompetent hands to people who not only have the wherewithal but also hopefully the competence, the imagination and the energy to save the business”.

The current attitude towards insolvency is to carry out much more work on corporate problems before any insolvency procedure is entered into. This places a new emphasis on managing insolvency risks proactively rather than after troubles have become crises.

In this series, we will explore the life cycle of insolvency from financial distress and default, to corporate failure and business rescue. We will also investigate different approaches to managing insolvency, along with their strengths and weaknesses.

WHEN IS A COMPANY INSOLVENT?

Corporate insolvency law is not merely concerned with the death and burial of companies. Important issues are whether corporate difficulties should be treated as terminal and whether it is feasible to mount rescue operations.

WHAT DOES INSOLVENCY MEAN?

Insolvency refers to the regulated legal process that ensues upon the bankruptcy of a company. Insolvency procedure registers and prioritizes claims, freezes other legal actions, limits company to business as usual, and tries to establish value from assets.

In a society that facilitates the use of credit by companies, there is a degree of risk that company creditors will suffer because the firm has become unable to pay its debts on the due date.

If a number of creditors were owed money and all pursued the rights and remedies available to them (for example, contractual rights; rights to enforce security interests; rights to set off the debt against other obligations; proceedings for delivery, foreclosure or sale), a chaotic race to protect interests would take place and this might produce inefficiencies and unfairness. This is what insolvency laws seek to prevent.

Image result for liquidator

The end target of any restructuring or insolvency process is to return a company to financial health. Predominantly by lowering and decreasing its obligations. If the situation can’t be rectified, insolvency law will work to ensure a fair allocation of liquidated assets.

Image result for doctor

WHEN IS A COMPANY INSOLVENT?

There are two definitions of Insolvency, depending on the test applied by the court. Briggs J in Re Cheyne Finance Plc contrasted “a momentary inability to pay as a result of temporary liquidity soon to be remedied” with “an endemic shortage of working capital” which renders “a company insolvent, even though it may be able to pay its debts for the next few days, weeks or months before an inevitable failure.”

  • A company is balance sheet insolvent where the company’s liabilities exceed its assets.

  • A company is cash flow insolvent when the company is unable to pay its mature liabilities as they fall due. In this situation, the company may be balance sheet solvent and is experiencing temporary cash flow/liquidity problems.

Where a company is cashflow insolvent it may undergo restructuring through schemes of arrangement, administration, or receivership and be managed until it returns to profitability.

If the company cannot be returned to profitability, it may be wound up and its assets sold to satisfy creditors claims, after which the company is then liquidated.

Image result for the punisher

Many companies would find themselves without access to funding or credit and may enter unnecessarily into insolvency proceedings if an arbitrary approach was taken to the balance sheet test. For this reason the cash flow test is used to identify companies that merely require a cash injection and those that need to be totally restructured.

In BNY Corporate Trustee Services Ltd v Eurosail-UK 2007-3BL Plc, The court held that the “balance sheet” test of insolvency may only apply where a company has reached a point of no return (where it is clear that the business will not be able to meet its future or contingent liabilities).  However, if the cash flow test were the only relevant test for insolvency, then current and short-term creditors would in effect be paid at the expense of creditors to whom liabilities were incurred after the company had reached the point of no return because of an incurable deficiency in its assets.

An insolvency usually begins with an event of default (“EoD”) or inability to meet an agreed business obligation. This obligation may be a contractual debt, a bill payment or a business loan.

A period is sometimes allowed to repair the default (Cure Period); usually between 1 week to 3 months. If the Cure Period lapses or there isn’t one to begin with, the creditor has a right to declare EoD and pursue legal action against the company for the immediate payment of all outstanding obligations.

Final liquidations are a last resort, sometimes the best of both worlds can be achieved by a court approved private work out as creditors generally prefer private negotiation to judicial intervention.

Image result for judge with a huge hammer images

Judicial proceedings are a fall back remedy, used when it is necessary to stay hold out creditors, bind dissentients, improve title, enhance foreign recognition, monitor gross unfairness and punish fraud.

When a corporate failure occurs, this may have a dramatic impact on the lives, interests and employment prospects of a number of parties. It is important to understand the nature of these potential effects. This would help us better manage the negative effects of corporate failure.

