An employer is bound to pay in full, the pension of a retiring employee

New Nigeria Development Company Limited V. Daniel Ugbabe Ugbabe

Supreme Court of Nigeria

(Ariwoola; Augie; Ogunwumlju; Aboki; Abubakar, Jj.sc)

BACKGROUND FACTS

Daniel Ugbabe Ugbabe (the Respondent) in 1972, was employed by Ahmadu Bello University. Later in 1976, he transferred his service to the Benue Polytechnic, Ugbokolo, and in 1980, he transferred his service back to Ahmadu Bello University as the Bursar of the University. After serving 16 years at both academic institutions, the Respondent 1988, was appointed the Chief Executive Officer and Group Managing Director of New Nigeria Development Company Limited (the Appellant) wherein he served a further 4 years with the Appellant before retirement in 1992, thus serving a total of twenty years in the public service. When the Respondent retired, the Appellant computed and paid pension to the Respondent only for the four years period of the Respondent’s service with the Appellant, but the Respondent sought payment of gratuity and pension on the basis of 20 years of service. After several failed attempts at reconciling their differences, the Respondent commenced an action at the High Court (trial Court). At the conclusion of trial at the trial Court, a considered judgment was delivered against the Respondent.

Dissatisfied with the judgment of the trial Court, the Respondent appealed to the Court of Appeal (lower Court). The lower Court set aside the judgment of the trial Court and delivered judgment in favour of the Respondent.

Also, dissatisfied by the decision of the lower Court, the Appellant appealed to the Supreme Court. The sole issue for determination was: Whether the Appellant was bound by the provisions of the Pensions Act and the various Federal Government Circulars and Regulations rather than solely on its Personnel Administrative Manual and Conditions of Service in the computation and payment of the retirement benefits of the respondent, in the circumstances of this case.

ARGUMENTS

Learned Counsel for the Appellant argued that the provisions of the Pensions Act, are applicable to the Public Service of the Federation and that it is clear from the provisions of Section 318 of the 1999 Constitution which is applicable to this case, and which the court below relied on, that a company such as the Appellant in this appeal can only be
regarded as part of the Public Service of the Federation if the Government of the Federation or its agency owns controlling shares or interest therein, and that the mere listing of the Appellant as an “Approved Service” in the Official Gazette in respect of organizations declared as approved services under the Pension Act, neither qualifies the
Appellant’s staff to be in the public service of the Federation nor changes the status of the Appellant, in view of the clear provisions of the Constitution. Counsel stated that neither the Government of the Federation nor any of the agencies own any share or interests in the Appellant and therefore, it cannot be bound by the provisions of the
Pensions Act. The Appellant through its Counsel further submitted that its management and operation is regulated by its memorandum and articles of association and its Personnel Administration Manual which is reviewed by its Board of Directors and that it is only liable to pay the Respondent’s pension to the extent of the period the Respondent served with the Appellant while it is the responsibility of the other organizations with whom the respondent served to contribute towards his pension for the period he served with them.

Learned Counsel for the Respondent in reply contended that Section 173 of the 1999 Constitution provides that the right of a person in the public service of the Federation to receive pension or gratuity shall be regulated by the law and it is pursuant to this constitutional provision that the Pensions Act was enacted. By section 24 of the Pensions
Act, the Minister is vested with the power from time to time by order to determine which organization is termed a public service. Counsel argued that the essence of qualifying an organization as an “Approved service” is to allow organizations or establishments like the appellant to provide retirement benefits comparable with the pension scheme for Federal and State public servants, i.e., to permit employees in the service of the Federal Government to transfer their service to State service and vice versa for continuity of service for pension purposes as provided by the Pension Act. Counsel submitted that it was based on the above undeniable fact that the respondent transferred his service from ABU to the appellant and by the Appellant accepting the transfer of service, the Pensions Act, the Federal Government Circulars and other conditions of service which governed the respondent’s employment while with his previous employers were incorporated by reference into the Respondent’s service with the Appellant.

DECISION OF THE COURT
In resolving the issue, the Supreme Court held that The Pensions Act is not specific on the point of whether the last employer should pay all entitlements and seek reimbursement from previous employers or pay only for the period the employee worked for it. However, it is a principle of labour law that any ambiguity regarding the payment of any entitlement to an employee must be resolved in favour of the employee. Thus, the rule of the retiree getting his full pension and gratuity from his last place of employment and the last place to get reimbursed by previous employers is
borne out of the fact that the method most practicable and most humane to the employee must prevail. The respondent having transferred his service from Ahmadu Bello University to the appellant, he qualified as an employee of an approved service under the Pensions Act who upon retirement is entitled to gratuity and pensions to be computed in accordance with the provisions of the Pensions Act and other Circulars to that effect.

Issue resolved in favour of the Respondent.

Samson A. Eigage, Esq., with Kigai Sontoye, Esq.; Faruq O. Aliyu, Esq., and Olayemi
Afolayan, Esq., for the Appellant.
J. B. Daudu, SAN with E.O. Isiramen, Esq.; I.E. Offiah, Esq.; Z. T. Koraris, Esq., and S.
Emmanuel, Esq., for the Respondent.

This summary is fully reported at (2023) 9 CLRN in association with ALP NG & Co.

See www.clrndirect.com; www.alp.company