ERISAAC PRESS V. EMMANUEL SALLAH
Jurisdiction
Court of Appeal
Judge
N/A
Catalog Type
Case
Judgement Date
Feb 14, 2013
Summary
Labour Law — Redundancy — Failure to negotiate redundancy pay — Effect — Assessment of redundancy benefits — Award of interest — Costs Headnote The plaintiff (respondent), an employee of the defendant company, was declared redundant after about 13 years of service on the ground of lack of contracts. Apart from outstanding salary and leave entitlements, no redundancy compensation was negotiated or paid. The plaintiff commenced an action in the High Court claiming, inter alia, that the redundancy was wrongful and illegal for failure to negotiate redundancy pay, and sought an award calculated on the basis of four months’ salary for each year of service. The High Court held that the redundancy was unlawful for failure to comply with section 65(4) of the Labour Act, 2003 (Act 651), and awarded the plaintiff four months’ gross salary for each year worked, together with interest at the commercial rate and costs. The defendant appealed against the quantum of the award, the award of interest, and the costs, but did not challenge the finding that the redundancy was unlawful. Held, allowing the appeal in part: 1. Failure to negotiate redundancy pay renders redundancy unlawful: Under section 65(4) of the Labour Act, 2003 (Act 651), the amount and terms of redundancy pay must be negotiated between the employer and the employee or their representatives. The defendant’s failure to undertake such negotiation rendered the redundancy wrongful and illegal. 2. Employer cannot benefit from its own default: The absence of a clear basis for calculating redundancy pay was attributable to the defendant’s failure to negotiate; it could not rely on that failure to resist payment to the plaintiff. 3. Assessment of redundancy pay: The trial court’s approach of calculating redundancy pay on the basis of a specified number of months’ salary per year of service was consistent with accepted practice. The Court of Appeal upheld the method but directed that the exact amount be computed based on the plaintiff’s exit salary. 4. Award of interest: Interest may be awarded where justice requires, even in the absence of a contractual or loan relationship. A party who wrongfully withholds money belonging to another may be ordered to pay interest at the prevailing bank rate until final payment. 5. Costs — Appellate interference: An appellate court may interfere with an award of costs where it is excessive having regard to the circumstances of the case, including the simplicity of the matter and the nature of proceedings. The costs awarded by the trial court were accordingly reduced.
Full Content
JUDGMENT
AVRIL LOVELACE-JOHNSON JA
The Defendant/Appellant (hereinafter referred to as the Defendant) seeks to have set aside the judgment of the High Court dated 18th November 2010 by which the redundancy of the Plaintiff/ Respondent (hereinafter referred to as the Plaintiff) was declared unlawful, an order made that he be paid 4 (four) months of his gross salary for each of the 13 years he worked for the Defendant plus interest at the Commercial rate on this amount and costs of GH cedis 3,000.00.
The Plaintiff had by his writ sued for
a. A declaration by this Honourable Court that the declaration of Plaintiff as redundant by the Defendant company without a negotiated package is wrongful and illegal
b. That for 13 years that the Plaintiff worked with the defendant’s company, the Plaintiff should be paid four (4) months of his gross salary for each year served/worked with the defendant Company.
c. General Damages
d. Costs, including the professional fees of the plaintiff’s lawyer
The events which led to the present dispute are that the Plaintiff among others were given letters declaring them redundant. Apart from a promise in the said letter to pay then two months salaries outstanding, they were given no compensation. The said letter entitled LACK OF CONTRACTS REDUNDANCY did state in part that ‘...likewise would your leave entitlements worked out for payment in due course.’
It is the Plaintiffs contention that having failed to conduct the said Redundancy exercise in accordance with law the said exercise was wrongful and illegal.
The Defendant Company’s position is that Management had a meeting with the staff including the Plaintiff at which meeting they were told that due to lack of contracts leading to inability to pay them they would be made redundant but would be recalled to work if the fortunes of the Defendant company improved. According to them Plaintiff was once recalled to come and work but after performing the task of locating some films he left of his own volition. In the light of all this the Defendants do not consider the redundancy exercise wrongful or illegal.
