Peugeot Automobile Nigeria Limited V. Saliu Oje & Ors. (1997)
LawGlobal-Hub Lead Judgment Report
MUHAMMAD, J.C.A.
Peugeot Automobile Nigeria Limited is an automobile plant based in Kaduna and specialized in assembling and sale of Peugeot cars. The respondents who were the plaintiffs at the Kaduna State High Court, instituted an action for themselves and on behalf of over 1000 co-workers against the appellant/defendant who relieved them of their employments as a result of declaring their posts redundant. Each of the respondents was employed by the appellant under a separate agreement. Dates of employment varied ranging from 1975 to 1986.
In their joint statement of claim, the respondents/plaintiffs in paragraph 18 asked for the following reliefs:
“(18.1) A declaration that each of the plaintiffs who has completed 5 years of service with the defendant, is entitled under the defendant’s terms and conditions of service to payment of gratuity based upon the number of years served in the defendant’s service and an order for payment of same.
- An order declaring the action by the defendant in its failure to pay the said entitlements to the plaintiffs as a breach of its undertaking to pay same.
- An order that the plaintiffs and the other members of the ex-skilled employees of Peugeot Automobile Nigeria Ltd. whom the plaintiffs represent should be paid all their entitlements.”
Pleadings were settled and the case went on full trial. Three witnesses testified in favour of the respondents whereas the appellant had one witness. Learned counsel for the respective parties addressed the lower court. After reviewing the evidence and the addresses of learned counsel, the learned trial Judge delivered his judgment on the 28th day of January, 1994 wherein he allowed plaintiffs/respondents claims on gratuity and ex-gratia but dismissed the claim of one month salary in lieu of notice. The defendant/appellant was dissatisfied with the lower court’s decision and appealed to this court on four grounds. The reliefs asked from this court by the appellant included an order setting aside the judgment of the lower court with all the declarations granted therein and another order dismissing the plaintiffs/respondents suit.
Parties filed and exchanged briefs of arguments. Learned counsel for the appellant formulated the following issues for determination:
“1. Whether or not the learned trial Judge was right in holding that the respondents are entitled to gratuity.
- Whether the respondents had discharged the burden of strict proof as required by law having regard to the nature of their claims which amounted to special damages.
- Whether or not the learned trial Judge was right in awarding ex gratia to the respondents.”
Learned counsel for the respondents adopted the issues formulated by the appellant. He however added the following issue:
- Whether the respondents on salary grade levels 1-3 are entitled to gratuity computed on the basis of page 1 paragraph C of Exhibit 4 OR on the basis of page 2 paragraph C of Exhibit 4.”
In his submission, learned counsel for the appellant, on issue No. 1, argued that the terms and conditions of service of the respondents with the appellants are governed by clause 8 of Exhibit 2. The Learned Trial Judge was therefore in error when he awarded gratuity to the respondents when the clause provided that only those employees who retired or resigned were to be entitled to gratuity benefit. It was his submission that since the respondents neither retired nor resigned but declared redundant, the benefits payable to such category of staff were clearly provided by clause 11 of Exhibit 2 and that such benefits had already been paid to the respondents. Exhibit 4 provided only details or mode of computing entitlements and could not be a separate term or condition of service between the parties. Thus, it was argued, award of gratuity to staff declared redundant could only amount to double compensation. Argued further is that there was uncertainty or contradiction as to the exact number of the respondents who had put in 5 years service as required by Paragraph C of Exhibit 4 in order to entitle them to gratuity benefits.
On issue No. 2 learned counsel argued that the entire claims of the respondents were in the province of special damages which must be proved specifically. He cited Nitel v. Ogunbiyi (1992) 7 NWLR (Pt. 255) 543. He submitted further that the law, in such a situation, required the respondents to plead and particularise any item of damages suffered by them. Even where that was done, as no evidence was led on it, it was deemed abandoned. It was thus clear that the standard of proof set was not attained by the respondents. On the exact number of the respondents and whom they represented, who were declared redundant by the appellant, the issue was contradictory. It was also not established who among them were on grade levels 1, 2 and 3. The burden of proving such facts squarely rested on the respondents. In his last issue, learned counsel for the appellant submitted that the learned trial Judge was in error when he awarded to the respondents ex-gratia for the year, 1986 on the basis that the respondents had worked for 10 months in the year and that it would be unjust to deprive them of the ex-gratia payment while clause 17 of Exhibit 2 has stipulated when such a benefit is payable and to whom. The stipulated period of entitlement to ex-gratia benefit is the end of year i.e the 31st day of December. The respondents, he argued further, were no longer staff of the appellant in December, 1986. It was also argued that there was no evidence before the lower court to show how much each of the respondents was entitled to be paid as ex-gratia and thus the lower court had no basis for awarding ex-gratia to the respondents. Ex-gratia benefit was special in nature and ought be treated as a special claim.