 

What are the Duties of an Employer?

shutterstock_406485700

An employer is a person or other legal entity that controls and directs the actions of another person, called a worker or employee under an express or implied contract of employment and pays (or is obligated to pay) him or her salary or wages in compensation. The employer has duties specified by the law which he must be cognizant of at all times  as the breach of any of these duties may render the employer liable at law in the event of injury or loss to the employee and they include:

  • The duty to provide work for his employee.
  • The duty to provide a safe and healthy work environment. where it is not practicable to avoid the presence of hazards, providing adequate personal protective clothing and equipment without any cost to workers
  • The duty to provide competent co-workers so as to prevent or reduce the possibility of injury as a result of a co worker’s incompetence.
  • The duty to remunerate employees in accordance with the terms of the contract of employment if the employee arrives for work and can work..
  • The duty to indemnify employees against liabilities and losses resulting from following his employer’s instructions.
  • The duty to give employees reasonable opportunity to have their complaints resolved or mitigated.
  • Where a report is received from an employee about hazards or any injury or harm to health, he must within reasonable time after receiving the reportinvestigate the matter and determine the action, if any, to be taken; and notify the employee about what was decided.

If you are an employer and you feel you need advice on your rights and obligations, please feel free to contact us by email or give us a call at +2348036258312 or +2348188474167.

CAN YOU LEGALLY PAY YOUR STAFF WITH BITCOIN?

bitcoin-logo-3d

Did you know that some businesses are paying their employees in Bitcoin and other cryptocurrencies? The rise of cryptocurrencies and other digital currencies appears to have expanded the definition of money and has created a conversation around the role of central banks and other regulators.

A cryptocurrency is a digital currency that is created and managed through the use of advanced encryption techniques called cryptography. While there are a number of different kinds of cryptocurrencies available today, Bitcoin is by far the most well known.

According to the source website, the Bitcoin was created in 2009 based on peer to peer technology. Unlike fiat currencies, which are managed by governments, there is no central bank or authority that runs Bitcoin. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and anyone can take part.

Bitcoin can be used as an international currency. When an employee gets paid in Bitcoin, they can easily exchange it into virtually any fiat currency at any time, especially when the exchange rate is in his or her favour. For the employer, remote contractors or employees who live offshore can be paid in Bitcoin, so they choose which currency they would like to exchange it for.

As a global currency you can send Bitcoin to anyone, anywhere in the world without worrying about cross-border remittance fees, management or processing fees.

CONS

However, the pros come with some cons. Bitcoin and other cryptocurrencies tend to be quite volatile in terms of their value, so the employee may suddenly find themselves in a losing position. Thus it is not advisable to pay the total salary in Bitcoin.

Cryptocurrencies have seen significant increases in value over the last few years, it’s important to note that those increases in value may be seen as capital gains by Revenue Agencies and are taxable as such. Essentially, you must pay capital gains on the increased value of your cryptocurrency.

Section 1 of the Labour Act prevents the payment of wages through means other than legal tender the wages of a worker shall in all contracts  be made payable  in legal  tender and not otherwise; and    if in any contract  the whole or any  part of the wages  of a worker is made payable in any other manner the  contract shall be illegal, null and void.  This implies that any payment of wages via Bitcoin. However, this may not apply to persons excluded from the definition of a worker under the Act, such as Persons exercising administrative, executive, technical or professional functions as public  officers or otherwise.

 

Sexual harassment 101: what everyone needs to know

neverok-image-square-53w0ngnzifxrcd1ybpx29sz5yw6

The aftermath of the Harvey Weinstein revelations has unearthed a  depth of ignorance around the whole issue of sexual harassment. There has been the routine conflation with assault and then panicky addition of “alleged” to the end of every sentence, along with wild assumptions about its rarity and triviality. For the avoidance of doubt, this is the harassment 101.

What is sexual harassment?

The UK Equality Act of 2010  defines it as:

“unwanted conduct of a sexual nature which has the purpose or effect of violating someone’s dignity, or creating an intimidating, hostile, degrading, humiliating or offensive environment for them.”