The following are the grounds of Appeal filed
(1) The judge erred when he ordered that for 13 years that the Plaintiff worked with the Defendant company he should be paid four (4) months of his gross salary for each year that he worked with the Defendant company as redundancy award when the judge had held earlier that the Plaintiff did not provide any basis for that and also he did not tell the Court his monthly salary at the time he was exiting and this court cannot therefore give a specific amount at the moment that should be paid to the Plaintiff as redundancy award
(2) The judge erred when he ordered that the Defendant pays to the Plaintiff commercial rate of interest on the redundancy with effect from August 2008 to date of payment, applying the principle of an implied loan transaction between the Plaintiff and the Defendant when there was no loan transaction between the Plaintiff and the originally borrowed.
(3) The costs Defendant was ordered to pay the Plaintiff is excessive.
It would appear from these grounds and counsel’s arguments thereon that the Defendant has no quarrel with the first part of the learned High Court Judges judgement declaring the Plaintiff’s redundancy without a negotiated package as wrongful and illegal. His appeal is against the award made, the interest awarded thereon and the costs.
To deal with the first ground properly it is necessary to reproduce in full the portion of the learned judge’s judgement dealing with how the amount awarded was arrived at.
The judge stated in part at page 8 of the judgment
“By section 65(4) of the Act the amount of redundancy pay and the terms and conditions of payment are matters which are subject to negotiation between the employer or a representative of the employer on the one hand and the worker or local union concerned on the other. The said negotiation should have been done before the exercise. In the current case the exercise had already been done. More so there is no existing term and conditions of service which could be used as basis for the amount to be paid....”
The Court’s position is borne out and is the correct interpretation of section 65 (4) of the Labour Act 2003. Act 651. The said section states
‘The amount of redundancy pay and the terms and conditions of payment are matters which are subject to negotiation between the employer or a representative of the employer on the one hand and the worker or the trade union concerned on the other’
It is clear then that the primary cause for there being no basis for calculating the redundancy award was not because ‘Plaintiff did not provide any basis for that..’ as counsel states in the first ground of appeal but because the Defendant did not do what was required of it under the Labour Act ie negotiate with the Plaintiff on what was due him as redundancy pay.
It is to be borne in mine that the scope of application of the Act in question is “.....all workers and to all employers except the Armed Forces, the Police Service, the Prison Service and the Security and Intelligence Agencies specified under the Security and Intelligence Agencies Act, 1996 (Act 526).
The Defendant cannot rely on its failure to do the proper thing as a ground for depriving the Plaintiff of what is due him in the light of the Courts declaration that their failure to negotiate with the Plaintiff about his redundancy pay made his redundancy wrongful and illegal.
The second leg of that ground of appeal is that the learned judge stated that the Plaintiff did not tell the Court his monthly salary as at the time he was exiting so the Court could not give a specific amount that should be paid to the Plaintiff as Redundancy award.
It is the contention of Counsel that having made this statement the award made by the Court was ‘baseless, arbitrary and capricious. It is not supported by any precedent or rule of law. It is therefore wrong and should be set aside.’ See the written submissions of Counsel for the defendant.
The Court stated that it was in no doubt that the Plaintiff was entitled to be paid a redundancy award and stated that it saw no reason why the amount he had stated should be varied.
The plaintiff repeated his claim in paragraph 8 of his statement of claim. At the tail end of his evidence in chief the Plaintiff stated that he wanted the court to get his leave allowance and redundancy package for him. He did not give any details of this package and no question was asked about this piece of evidence in cross examination. This notwithstanding we are of the considered opinion that the four months in each year served used by the learned High Court Judge was appropriate in the circumstances. We are of the opinion that this is in consonance with the practice on such issues where such entitlements are worked out by multiplying a specific number of months in a year by the number of years served.