Learned counsel for the respondents on the other hand, while arguing issue No.1, submitted that it was common ground between the parties that Exhibits 2 & 4 governed the payment of gratuity to the respondents and not specifically clause 8 of Exhibit 2 as contended by learned counsel for the appellant. It was his further submission that clause 11 of Exhibit 2 provided for payment of redundancy benefits and that this clause did not specifically or by any implication exclude staff declared redundant from enjoying gratuity benefits. It was submitted further that clause 11 of Exhibit 2 accorded with section 20(1)(c) of the Labour Act, Cap. 198, Laws of the Federation, 1990 which provided for negotiated redundancy payments for discharged workers. The payment of redundancy benefit was therefore both a statutory and contractual obligation on the appellant. Learned counsel cited and relied on Paragraph C of Exhibit 4 which entitled each of the respondents who spent five years in the service of the appellant to payment of gratuity. On the 2nd issue for special damages requiring special proof and particularization of the claim learned counsel for the respondents, referred to paragraphs 1-6 of the statement of claim and paragraph 1 of the statement of defence, paragraphs 10 of the statement of claim and 11 & 12 of the statement of defence to show that the claims of the respondents were special and were particularized. He cited the cases of Ratcliffe v. Evans (1892) 2 QB 524 and Odulaja v. Haddad (1973) 11 SC 357 at 363; Nitel v. Ogunbiyi (supra). Learned counsel argued further that the issue of strict liability has to do with tortuous liability and not contractual as in this case. He cited Oshinjirin & Ors. v. Elias & Ors. (1970) 1 All NLR 153 at 156. The principle involved in the present case is that of breach of terms of contract of employment and not tortuous. On the ex-gratia award, learned counsel submitted that the right to ex-gratia as provided by clause 17 of Exhibit 2 must have accrued before same is paid at the end of the year based on meeting the production target of the year. Since the respondents were part of the production up to October, 1986, they were part of the achievement of the production target and were ipso facto entitled to such ex-gratia payment. There was therefore nothing in clause 17 of Exhibit 2 which could suggest that the respondents had to be in service of the appellant by December, 1986 to entitle them to the ex-gratia payment. The additional issue formulated by learned counsel for the respondents which is their fourth issue, is on the method of computing the respondents gratuity. He argued that by reference to paragraph 1 of the statement of claim and paragraph 1 of the statement of defence the parties were agreed in their pleadings that all the respondents were on salary grade levels 01 – 03. By this fact and in accordance with Exhibit 4, the computation of the gratuity due to the respondents would be based on Paragraph C of Exhibit 4 i.e one month basic salary for staff who completed five years of service with the Company. Learned counsel submitted that what appeared in the Judgment, P. 26 lines 36-41 and P. 27 lines 14-21 and 38-41 all of the record, were a slip from the learned trial Judge as he referred to page 2 paragraph C of Exhibit 4 instead of page 1 Paragraph C of Exhibit 4. This mistake, he argued further, can be corrected by this Court under its powers conferred by section 16 of the Court of Appeal Act, 1976.
I think I should start by re-stating the well settled principle of law relating to contracts of employment and that is: where parties have agreed to be bound in their relationship by written agreements, such a contract must be governed by the terms of the contract. See Union Bank (Nig.) Ltd. v. Ogboh (1991) 1 NWLR (Pt. 167) 369; Amodu v. Amode (1990) 5 NWLR (Pt. 150) 356; Union Bank (Nig) Ltd. v. Ozigi (1994) 3 NWLR (Pt.333) 385; (1994) 3 NACR Page 1.
In the appeal at hand, it is clear from the pleadings that the parties intended to be bound by the terms and conditions they entered into. The respondents as plaintiffs, stated in their statement of claim:
“4. The plaintiffs on their various dates of employment were each given a letter of employment and conditions of service which were meant to regulate the contract of employment of the parties of (sic) this suit”
The appellant as defendant in paragraph 1 of its statement of defence admitted the averment in Paragraph 4 of the plaintiffs’ statement of claim. It averred further in Paragraph 8 that:
“The Defendant avers in reply to Paragraph 11 of the statement of claim that Ex-gratia payment is payable by the defendant to the plaintiffs subject to clause 17 of the terms and conditions of service applicable to the plaintiffs ………… (Italics for emphasis)
Exhibit 2 is a booklet titled,
“Peugeot Automobile Nigeria Limited Terms and Conditions of Service for Levels I – III”
Chapter 2 clause 8 of Exhibit 2 made provision for pension, gratuity, et cetera. It states:
“On retirement or resignation employee shall receive benefits in accordance with the Company’s Pension and Gratuity Scheme. (See Booklet on Pension and Gratuity).”
