By Geraldine C. Nzulumike
INTRODUCTION
The distinction between statutory and contractual employment relationships remains a significant factor in how Nigerian courts approach wrongful termination claims. In Adedeji & Ors v Central Bank of Nigeria & Attorney-General of the Federation (2023) 5 NWLR (Pt. 1878) 531, the Supreme Court outlined the principles governing public employment, particularly when such employment does or does not enjoy statutory flavour. The main issue in this case was whether the Appellants (former employees of the Central Bank of Nigeria (CBN)) were entitled to be reinstated as staff on the grounds that their employment had statutory flavour. The Court’s judgment highlights the limits of employment rights in public institutions.
FACTS OF THE CASE
The Appellants were employees of the 1st Respondent but, on written directives of the Federal Government, were relieved of their employment by the bank in what was labelled a ‘rationalization’ exercise. Between 1996 and 2003, over 1000 staff were terminated. The Appellants sued the 1st respondent for themselves and on behalf of over 1000 staff, for wrongful termination of employment. The Appellants argued that the CBN is an autonomous body, and the directive violated the CBN Staff Manual. The Appellants, therefore, sought their reinstatement without loss of seniority or benefits.
The Federal High Court of Lagos State dismissed the suit, holding that the CBN acted within its Staff Manual. The court also held that their employment lack statutory flavour, and their reinstatement would impose willing employees on an unwilling employer. The Court of Appeal upheld the trial court’s decision, hence the appeal to the Supreme Court.
DECISION OF THE SUPREME COURT
The Supreme Court dismissed the appeal in a unanimous decision holding that the appeal is devoid of merit and the rationalization exercise by the 1st respondent was appropriate. It affirmed the findings and decision of the trial and lower court.
UNDERSTANDING STATUTORY FLAVOUR
An employment is said to have statutory flavour when:
- The employer is a body set up by the Constitution or statute, and
- The statute prescribes the conditions and procedures for employment and termination of employment.
This test was reaffirmed in Kwara State Judicial Service Commission v Tolani (2019) 7 NWLR (Pt. 1671) 382 and Oloruntoba Oju v Abdul Raheem (2009) 13 NWLR (Pt. 1157) 83. Where these conditions are absent, the employment relationship is treated as purely contractual and subject to the rules of a master-servant relationship. It should be noted that there are three categories of employment:
- Pure master-servant relationships,
- Servants who hold their office at the pleasure of the employer, and
- Employments with statutory flavour.
See the case of Ovivie v Delta Steel Co. Ltd (2023) 14 NWLR (Pt. 1904) 203. The court further held in Ovivie v Delta Steel Co. Ltd (supra) at 236, paras C-D that:
“An employment enjoys statutory flavour when the contract of service is governed by statute or where the conditions of service are contained in regulations derived from statutory provision. In the circumstances, they invest the employee with a legal status higher than the ordinary master/servant relationship.”
The case of Olaniyan & Ors v University of Lagos & Anor (1985) 2 NWLR (Pt. 9) 599, offers a clear example of an employment with statutory flavour. In that case, the University of Lagos, being a statutory body, was bound by Section 17 of the University of Lagos Act, No.3 of 1967 (as amended), which prescribed specific procedures for terminating the employment of senior academic staff. The University’s failure to follow those procedures rendered the termination of the Appellants unlawful and warranted their reinstatement.
In contrast, in Adedeji v CBN (supra), the Appellants relied on alleged violations of the CBN Staff Manual to challenge the termination of their employment. However, the Supreme Court clarified that the Staff Manual is not a statutory instrument and cannot supersede the CBN Act. Under Section 7 of the Act, the power to make staff regulations rests with the bank’s Board of Directors. As such, the Appellants’ employment was governed by contract, not statute.
This decision is in alignment with the decision in Omagbemi v FBN (2021) LPELR-54155(CA) 10, where the court held that an employment contract governed by an Employment Handbook does not enjoy statutory flavour. In Idoniboye-Obu v N.N.P.C. (2003) 2 NWLR (Pt. 805) 589 at 624, paras C-E, the court held that:
“It is easy to understand from Olaniyan and Shitta-Bey that the rules and regulations which are claimed by an employee to be part of the terms and conditions of his employment capable of giving it statutory flavour and be of protection to the employee must (1) have statutory reinforcement or at any rate, be regarded as mandatory, (2) be directly applicable to the employee or persons of his cadre, (3) be seen to be intended for the protection of that employment; and (4) have been breached in the course of determining the employment; before they can be relied on to challenge the validity of that determination.”
Given that the Appellants’ employment lacked statutory backing, it was classified as a simple master-servant relationship. In such cases, courts have consistently held that the remedy for wrongful termination is damages, not specific performance. This principle is reaffirmed in Nigerian Gas Co. Ltd v Dudusola (2005) 18 NWLR (Pt. 957) 292 and Shell Pet. Dev. Co v Lawson-Jack (1998) 4 NWLR (Pt. 545) 249.
LESSONS FROM ADEDEJI V CBN (SUPRA)
- Statutory Flavour Must Be Rooted in Law
The Supreme Court reiterated that internal documents, such as staff manuals or handbooks, cannot create statutory flavour unless they are expressly derived from or authorised by statute.
2. Reinstatement Requires Statutory Backing
Only statutory employment attracts the remedy of reinstatement. In master-servant relationships, courts will not order reinstatement unless there is a statutory obligation to do so. The appropriate remedy in such cases is damages for wrongful dismissal, if proven.
3. Dependence on Internal Manuals
Employment handbooks and internal guidelines do not have the force of law. Both employers and employees in the public sector must evaluate whether such instruments have legislative backing before relying on them in litigation.
CONCLUSION
The decision in Adedeji v CBN (supra) showcases the distinction between contractual and statutory employment. It emphasises that employment relationships with public institutions do not automatically enjoy statutory flavour simply because the employer is a statutory body. Statutory flavour arises only where the enabling statute prescribes detailed conditions of service and termination of employment.
This judgment is a reminder that internal employment documents must be adequately grounded in legislation to provide statutory protections. It is recommended that employers in the public sector ensure that their employment practices align with statutory regulations. Similarly, employees must understand the legal basis of their appointments before asserting claims for reinstatement or wrongful termination.
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