It covers indecent or suggestive remarks, unwanted touching, requests or demands for sex and the dissemination of pornography. This legislation is often portrayed as murky or ambiguous, on the grounds that it’s hard to tell the difference between a bit of banter and a humiliating remark.

 The humiliation or intimidation of sexual harassment lies in making someone feel that their physical attributes are their main value to the workplace, which undermines any skills or talent or insights or hard work they may also have brought. So saying “you’ll do well in the organisation because you have big boobs” is harassment, even if

a) you think it’s true,

b) you personally are not a boob man,

c) you didn’t mean it as an overture and

d) everyone laughed.

The test “how would I feel if it were said to me?” isn’t necessarily helpful, since there is context you may have missed, such as what it’s like to be routinely ignored in meetings until your point has been corroborated by three other men, and then congratulated on your big boobs. Sex-based harassment relates to the sex of the target but isn’t necessarily sexual in nature.

How common is it?

A report conducted jointly by the TUC and Everyday Sexism found that 52% of women had experienced some form of sexual harassment at work, nearly a quarter had been touched without invitation, a fifth had experienced a sexual advance. An earlier study by the law firm Slater and Gordon found that 60% of women had experienced inappropriate behaviour and nearly half of respondents had been warned to expect problematic behaviour from a particular person when they arrived.

Why don’t women report it?

About one in five women do report it. Their outcomes are poor: 80%, according to the TUC report, found that nothing changed; 16% said that the situation worsened afterwards.

Many women never report harassment because of the cultural context they are stepping into, one in which, says the writer and feminist activist Beatrix Campbell, “there’s a knowledge of and tolerance of sexual harassment, that makes women’s journeys through public space always a little bit hazardous. I think the people who talk about this stuff as if it’s nothing forget how heartbreakingly sorrowful we feel about that and how ashamed. The other structural conversation to have about this, apart from power, is shame. I am overwhelmed by hearing these women’s stories. The politics of humiliation has been erased from the discourse. It can’t be underestimated, because you were in that room, he did put his hands on your body. Even if you escaped, the point is that you were there.”

6016

Why would a woman end up alone in Harvey Weinstein’s hotel room?

A few practical reasons: for instance, she had been lied to, told there was a party there or started off in a group that had then evaporated; meetings are routinely held in hotel rooms in the entertainment industry; the junior party in any given business meeting rarely has a decisive say over where it’s held. But really, the slide from civilised interaction into threatening behaviour is all in the hands of the aggressor. There are no formal waypoints, where consent is understood before moving to the next waypoint. Harassment isn’t like a date with a communication failure. However, the fact that this question is asked contributes to the shame and builds the wall of silence.

Is there a typical target, or a typical harasser?

Often the target of the harassment has low power in the workplace, whether by dint of a temporary or precarious contract or being young. The Equal Opportunities Commission (as was) found in 2002 that the majority of harassment cases taken to tribunal were by people who had been in the workplace for less than a year. Research suggests a clear association between harassment and women who are on zero-hours contracts who will just not get offered work again if they kick up a fuss. That is crude power operating in the workplace.”.

Powerlessness has no single source – Terry Crews has recounted his harassment by a senior Hollywood executive, as has James van der Beek; the operative vulnerability was race and age, respectively. The harassers are overwhelmingly male, and in a position of authority over the target.

 

How easy is it to bring a case of sexual harassment to an employment tribunal?

Juliette Franklin, a senior associate at Slater and Gordon, says that “unfortunately, it tends to be one person’s word against another, because if you’re setting out to intimidate, you do that when there’s no one else around”. Then it will be a case of looking at corroborating evidence. “Has any of this found its way into email correspondence? Can you keep a diary or some kind of record, perhaps send yourself an email so you’ve got something contemporaneous. Have you contacted HR and raised a grievance?”

Companies may have lots of procedures in place that nobody ever follows: they may have a big push on equality training, but nobody has been trained for 10 years.

“An awful lot of cases settle before they get to court, a level of compensation might be paid, other measurements might be put in place,” says Franklin. “That can be biggest benefit of it, making sure someone is taken to task for their behaviour.” The civil system is adjudicated on the balance of probabilities: is it more likely than not that this has happened, and for this reason? It is not a notoriously difficult area in which to secure a victory, but “there’s a great deal to be gained from resolving it as soon as possible”.