The booklet on Pension and Gratuity referred to in clause 8 quoted above refers to some bundle of papers titled “Contributory Provident Fund/Group Life Assurance/Gratuity Benefits.” This document was admitted in evidence and marked as exhibit 4. Paragraph or clause C of Exhibit 4 provides for the gratuity benefits for appellant’s employees within Salary Grade Levels 1-3. The paragraph states:
“(c) Gratuity Benefit
The Company provides one month of basic salary to the Staff for every one year of full service and on condition that they have completed five years of service with the Company. This benefit is however at no cost to the staff.” (Italics supplied).
The finding of the learned trial Judge is that both Exhibits 2 and 4 are binding on the Parties. He went on at length to state that:
“The effect therefore, is that both Exhibits 2 and 4 exist together and govern both parties as to conditions of service. Page 10, clause 11 of Exhibit 2 is therefore not the only applicable provision for a redundant staff, page 2 of Exhibit 4 also applies to a redundant staff. It complements Exhibit 2. Since Exhibit 4 provides that a staff who completes five years of service, is entitled to gratuity on a given formula, I hold that any plaintiff who had put in five years of service with the defendant company as at the 3rd of November, 1986 when he was declared redundant, is entitled to be paid a gratuity in the way and manner paragraph C, page 2 of Exhibit 4 has provided. I am fully fortified in my view, that Exhibit 4 is a binding document on the parties and applies even to staff, declared redundant, by the provisions contained in the letters given to the plaintiffs declared redundant”
It is to be appreciated that neither the appellant nor the respondents is denying the fact that the respondents were declared “redundant” by the appellant and were accordingly relieved of their posts. One may then ask: what are the rights or benefits accruable to an officer declared by the appellant “redundant”? It has already been seen that all the respondents, while in service with the appellant, were on salary grades of between, levels 1 and 3. Exhibit 2 contains the policy or conditions of service regulating the relationship of the appellant and the respondents. Clause 11 of Chapter 2 spelt out conditions applying to “redundancy”. Pertaining to benefits accruable to an officer declared “redundant”, the Clause states:
“In the event of redundancy, employees declared redundant shall receive benefits as follows:-
(i) Employees with service below two years – Nil.
(ii) Employees with service of 2 to 5 years – 2 weeks pay for each completed year of service based on terminal salary.
(iii) Employees with service of 6 to 9 years – 3 weeks pay for each additional completed year of service based on terminal salary.
(iv) Employees with service of 10 years and above – 4 weeks pay for each additional completed year of service based on terminal salary.
In addition, redundant staff shall receive the following payments:
i. Travelling expenses to employees place of recruitment.
ii. Pro-rata payments of annual leave entitlements.”
From the records, Exhibit ‘5’ is a document titled “Redundancy”. It conveyed, for instance, to the 2nd respondent Mr. Sylvanus Ochoche that he was declared redundant by the appellant company. Paragraph 2 of Exhibit 5 states inter alia:
“Our records show that your entitlements are as follows:
- Your salary up-to-date.
- 40 weeks pay as Redundancy Benefits.
- Pro-rata payments of annual leave entitlements.
- Other allowances.
- Pension.”
This document is just a sample. It was the same document that was communicated to the remaining respondents. The respondents had pleaded this document in paragraph 6 of their statement of claim. The appellant admitted having communicated same to the respondents in paragraph 1 of the statement of defence.
Even though the respondents claimed (in paragraph 13 of their statement of claim) that the appellant had failed to pay them their “due entitlements,” it is quite clear from paragraph 10 of the appellant’s statement of defence and ample evidence even from the respondents themselves especially PW3, one Emmanuel Mologwu (the 3rd plaintiff/respondent) that the respondents and those they represented had collected various sums of money worked out in accordance with the provision of Clause 11 of Exhibit 2, as redundancy benefits. The learned trial Judge granted the claim of the respondents on gratuity on the premise that pension was akin to gratuity.
