The Presiding Judge of the Port-Harcourt Judicial Division of the National Industrial Court, Hon. Justice Faustina Kola-Olalere, has ordered Madrik-Uju Company Limited to pay Mr Joseph the sum of N1.0 million as outstanding hazard, gratuity, and ex-gratia allowances covering November 2019 to June 2020, along with N500,000 as cost of action, within 30 days.
However, the court held that Mr Joseph is not entitled to hazard, gratuity, and ex-gratia allowances for the period from November 1, 2020, to July 31, 2021, since his contract of employment had already expired. The judge also noted that the company’s decision to suspend allowances and bonuses due to the COVID-19 pandemic was reasonable under the circumstances.
From the facts presented, the claimant, Mr Friday, stated that he was employed in November 2019 under a one-year contract with defined salaries, bonuses, and allowances. He alleged that despite continuing to work until July 31, 2021, the company failed to pay him his full entitlements.
Mr Friday argued that although his contract expired in October 2020, he continued working under the Managing Director’s directive while awaiting renewal. He claimed he was only paid his salary without receiving allowances or bonuses, which he considered a breach of contract. He also contended that an internal memo relied upon by the company could not override his accrued rights.
In response, Madrik-Uju Company argued that there was no written renewal of the contract, and therefore the claimant had no valid cause of action. The company further stated that continuing to rely on an expired contract was legally unfounded. It added that during the COVID-19 pandemic, allowances were suspended, and employees were given the option to either accept salary only or resign.
Counsel to Mr Friday countered that the directive to continue working under the same conditions amounted to a valid extension of the contract, and therefore the claimant remained entitled to all outstanding allowances.
Delivering judgment, Justice Kola-Olalere held that the employment contract was for a fixed one-year period and was not renewed in writing after its expiration in October 2020. The court ruled that the company’s memo suspending allowances could not apply retrospectively, and therefore Mr Friday was entitled to allowances from November 2019 to June 2020.
However, the judge commended the company for continuing to pay salaries during the pandemic despite financial hardship. The court further held that the claimant was bound by the company’s circular suspending allowances due to COVID-19, as both parties were affected by the economic impact.
In conclusion, the court stated that equity required both parties to share the burden of the pandemic’s effects, and ruled that both sides were bound by the terms of Exhibit D.7.
