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JUDGMENT
DR. DATE-BAH, J.S.C:
This case, with respect, is
based on a flawed conception of
the nature of a contract of
employment. A contract of
employment is not necessarily a
contract till the retirement
age. As Wuaku JSC said in
Nartey-Tokoli v Volta Aluminium
Company [1987-88] 2 GLR 532
at p. 545, a contract of
employment, though it may be for
an indefinite period, does not
mean life employment. Claim (d)
endorsed on the Plaintiff’s writ
of summons is, however, based on
the fallacious conception that
there is an expectation interest
in a contract of employment till
the age of retirement. The
claim is in the following terms:
“an order for the payment to
plaintiff of all salaries,
increments and all other
benefits for the remaining six
(6) years of service with
defendant company.”
A contract of employment is
clearly terminable. Even if it
is terminated wrongfully, that
does not give the aggrieved
party the right to be paid
salary till his retirement age.
The Supreme Court held in
Nartey-Tokoli v Volta Aluminium
Company [1987-88] 2 GLR 532
that where an employer
terminates an employee’s
appointment in breach of a
contract of employment, the
employer is liable to pay
damages to the employee and that
the damages are not limited to
salary in lieu of notice. Thus,
for instance, in Hemans v
GNTC [1978] GLR 4 where an
employee’s contract was
wrongfully terminated, the Court
of Appeal awarded him four
months’ salary in damages,
though the notice period under
the contract was only one
month. Nevertheless the duty of
mitigation of damages devolves
on an employee. Accordingly, he
or she has the duty to take
steps to find alternative
employment. In principle then,
in the absence of any contrary
statutory or contractual
provision, the measure of
damages in general damages for
wrongful termination of
employment in the common law of
Ghana is compensation, based on
the employee’s current salary
and other conditions of service,
for a reasonable period within
which the aggrieved party is
expected to find alternative
employment. Put in other words,
the measure of damages is the
quantum of what the aggrieved
party would have earned from his
employment during such
reasonable period, determined by
the court, after which he or she
should have found alternative
employment. This quantum is, of
course, subject to the duty of
mitigation of damages. These
principles outlined above,
however, hold true in relation
to only contracts not affected
by public law provisions.
Ghana Cocoa Marketing Board v
Agbettor & Ors [1984-86] 1
GLR 122 illustrates the impact
of public law provisions on
contracts of employment. In
this case, because the
employees, as public servants,
enjoyed constitutional
protection from being dismissed
“without just cause”, the Court
of Appeal held that, where they
had been dismissed in breach of
the constitutional obligation,
the Court would mark its
disapproval of the employer’s
unconstitutional action by
ordering it to pay two years’
salary to the employees as
compensation. One should hasten
to add that on the facts of the
present case, no public law
provision is applicable.
The relevant facts of this case,
which have given rise to this
issue of law, are as follows:
the plaintiff was an employee of
the defendant brewery. He was
employed as chief of security.
On 29th November,
1996, the Defendant’s
managing-director invited the
plaintiff into his office and
handed him, in the presence of
two other members of the
management, a letter informing
him that his post in the company
had been declared redundant as a
result of a manpower
rationalization exercise by the
company. The letter stated that
his services would no longer be
required from 2nd
December 1996, but that he would
be paid up to that day and also
be paid three months salary in
lieu of notice. The letter
further informed him that he
would receive a severance award
of two and a half months pay for
each year of service, commencing
from 1st January
1991.
At the meeting with the
managing-director, the plaintiff
was given his three months
salary in lieu of notice and two
days salary for December 1996.
He was also paid monetary
compensation for his accrued
leave days. On the 5th
of December 1996, the Plaintiff
collected from the Accounts
Department of the Defendant the
severance award referred to
above.
After thus collecting the
compensation offered in the
letter of 29th
November, 1996, the Plaintiff
caused his lawyer to write a
letter to the defendant dated 29th
January 1997 which asserted that
the Senior Staff Service
Conditions of the defendant
dated 1st April 1995
contained no provision covering
redundancy. It characterized
the defendant’s action in
terminating the plaintiff’s
employment as smacking of
arbitrariness and injustice. It
expressed the view that the
defendant’s declaration of the
plaintiff redundant was unlawful
at law and in breach of the
Industrial Relations Act 1965,
Act 299. It requested the
holding of amicable bilateral
discussions to resolve the
dispute.