But by looking at the provision of Clause 8 of Chapter 2 of Exhibit 2, already quoted above, I am inclined to agree with the submission of learned counsel for the appellant that the gratuity referred to in Exhibit 2 can only apply to situations where an employee of the appellant had his appointment determined either by retirement or resignation. The manner under which the respondents appointments were determined did not fall in either of the above categories i.e retirement or resignation. Their appointments were determined under “redundancy”. Redundancy in service in my view, is a mode of removing off an employee from service when his post is declared “redundant” by his employee. It is not a voluntary or forced retirement. It is not a dismissal from service. It is not a voluntary or forced resignation. It is not a termination of appointment as is known in public service. It is a form unique only to its procedure where an employee is quietly and lawfully relieved of his post. Such type of removal from office does not, in my view, carry along with it any other benefit except those benefits enumerated by the terms of contract to be payable to an employee declared “redundant.” Redundancy benefits have been enumerated by Clause 11 of Chapter 2 of Exhibit 2. These benefits do not include gratuity benefits. So the conditions applicable to redundancy are quite distinct from those applicable to retirement or other conventional modes of relieving an employee from active service, such as termination, resignation or dismissal. In the present appeal, the appellant would be over-generous if it were to pay the respondents benefits not covered by the conditions of service.
Now, in the context of the holding of the learned trial Judge that any plaintiff who had put in five years of service, in line with the provisions of Clause 11 of Exhibit 2 and page 2 of Exhibit 4 but laid off for redundancy, was entitled to be paid gratuity, was only a finding with no base to stand. This is because the number of respondents who fulfilled the five year requirement was never established by the respondents. It is a well-known principle of the law that a court of law does not embark on a jamboree of fact finding. See: UBA. v. Achoru (1990) 6 NWLR (Pt.156) 254; K.S.U.D.B. v. Fanz Co. Ltd. (1990) 4 NWLR (Pt 142) 1. The order of the learned trial Judge appears rather wild when he stated inter alia that:
The defendant to calculate the gratuity of every plaintiff entitled to it in accordance with Exhibit 4 and pay him.”
I think the law in this respect places the burden of proof squarely on the respondents. Sections 135 – 137 of the Evidence Act, L.F.N. 1990. I do not find any merit on the issue of payment of gratuity to the respondents. This determines issue No.1 of the appellant and the fourth issue of the respondents.
I prefer to treat the 3rd issue formulated by the appellant and then conclude with the 2nd issue. Issue 3 is on ex-gratia. Ex-gratia has been classified under Chapter 3 of the Terms and Conditions of Service under reference. The Chapter deals with remuneration, wages and allowances. Clause 17 of that Chapter states:
“Ex-gratia will be paid at the end of the year depending on the extent to which the production target has been met and other company result. The management will inform the workers accordingly. Any government guidelines or legislation on such income shall take precedence.” (Italics supplied).
What is an ex-gratia? Exhibit 2 has not assigned any definition to the term. The term is Latin. It connotes something given out of grace, favour, indulgence or gratuitous. Henry Campbell Black, author of Black’s Law Dictionary defines it as a “term applied to anything accorded as a favour; as distinguished from that which may be demanded ex debito, a matter of right.” So it follows that ex-gratia payment being claimed by the respondents, is a payment by one who recognises no legal obligation to pay.
The way payment of ex-gratia is couched in Exhibit 2, as reproduced above, appears to be binding on the appellant and therefore mandatory. On a closer examination however, it is clear that for the payment of such ex-gratia, two conditions must be satisfied:
(i) that it is only payable at end of the year and
(ii) it’s payment is dependent on the extent to which the production target and other company results have been achieved.
Where any or both conditions above is lacking, the company (appellant) cannot effect payment of any ex-gratia to any employee. However, in his process of reasoning the learned trial Judge who adjudged the respondents entitled to the ex-gratia payment, as the respondents worked in 1986 from January to 3rd November, 1986 (a period of over 10 months) appellant ought to pay the ex-gratia to the respondents “as whatever target was met in production for the year 1986, was met with the sweat of the plaintiffs,” Fine! That might be so. But is that not speculative? Is that not an inclination towards moral consideration? I think the age-long principle of the law, that law and morality are almost always poles apart is still very much alive. The truth in this case is that payment of ex-gratia is tied to the end of the year which, in normal calculation, is the 31st day of December of each year. So, unless where the company decides to pay ex-gratia to some employees at a time different from “end of the year”, an employee whose employment ceases before “end of the year” is not in anyway entitled to the company’s payment of ex-gratia. The respondents were declared redundant on the 3rd day of November, 1986. They were not therefore entitled to the payment of ex-gratia for the year 1986 by the appellant. That is the true position. Thus, issue No. 3 too, has merit and must succeed.
On issue No.2 which I have delayed to consider but now, I feel there is nothing more for me to consider. In view of my above holdings I think the substratum of the appeal, i.e. the issues of payment of gratuity and ex-gratia entitlements, is well founded. Further discussion on these issues may appear ridiculous and verbous.
In the final result, the appeal has merit and is hereby, accordingly, allowed. Judgment of the lower court with all the declarations granted therein, is hereby set aside. In its place an order dismissing the respondents’ suit is hereby made.
Parties in this appeal are to bear own costs.
Other Citations: (1997)LCN/0322(CA)
