Some of the questions that human resources managers and employment lawyers will face are about the fate of a job applicant who was given an offer letter of employment and had accepted same before #Covid19 but was unable to assume duty because of the pandemic.
The answer is simple: The applicant is and should be treated as an employee of the concerned company.
Generally, it is trite law that offer and acceptance are the key components of an agreement. So, an employment contract is formed when an offer letter to a job applicant has been accepted unconditionally and the acceptance has been duly communicated to the employer.
The Supreme Court was very explicit in a recent case of NRMA & Ors. v. Johnson (2019) 2 NWLR (Pt. 1656) 247, that once the offer of employment has been accepted, the employer could not withdraw it and that all due salaries and benefits up till the time of termination must be paid.
In Obaike v. B.C.C. Plc. (1997) 10 NWLR (Pt. 525) 435 at 447, the Court of Appeal held that “In order to decide whether the parties have reached an agreement, it is usual to inquire whether there has been a definite offer by one party and an acceptance of that offer by the other. In deciding this the court adopts an objective test.”
The proper application of the objective test is to view the making of an employment contract in the light of a recruitment process. A recruitment process usually involves an advertisement of a post, job roles, requirements for qualification with procedure for application; submission of applications or CVs by applicants; interview(s) by the recruiter and the recruiter concludes the process by sending out an offer of employment to the selected applicant.
The chronological sequence of the above process is important for two reasons: first to show the intention to create legal relation which evidenced by the build up of the process to the final stage when offer of employment is made; and, secondly, to show that the interviewed applicant(s) are narrowed to the most suitably qualified applicant (or set of applicants) to whom an offer of employment is made. So, if a recruiting company makes an offer of employment to an interviewed applicant, who accepts the offer and communicates his or acceptance (in the above circumstances), an agreement should be unquestionably formed.
Employment contracts differ from other transactional contracts in some respect, for instance the contract for the sale of land from which, according to the Court in Bioku Investment Property Co. Ltd. V. Light Machine Industry Ltd. (1986) 5 NWLR (Pt. 39) 42, either of the parties can withdraw at any stage before execution of the final agreement.
However, if an employment contract is for a certain period and the period (both the commencement and terminal dates) fall within the period of #Covid19 during which no business was permitted to open or operate and therefore the employee could not assume duty for the employer, then the contract is deemed frustrated. Consequently, the employer is excused from paying salaries or other agreed benefits in the contract.
A contract is frustrated when an intervening act (not caused by either of them) prevents the parties to a contract from performing their obligations under the contract. “In other words, a contract will be said to be frustrated”, according to Ariwoola, JSC in N.R.M.A. & Ors. V. Johnson (supra) at page 266, “if its performance is dependent on the continued existence of a state of affairs, then the disappearance or destruction of that state of affairs, without the fault of either of the parties will discharge them from the contract.” This can occur (in employment contract) when an employee is unable to assume duty or to do the agreed work with the agreed period till the period lapses or the company is wound up before assumption of duty.
The point must be mentioned (for the sake of acknowledgment only) that it is a great hardship for a business struggling with low productivity during #covid19 to be compelled by the law to pay salaries to a new employee who has not assumed duty or provided any service to the employer.
Unfortunately, the only choice the employer has is to mitigate its loss by adopting available measures within the ambits of the law. As noted by the Court of Appeal in R.M.A.F.C. v. U.E.S. Ltd. (2011) 9 NWLR (Pt. 1252) 379 at 418 that: “It is trite that a contract is not frustrated merely because its execution becomes more difficult or more expensive than either party originally anticipated and has to be carried out in a manner not envisaged at the time of its negotiation.”
A company in that difficult situation should resist the urge to attempt a withdrawal of the offer of employment as this will be ineffective if the employee’s acceptance of the offer has been communicated to the company. This point was noted by the Supreme Court in the case of N.R.M.A. & Ors. V. Johnson (supra) at page 265, wherein Ariwoola, JSC held that:
“As earlier noted, the trial court had found that the offer of appointment made to the respondents was accepted and same, began to run as stated in the said offer on 01/6/1999. The trial court had however also found that the terms of the contract required that each of the parties to the agreement could terminate the appointment or bring the contract to an end by a month’s notice in writing or by one month salary in lieu of notice.”
So, what should an employer do when caught up in the above quagmire of paying salaries to an employee who can neither assume duty nor work for the company?
In my view, there are two measures:
1. Disengagement: The company may disengage the employee in accordance with the probational contract for operational reasons. Most employment contracts provide for an initial period of probation during which both parties can disengage from the relationship and the procedure for doing so. If this is so, then the contract should be followed; or
2. Renegotiation: The #HR should renegotiate the salary and other benefits which the company can afford in order to keep the employee on the staff list during the #covid19 season even though the employee is unable to start working for the company. This renegotiation should be with the assurance that the initial salary/benefit will be restored upon assumption duty. The renegotiated contract should be documented and signed by both parties.
I recommend No.2 in view of the fact that the huge costs of recruitment may be lost and irrecoverable if No.1 is adopted. With option No.2, the service of the new employee can later be enjoyed by the employer when normalcy returns. This choice, of course, will depend on whether the new employee’s service will be integral to the employer’s business post-covid19.
Also, it is arguable if No.1 above can be accomplished by merely paying the the salary in lieu of notice or will entail compliance with the provisions of Section 20 of the Labour Act on redundancy. This is because, the disengagement of employee for operational reasons implies redundancy which is partly regulated by S.20 of the Labour Act.
