Nigeria: Don't Touch My Money! - ‘Can An Employer Surcharge An Employee For A Loss, Or On The Back Of A Negligent Act Leading To A Loss?

Last Updated: 3 December 2018
Article by Perchstone & Graeys

The right of an employer to sanction an employee for misconduct has always existed, with sanctions varying from suspension to termination or dismissal. A common form of sanction, especially in cases of misconduct involving financial loss, is a direct deduction of the sum from the employees' salary. Whilst a common act, the decision to deduct an employee's salary is not entirely at the discretion of the employer; Section 5 of the Labour Act. In the recent case of Omolola Shafqat Ogungbuaro v. Access Bank Plc, the National Industrial Court (NIC/the "Court") addressed one of the many instances of salary deduction and the position of the law in that regard.

FACTS

Mrs. Omolola Ogungbuaro ("Mrs. Ogungbuaro") was employed by Access Bank Plc (the "Bank") and confirmed on August 3, 2009. Whilst with the Bank, she served as the account officer to Plenco Industries Limited ("Plenco"). While out of the office on duty, Mrs Ogungbuaro received an e-mail from Plenco directing the transfer of N2,500,000.00 to a designated account. All attempts by Mrs Ogungbuaro to contact Plenco to confirm this was to no avail. She then instructed the Branch Secretary to forward indemnity forms to Plenco to execute, pending her return to the office. On her return, Mrs Ogungbuaro discovered that the Branch Secretary had, instead, treated the transfer request without her authorization or knowledge; and without due regard to the protocols of the Bank.

At about 9:30am the following day, Plenco wrote a complaint to the Bank that the sum of N2,500,000.00 was missing from its account. The Bank set up an investigation unit (the "Unit") through its internal audit department. During the investigation, the Branch Secretary admitted that she wrongly confirmed the request for payment, contrary to Mrs. Ogungbuaro's instructions. Nevertheless, the Bank informed Mrs. Ogungbuaro that the sum of N81,250. would be deducted from her salary for 20 months. Despite her appeal, the Bank refused to reverse its decision, and commenced the deductions on November 22, 2013; and continued making several other deductions.

When the situation became unbearable, Mrs. Ogungbuaro resigned from the Bank on December 9, 2013; and wrote objecting to its action and demanding for a refund of N1,672,798.85 debited from her various accounts. Upon the Bank's refusal to accede, Mrs. Ogungbuaro instituted an action seeking, amongst other reliefs:

  1. A declaration that the deductions from her accounts are illegal, unconstitutional, null and void and same be reversed.
  2. A declaration that the sum of N1,647,307.92 deducted from her various accounts be refunded by the Bank with interest.
  3. General damages in the sum of N25,000,000.00 for the pain, traumatization, frustration, emotional injuries and loss of quality life suffered as a result of the Bank's action.
  4. An order directing/compelling the Bank to give her an unbiased and satisfactory reference letter upon demand.

FINDING/DECISION

In determining the matter before it, the Court considered the following issues:

  1. Justification for the surcharge of an employee's salary: Relying on Shefiu Adejare v. MDS Logistics Plc (unreported) Suit No. NICN/LA/20/2013, it was held that an employee cannot be surcharged (made to repay from his/her personal funds any losses stemming from negligent or intentional mismanagement of a fiduciary responsibility) by an employer without first being given a hearing on the issue. This must be two pronged: (i) a hearing to establish the guilt of the employee; and (ii) a hearing to justify the surcharge and yardstick for measuring the surcharge, or the apportionment of indebtedness (where more than one person is involved). Whilst Mrs. Ogungbuaro was heard on the first point (the issue of negligence), she was not heard on the second point (the surcharge). In view of the Bank's failure to show any justification to warrant the surcharge, the Court declared that the surcharge was null and void.
  2. Sanctions or conclusions of an investigation panel: It is not enough for a hearing to be conducted. The decision of a disciplinary committee must also be seen to be fair. The Unit found that it was indeed the Branch Secretary who confirmed the transaction; and that plenconigeria@gmail.com, the actual email address of Plenco, was used to send the transfer instruction; but the replies were redirected to a fake email: plenconigerian@gmail.com. None of the findings inferred that Mrs. Ogungbuaro was negligent; despite this, the Unit concluded that the loss was as a result of the negligence of Mrs. Ogungbuaro and the Branch Secretary. The Court held that the conclusions and recommendations of the Unit did not correlate with its findings; it cannot make a finding and then make conclusions/recommendations unrelated to the finding. The Court therefore varied the decision of the Unit and held that Mrs. Ogungbuaro was not negligent.
  3. General damages for pain, traumatization, frustration, emotional injuries and loss of quality life: The Court held that beyond mere pleadings, Mrs. Ogungbuaro failed to prove how the actions of the Bank caused her "pain, traumatization, frustration, emotional injuries and loss of quality life" and what the foregoing entails. Since this entitlement was not proved, the claim for general damages failed and was dismissed; he who asserts must prove.
  4. Entitlement to an unbiased and satisfactory work reference: Reliefs claimed by a party to a suit must be supported by pleadings and evidence. In the absence of any pleadings or evidence supporting Mrs. Ogungbuaro's claim for a work reference, the claim was rejected by the Court.

COMMENTS

Omolola Shafqat Ogungbuaro v. Access Bank Plc is one of the rare cases where the NIC has had a cause to review the decision of a disciplinary committee. In this case, the Unit failed to extend its investigative hearing beyond when the employer can surcharge an employee for a loss/negligent act of his occasioning loss to the employer, to the expected two layers in matters affecting a surcharge, i.e.: (i) a hearing affording the employee a right to be heard/to establish guilt – which at this stage may be minimal, simply affording a right to reply to a query/complaint; and, (ii) if/when employer decides, and finds employee liable, to determine how the employer came about the exact deduction/to justify the surcharge and yardstick for measuring the surcharge, or apportionment of indebtedness. While the Unit may have executed the first arm, it did not however take on the second.

A fair hearing is only fair where, by the impression of a reasonable person who was present at the trial, justice can be said/seen to have been done. The employer is therefore not only obligated to afford the employee an opportunity to be heard (on both fronts), but to also ensure that the trial is conducted fairly and the decision of the company reasonable on the back of the hearing. In the view of the court, the Unit's conclusions and sanctions did not correlate, nor where its conclusions fair. Thus, in all cases, justice must be seen to be done.

Lastly, Section 5 of the Labour Act prohibits the deduction, or any agreement to deduct the wages/salaries of an employee, for or in respect of any fines; provided that, with the prior consent in writing of an authorized labour officer, a reasonable deduction may be made in respect of injury or loss caused to the employer by the willful misconduct or neglect of the worker. In Adebusola Adedayo Omole v. Mainstreet Bank Microfinance Bank Ltd, Suit No: NICN/LA/341/2012, the NIC held that a unilateral reduction in the wages and salaries of workers is not acceptable, and that the reduction of the salary of the employee by the employer without her consent violated the spirit of both Section 5(1) and the ILO Convention No. 95 (Protection of Wages Convention, 1949). This must always be borne in mind in matters regarding a surcharge. Consent must always therefore be secured.

Employers must ensure that, in the exercise of their quasi-judicial powers (in the form of investigative panels/disciplinary committee), they do not infringe on an employee's right to be fairly heard, nor his/her right to a complete salary/pay for work done. Matters regarding deductions and surcharges must thus be treated with precision and reasonable care. Consent must always be secured, and even with disciplinary matters, the two-pronged hearing process must be utilized; (i) a general hearing on the issue/substance; and where found liable (ii) to determine/justify the surcharge and yardstick for measuring the surcharge, or the apportionment of indebtedness.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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