In any case it is not in dispute that Plaintiff worked for the Defendant for 13 years. It is also not in dispute that he exited on a salary. The amount to be paid him being one to be worked out mathematically, we will take a leaf from the book of the Supreme court in the case of Baiden v. Graphic Corporation 2003-2005 2 GLR page 522 per Atuguba JSC and order that the Registrar of this Court be provided with the exit salary of the Plaintiff by the Defendant and the amount due him as redundancy pay calculated with the help of the parties in accordance with leg b of Plaintiff’s claim within a month of today. Accumulated tax on the amount is to be deducted before payment is made to the Plaintiff.
This ground of appeal fails.
The second ground of appeal faults the Court’s award of commercial interest on the amount arrived at as redundancy award. Indeed according to Counsel for the Defendant since the Defendant did not take any loan from the Plaintiff, the latter is not entitled to any interest at all on any such award.
The position of the Courts has been that interest will be awarded where the justice of the case calls for it even if no such claim has been made. See the case of Butt v. Chapel Hill properties Ltd 2003-2004 1 SCGLR 636 @652 cited by the learned High Court Judge at page 9 of the judgement.
A person who without any justification retains money belonging to another should be made to pay interest on the amount from the period when it was withheld till the date of final payment.
As stated in the case of Royal Dutch Airlines (KLM) v. Farmex Ltd 1989-90 2 GLR 623, SC in such a situation ‘it is reasonable to suppose that the Defendants kept the Plaintiff’s money......and used it to their advantage, to the detriment of the Plaintiffs. The Defendants cannot justly claim to be entitled to keep profits they have thus made at the Plaintiff’s expense. The Plaintiffs are entitled to call upon the defendants to account to them for the use of this money;’
Rule 1 of CI 52 the Court (Award of interest and Post Judgment Interest) Rules, 2005 provides as follows
If the Court in a civil cause or matter decides to make an order for the payment of interest on a sum of money due to a party in the action, the interest shall be calculated
a) At the bank rate prevailing at the time the order is made and
b) At simple interest
In accordance with the above provisions, the amount eventually arrived at as Plaintiff’s redundancy award is to attract interest at the prevailing bank rate as at the date of judgment that is 18th November 2010 till the date of final payment. The said interest is to be worked at simple interest.
This ground of appeal succeeds in part.
The third ground of appeal is that costs awarded against the Defendant is excessive.
In awarding costs, the trial judge stated that the suit was filed on 9th April 2009 so Plaintiff had been pursuing the case for more than a year. He also stated that Plaintiff had to engage services of Counsel.
Counsel for the Defendant submits that the pleadings were not complicated, no witnesses called. Indeed he states that there was no trial of any sort so the costs should be set aside altogether.
The record shows that the trial began on 10th February, 2010 and judgment was given in favour of the Plaintiff on 18th Nov 2010. Costs usually following the event the Plaintiff is certainly entitled to costs. No witnesses were called other than the parties. Is the award of costs of GH3,000.00 cedis justified in the circumstances?
In the case of Bank of Ghana v. Nyarko and anor [1973] 2 GLR page 265@266 cited by Counsel for the Defendant and the case of Guardian Assurance Co Ltd v. Khayat Trading Store [1972] 2 GLR 48, CA, the fact that the pleadings were not complicated, no or few witnesses were called and no unnecessary adjournments taken were factors taken into consideration in making a decision to reduce costs awarded by the trial Judge.
We believe that the circumstances of this case earlier stated justify a reduction in the costs awarded. They are reduced to GH cedis 1,500.
This ground of appeal succeeds.
The appeal is allowed in part and dismissed in part
SGD
AVRIL LOVELACE-JOHNSON JA
JUSTICE OF THE COURT OF APPEAL
SGD
KANYOKE JA (PRESIDING)
JUSTICE OF THE COURT OF APPEAL
SGD
OFOE JA
JUSTICE OF THE COURT OF APPEAL
COUNSEL
COL (RTD) G.Y. TSAHEY FOR DEFENDANT/APPELLANT
MR. FELIX ABOAGYE FOR PLAINTIFF/RESPONDENT