The National Industrial Court of Nigeria, Lagos Division, has ruled that United Bank for Africa (UBA) constructively dismissed 20 of its former employees, ordering the bank to apply insurance proceeds to offset their outstanding staff loans and to issue them work references.
Delivering judgment in Suit No: NICN/LA/286/2020, Justice Ikechi Nweneka held that the affected employees were forced to resign in early January 2020 under threats of losing their terminal benefits, a situation the court described as constructive dismissal.
The claimants, led by Adeniji Funmilayo Foyekemi and Russel Ojaya Ilueminisen alongside 18 others, approached the court through their counsel, Elvis Asia, alleging that their resignations were involuntary.
They accused UBA of coercion, oppressive staff loan practices, failure to remit National Housing Fund deductions, and defamation following their exit from the bank.
They told the court that between January 3 and 6, 2020, UBA directed them and other staff members to resign or risk forfeiting their entitlements, an action they said violated provisions of the bank’s employee handbook.
The claimants further argued that personal loans granted to them between August and December 2019 were deliberately structured to deprive them of benefits ahead of an anticipated mass sack. According to them, their terminal benefits were used to liquidate the loans instead of invoking insurance cover provided under the loan agreements.
UBA, through its Human Resource Officer, Yvonne Solomon, denied the allegations and urged the court to dismiss the suit. The bank also challenged the court’s jurisdiction, arguing that the claimants failed to exhaust the internal dispute resolution process outlined in clause 6.7 of the employee handbook, which requires grievances to be reported internally and subjected to mediation before litigation.
Justice Nweneka dismissed the bank’s objections and proceeded to determine the substantive issues. On the central claim, the court found that the circumstances surrounding the resignations amounted to constructive dismissal.
“I find that the claimants were constructively dismissed by the defendant,” the judge ruled.
However, the court rejected the claim that the staff loans were unconscionable or oppressive, holding that the claimants failed to prove that the loans—issued at interest rates of 18 per cent plus insurance charges—were against corporate decency.
Nonetheless, the court granted an alternative relief, ordering UBA to apply insurance proceeds to settle the outstanding loans. Justice Nweneka held that the claimants had involuntarily lost their jobs within the meaning of clause four of the loan agreements, thereby triggering the insurance cover.
On allegations of workplace discrimination, the court ruled against the claimants, noting that they failed to plead and prove that employees performing similar duties were paid higher salaries.
The court also ordered UBA to provide satisfactory work references to the former employees, citing provisions in the bank’s employee handbook that require the issuance of references to prospective employers.
In addition, Justice Nweneka awarded the claimants N750,000 as costs of the action, taking into account the nearly five-year duration of the case, the number of court appearances, filing fees, and prevailing inflation.
While granting reliefs on constructive dismissal, loan insurance application, work references, and costs, the court dismissed the remaining claims, including those seeking declarations on the unconscionability of the loans.