In a letter written in response,
the solicitor to the defendant
asserted that, in addition to
the express conditions of
service for the Senior Staff,
the defendant had implied
contractual terms, including
working rules, corporate
practices and conventions, built
over the years, which together
constituted the engagement terms
of the work force, including the
senior staff. The solicitor
contended, in effect, that the
redundancy exercise was in
accordance with these terms
implied by practice and usage.
When the dispute between the
parties was not resolved by the
correspondence between their
solicitors, the Plaintiff issued
a writ of summons against the
defendant on 19th
May, 1997. The Plaintiff’s
claim was for:
“(a) a declaration that his
being declared redundant is
unlawful and so wrongful.
(b)
general damages for wrongful
termination of employment by
defendant.
(c)
Monetary compensation of eight
(8) months salary for every year
of service with the defendant.
(d)
an order for the payment to
plaintiff of all salaries,
increments and all other
benefits for the remaining six
(6) years of service with
defendant company.”
In his judgment at the end of a
full trial, the learned trial
judge interpreted paragraphs 34
and 35 of the Labour (Amendment)
Decree 1969, NLCD 342 (which
were pleaded and relied on by
the Plainitff) as requiring the
two parties to the suit to sit
down and negotiate the severance
award. He was of the view that
the unilateral determination of
the amount of the severance
award by the defendant was not
lawful. He therefore entered
judgment for the plaintiff “as
per the writ of summons” and
ordered the parties to negotiate
over the severance award and to
complete the negotiations within
one month. Both parties
appealed from this judgment to
the Court of Appeal, the
plaintiff complaining, inter
alia, that the learned trial
judge should have awarded
general damages for the wrongful
termination of his contract.
The Court of Appeal dismissed
the plaintiff’s appeal and
upheld the defendant’s on 18th
December 2003.
It is from this judgment of the
Court of Appeal that the
Plaintiff has lodged a further
appeal to this Court. The
Plaintiff’s grounds of appeal
before this Court are as
follows:
“(a) The Learned Justices
of the Court of Appeal erred by
failing to recognize that the
acceptance by the
Plaintiff/Appellant in accepting
the severance package offered by
the Defendant/Respondent did not
estop him in law from reopening
the issue of the requirement for
negotiation for determination of
his severance award.
(b)
The Honourable Court erred in
holding that accepting or
receiving the severance package
as offered derogated from the
Appellants right to seek further
legal redress in asking for
appropriate negotiation of his
entitlements as required by law.
(c)
The Court of Appeal failed in
its legal duty under Rules 32(1)
and (2) in failing to consider
other existing grounds which it
could have considered to achieve
a just and equitable resolution
of the issues raised determining
the appeal appropriately.
(d)
The Learned Judges of the Court
of Appeal erred in misleading
and disabling themselves in not
critically evaluating the
evidence that the Appellant
acted diligently and timeously
in reopening the negotiation by
ignoring the Appellant’s
Solicitor’s letter to the
Respondent on the issue of
negotiation of the redundancy
and severance award.”
The Plaintiff argued grounds
(a), (b) and (d) together in his
Statement of Case. The essence
of his argument was that the
Court of Appeal erred in not
appreciating that the
Plaintiff’s right to negotiation
was not extinguished by the mere
receipt of the package and that
the intervention by the
Plaintiff’s solicitor within two
months was prompt enough. The
formulation of the Plaintiff’s
grounds of appeal betrays a
certain lack of appreciation of
the contractual principles that
should underpin an analysis of
this case. Under general
contract principles, the
plaintiff, by accepting the
package offered him, entered
into a compromise agreement
which appeared to extinguish any
claims that he had against his
employer in respect of the
termination of his employment.
At the very least, he should
have indicated at the time he
accepted the package that he was
doing so, without prejudice, or
under protest.