Michael Newman, from the solicitors Leigh Day, says “it’s easy enough [to bring a case] as in, the law is there. It’s quite hard for people to decide to do it while they’re still employed by the company. What I typically see is someone bringing an unfair dismissal case, and they’ll reel off a series of harassment incidents which, on their own, they never would have gone to a lawyer about, they’ll just have put up with it. They’d have found it pretty awful, but they couldn’t see a way of reasonably bringing a claim. It’s a very nuclear option.” Sometimes the HR department is inadequate, but often “the individual is so senior that they can operate in relative isolation”. A small employer may not have an HR department. “A garage in Scunthorpe with three people in it … I wouldn’t say it’s particular to any sector, or any large or small employer. Sadly, it’s pretty universal. And often I’ll get a bundle of cases: ‘Not only did you make me redundant while I was pregnant, you also did this a year ago.” The problem with that is the event has to be within the past three months.

Who should solve this?

We’ve got lots of policies on sexual harassment, we’ve been churning out guidance, giving training, we have a couple of hundred thousand elected workplace reps who are trained on how to tackle discrimination and harassment at work. But it really does come down to employers, unions and government. It is now the job of the institutions to take responsibility for this. It’s about women saying: ‘I didn’t do this, you allowed him to do it.’ It’s our problem and their fault.

Training Bonds: How do they work

restrictive-covenant

Captain Dan is a pilot who was formerly in the employment of Highland Airways Ltd. A year before his resignation, the company expended substantial amounts of money in sponsoring 2 specialised trainings for Captain Dan in order to improve his skills and increase the number of planes he could fly.

The terms and conditions for sponsoring the trainings were contained in two training bonds which required Captain Dan to remain in the employment of the Company for 36 months and 12 months respectively. Captain Dan thereafter attended the trainings and acquired licences and qualifications as a result, which made him a desirable candidate for several .

However, contrary to the terms of the training bonds, Captain Dan resigned from the employment of the Company and repudiated the training bonds. He argued that the training bonds were void and unenforceable because they constituted a restraint of trade and an unfair labour practice. The company on the other hand, is of the opinion that the training bonds were freely entered into by the parties and were necessary for the protection of the Company’s business interests. It was further argued that training bonds are not contracts in restraint of trade and are enforceable in Nigeria and other jurisdictions.

This compelled the company to seek legal advice on their right against Captain Dan. Having recourse to international best practice in other jurisdictions, the position of the law is that training bonds are contracts in restraint of trade, but are enforceable if they are considered to be reasonable. The test of reasonableness is whether the restraint is necessary for the protection of the parties’ interest and is not contrary to public policy.

Where the bond is deemed reasonable, the parties can adopt the practice in other jurisdictions where the amount an employer is allowed to recover following a breach of a training bond is limited to the pro-rated cost of the training for the remaining period of the bonding period before the employee breached it. This position of the law provides comfort to employers who incur considerable expenses in providing training for its employees that such investment will be protected by the courts. Arguably, it will also reduce the tendency of employees to flagrantly breach their contractual obligations due to the lure of better offers of employment from their employer’s competitors.

Employers are therefore advised to seek legal advice before drafting their training bonds to be certain that they would pass the test of reasonableness.If a training bond is deemed unreasonably lengthy or restrictive, such as to place the employee in a state of indentured servitude to the employee, the courts may void the legal effect of such an agreement, even though it was freely entered into by the parties.

 

What Rules should guide probationary periods?

aaeaaqaaaaaaaajvaaaajdewzwrhzjljltniymytnddiyi1inzlhlwniowe3ngjmmznhngNew employees are often subject to probationary periods during which their suitability for employment is evaluated. These are defined periods of time (which are often for three months but can be longer) that are established at the beginning of employment. This period often provides an employer the ability to terminate the employee without cause and without the normal obligations of providing notice or severance. The employee is usually not entitled to benefits such as health insurance, bonuses or options at this time.

