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Compensation : A/Court upholds N5.1m Fine against MTN over employment
By Kenneth Atavti, Abuja
The Lagos Division of the Court of Appeal on Thursday, dismissed an appeal filed by MTN Nigeria Communications Limited and upheld the N5.1 million compensation awarded to its former Procurement Manager, Mr Theodore Nwabueze Ikpa, over an unreasonable post-employment restraint of trade clause.
The appellate court, in a unanimous judgment delivered by a three-member panel led by Justice Danlami Zama Senchi, with Justices Boloukuromo Moses Ugo and Paul Ahmed Bassi concurring, upheld the June 13, 2018 judgment of the National Industrial Court in Lagos.
The dispute arose from the termination of Ikpa’s employment in December 2008. Ikpa, through his counsel, Adetunji Adedoyin-Adeniyi, approached the National Industrial Court, alleging that MTN failed to give him one month’s notice or salary in lieu of notice.
Ikpa also challenged a four-year restrictive covenant in his employment contract, which he argued prevented him from securing alternative employment until he reached retirement age.
The former MTN Procurement Manager sought salaries up to his retirement in October 2010 and retirement benefits or, alternatively, N10 million in damages for restraint of trade.
However, the National Industrial Court dismissed most of his claims but held that the four-year non-compete clause was unreasonable and awarded him N5,101,674 as compensation and N100,000 in costs.
Not satisfied with the judgment, MTN, through its lawyer, Solomon Mbadiwe, filed an appeal on four grounds, arguing that the lower court lacked jurisdiction to entertain the alternative claim, that the restraint clause was reasonable and necessary to protect its confidential information and trade secrets, and that Ikpa failed to prove actual loss.
The telecommunications company also contended that Ikpa voluntarily complied with the clause and that there was no evidence that the company prevented him from securing another job.
However, Ikpa argued that the clause effectively rendered him unemployable, citing evidence that MTN had a history of suing former employees who breached similar clauses, thereby creating fear among prospective employers.
In the lead judgement, Justice Senchi rejected all the grounds of appeal.
The Court of Appeal held that the National Industrial Court rightly exercised jurisdiction over the employment dispute and correctly evaluated the evidence.
The appellate court agreed that the four-year restriction was unreasonable and constituted a restraint of trade and therefore upheld the N5.1 million compensation award.
The court further held that there was no basis to interfere with the costs awarded by the trial court, noting that costs follow events.
After finding that the appeal lacked merit, the court affirmed the judgement of the National Industrial Court in its entirety and awarded an additional N500,000 in costs against MTN Nigeria in favour of Ikpa.
In his concurring judgement, Justice Ugo stated, “His Lordship’s reasoning and conclusion reflect mine. I, therefore, have nothing useful to add. I adopt His Lordship’s judgement as mine in also dismissing the appeal.”
Similarly, Justice Bassi held: “I am in complete agreement with His Lordship that this appeal is devoid of merit. I also dismiss the same and affirm the judgement of the lower court in Suit No. NICN/LA/05/2016, delivered on the 13th day of June 2018 respectively “.