In any case, the Plaintiff’s
claim of a right of negotiation
needs to be subjected to closer
scrutiny. The learned trial
judge, Gyamera-Tawiah J., based
his conclusion that there was a
duty of negotiation on
paragraphs 34 and 35 of the
Labour (Amendment) Decree 1969,
NLCD 342 (now repealed by the
Third Schedule of the Labour
Act, 2003 (Act 651)). These
paragraphs provide as follows:
“34. (1) Where an
organization is closed down or
where an organization undergoes
an arrangement or amalgamation
and the close down, arrangement
or amalgamation causes a
severance of the legal
relationship of employee and
employer between any person and
the organization as it existed
immediately before the close
down, arrangement or
amalgamation, then, if as a
result of and in addition to
such severance that person
becomes unemployed or suffers
any diminution in his terms and
conditions of employment, he
shall be entitled to be paid by
the organization in whose
employment he was immediately
prior to the close down,
arrangement or amalgamation,
compensation, in this Decree
referred to as “severance pay.”
(2)
In determining whether a person
has suffered any diminution in
his terms and conditions of
employment under sub-paragraph
(1) of this paragraph account
shall be taken of the past
services and accumulated
benefits (if any) of such person
in or in respect of his
employment with the organization
before it was closed down or
before the occurrence of the
arrangement or amalgamation.
35.
The amount of any severance pay
to be paid under paragraph 34 of
this Decree as well as the terms
under which payment is to be
made shall be matters for
negotiation between the employer
or his representative and the
employee or his representative.”
With the greatest respect, we do
not interpret these provisions
as casting any duty of
negotiation on the parties to
this suit. These provisions do
not, by their very terms, apply
to redundancy situations, but
rather to when an organization
is closing down or undergoing an
arrangement or amalgamation and
this results in the termination
of the employer-employee
relationship.
On the issue of compensation in
respect of redundancy, the
parties, thus, have to revert to
their underlying contractual
relationship. This is because
neither party pleaded any
relevant statute on the issue.
The uncontroverted testimony of
the defendant’s Personnel
Manager was that there was no
provision in the defendant’s
service conditions regarding
redundancy. The Senior Staff
Service Conditions tendered in
evidence by the Plaintiff
confirmed this testimony, since
it contained no provision on
redundancy. The redundancy
payment made by the defendant to
the plaintiff could thus be
explained either as an ex
gratia payment or a payment
made pursuant to implied
conditions in the contract of
employment, as contended by the
defendant. We prefer the
defendant’s own showing that it
was bound by implied terms to
make a redundancy payment to the
plaintiff. The acceptance by
the Plaintiff of the redundancy
package offered him by the
defendant meant that the
termination of his employment
was not unlawful or wrongful.
We are not persuaded by the
Plaintiff’s contention that the
redundancy package was
unilaterally determined by the
defendant company. It was open
to the Plaintiff to reject it,
if he was so minded. By
accepting the package, he made
the termination one by mutual
agreement. He therefore had no
cause of action against the
defendant. The learned trial
judge was therefore in error
when he entered judgment for him
for all the reliefs endorsed on
his writ. The Court of Appeal
was right in reversing that
judgment.
In arguing ground (c) of his
grounds of appeal, the Plaintiff
relied on paragraph 35 of the
Labour (Amendment) Decree 1969
(NLCD 342). His argument was
that since this provision
imposed a duty of negotiation on
the parties, the Court of Appeal
had power under its rules of
court to give any judgment or
make any order that would
resolve the question of a proper
award of severance pay to the
plaintiff. Since, in our view,
this provision lays no such
obligation of negotiation on the
parties to this suit, the
Plaintiff’s argument on this
ground falls away.
In our view this appeal is
unencumbered by any merit and
should be dismissed.
S. K. DATE-BAH (DR)
(JUSTICE OF THE SUPREME COURT
R.C. OWUSU(MS)
(JUSTICE OF THE SUPREME
COURT)
J. ANSAH
(JUSTICE OF THE SUPREME COURT
J. V. M. DOTSE
(JUSTICE OF THE SUPREME COURT
ANIN YEBOAH
(JUSTICE OF THE SUPREME COURT
COUNSEL
COL. RTD. TSHAHEY FOR THE
PLAINTIFF/RESD./APPELLANT
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