One purpose of probationary periods is to give the employer a reasonable opportunity to determine if the employee is qualified and suitable for the job. Most new employees show potential during the interview, however the subsequent failure to meet the expected standards within the probationary period can entitle an employer to dismiss the employee without fear of unfair dismissal claims

A probationary period also serves as a time for training and acculturation of the employee. Probation is typically a time in which lots of invaluable support and tuition is given so that the employee can meet their career objectives, especially if they are not very experienced. It is always advisable that the parties expressly define the performance standards expected of the employee in writing. This reduces the chances of confusion or conflict arising from misunderstanding.

This period also enables the employer understand whether the employee can adapt to the organisational culture. For instance, an otherwise stellar performer in a laid back culture may find performance difficult in a high pressure environment.

The Labour Act is silent on the issue of Probationary periods. However, Section 3 of the Act gives employers a 3 month grace period before requiring them to give their employees a written statement of the terms of their employment. From this, it can be implied that the lawmakers understood the need for an employer to evaluate the performance capacity of his employee before formalising the relationship.

This however does not mean that the employer can do whatever he wants! Employees have certain inalienable rights; and one of them is the right not to be dismissed on grounds that could be deemed discrimination.  This means he cannot be dismissed for reasons revolving around matters like age, sexual orientation or religious belief. In some cases, dismissing an employee for whistleblowing will entitle the employee to sue for damages arising from unfair dismissal.

Instead of perceiving the probationary period as a testing and evaluation period, it is better for the employee to view this period as a time for personal growth and development. The employee should endeavor to develop their existing skill sets and effectively leverage upon the resources that will be provided by the employer during this period.

Should an Employee who was not issued with an Employment letter give a written Notice to Resign?

know_your_rights_image

Amaka started working as an analyst in a commodities brokerage located in Victoria Island. Shortly before her employment, the Human Resources manager had resigned due to a dispute with the senior management. Due to this state of affairs, Amaka was not issued with an employment letter by the company and this state of affairs continued unremedied for the next year as the company searched for another Human Resources manager.

Amaka being a hard worker, was not bothered by the non-issuance of an employment letter, believing that she would prove her worth to the company over time. Moreover, she had been jobless for 2 years after the completion of her national youth service, and she was not going to let a simple matter as the non issuance of an employment letter prevent her from enjoying the fruits of such a juicy job.

Fast forward, and Amaka had worked punishing hours  for 3 years under a continuously tense environment worsened by her nasty boss who had been pursuing a vendetta against her for not accepting his lascivious overtures. He had promised to ruin her career and make life difficult for her whilst she remained under his employment. Despite consistently delivering stellar work, she was repeatedly given low grades during performance appraisals and consequently denied promotions. Amaka felt like a slave and was treated almost like one.

A few months later, Amaka received an offer from another investment bank, with considerably better terms of service and benefits. She promptly turned in her 2 weeks notice of resignation and patiently waited for  her salary at the end of the month. On the 30th day of the month, she received a letter from the Managing Director informing her that her resignation had been rejected on the grounds that it was company policy that employees were to give 1 (One) clear month’s notice or forfeit their monthly salary in lieu of notice. The letter was delivered by her boss with a malicious smirk on his toad-like face.

Amaka was incensed!!! This was a travesty, and she was not going to allow it. She promptly sought out legal advice on her options against the company.

The position of the law is that an employee has the right to resign with immediate effect, and the rejection of his resignation is tantamount to forced labour, and also against the time-honoured labour law principle that an employer cannot force himself on an unwilling employee. Employees are considered to have given notice of their intention to resign if they unambiguously inform their employers that they will terminate the contract on a certain date.

Furthermore, the Labour Act states that an employer must give an employee a written contract within 3 months of the commencement of the employment. The Labour Act also makes it unlawful for an employer to deduct the salary of employee by way of penalty, except in situations where the employer suffers a loss as a result of the misconduct of the employee.

From the facts  there was a failure of Amaka’s employers to provide her with an employment agreement stipulating the terms of her employment, including the process for terminating the employment relationship. The necessary conclusion is that the attempt by the company to withhold her salary on the grounds of non-adherence to company policy falls flat on the failure of the company to comply with the provisions of the Labour Act. The absence of an express requirement for 1 month notice implies that the employment relationship could be terminated at will. Consequently Amaka’s resignation is valid at law, and she can enforce her right to the withheld salary against the company by a suit at the National industrial Court.