The place of the employee handbook on employment contracts

Introduction

The place of the Employee Handbook in the modern employment relationship between employers and employees is becoming more significant. Given this prominent role that the Employee Handbook plays in the employment relationship, a lot of employment disputes now turn on the interpretation and/or alleged compliance or non-compliance with the provisions of the Handbook. In fact, in certain disputes before the courts, employees claim to be unaware of the existence of the Employee Handbook or that they are aware but did not agree to the terms contained in the document, as the Employer usually stipulates the terms of the Employee Handbook. In most cases, we note that Employee Handbooks are usually incorporated into the contract of employment by reference and often, the employee would have signed the contract before being availed a copy of the Employee Handbook, which sometimes form the basis of objecting to the enforcement of its content.

This article examines the nature and effect of an Employee's Handbook, as well as an employee's liability under the Employee's Handbook.

Nature of employee's handbook

An Employee's Handbook stipulates details of an employer's expectations, internal policies and processes which guides the conduct of the employee and vice versa, provides the employer's representations, obligations and assurances in terms of benefits to the employee. Simply put, an Employee Handbook communicates and reinforces workplace policies, procedures, rules and regulations. It serves as a reference document for internal conducts and reflects the employer's culture and values.¹

The Employee Handbook is important as the absence of policies or procedures regulating the employment relationship may create uncertainties, inconsistences, or conflicts in the workplace.

Effect of an employee handbook

The contract of employment is the bedrock of employment relationship, and it is legally binding between the employer and the employee. Usually, the employee indicates his/her acceptance of the terms by signing the contract of employment. An Employee Handbook, on the other hand, may not be signed by the employee. In fact, while the section 7 of the Labour Act² requires that the employer provides its workers with a contract of employment within 3 months of employment, the law does not make adoption of an Employee Handbook mandatory.

However, it is customary practice to provide an employee with the Employee Handbook at the beginning of the employment relationship, or in some cases during the course of employment.

The law is clear that where parties are well aware of the terms of a contract and voluntarily enter into the contract, they are bound by the terms of that contract. As noted earlier, an employee may not be aware of the terms contained in an Employment handbook as at the time of acceptance of the terms of the contract of employment.

The Nigerian courts have consistently held that the provisions of the Employee Handbook are binding on the parties. It is noteworthy to consider the following circumstances and the legal effect of the Employee Handbook in these circumstances as enunciated in the cases below.

Where the employee handbook is incorporated in the contract of employment

The position of case laws is to the effect that if an employee has signed the contract of employment, and the contract of employment refers or incorporates the terms and conditions of an employee handbook, an employee would not be heard to deny being aware of the employee handbook. The Court of Appeal held in the case of Regd. Trustees of Ikoyi Club 1938 v. Ayodeji (2020) LPELR-51633(CA) Per Ugochukwu Anthony Ogakwu, JCA (Pp 15 - 23 Paras C - B) as follows:

"So, in order for the Respondent to take benefit of the Handbook, it has to be shown that it was incorporated in his letter of employment, either by reference or by necessary implication. The Respondent's letter of employment was frontloaded by the parties and tendered in evidence at the trial. It is copied at pages 11-13 and 88-90 of the Records. Paragraph 3 (vii) of the letter of employment provides as follows: "Other conditions of your employment shall be as contained in the Ikoyi Club 1938 Management Staff conditions of service booklet." The above clause makes it limpid that the Handbook was incorporated in the Respondent's letter of employment by reference and necessary implication. So, it would be applicable and govern the Respondent's employment without more."

In the above case, the Appellant contended that the Handbook did not govern the Respondent's employment because the Respondent did not meet the condition precedent to the Handbook applying to him, which was, signing the acknowledgement slip of the Handbook. The Respondent argued that he had signed the Handbook and was entitled to benefit from the terms of the Handbook as it was binding on him. The Court held that the Appellant had failed to prove that the Respondent did not sign the Handbook and since the said Handbook was incorporated in the letter of employment, the terms of the Handbook were binding on the parties. The Court held, in agreement with the Trial Court that the onus was on the Appellant to prove that the Respondent did not sign the acknowledgment slip of the Handbook since the signed copy of the slip was required to be placed in the Respondent's file. In addition, the Court found that since the Appellant admitted that other severance entitlements of the Respondent like gratuities etc. were calculated based on the Handbook, it was an admission against interest to posit that the Handbook did not apply to the Respondent.

From the above decision of the Court, it would seem that where the Employee Handbook has been incorporated into the contract of employment, the provisions of the Employee Handbook would be binding on the parties. However, if the Employee Handbook also provides for a condition precedent for applicability such as requiring the employee to acknowledge or sign the Handbook, the same would not be binding unless the employee acknowledges the Handbook. As the court held: "the fact remains that, if in fact the condition precedent to the applicability of the Handbook was not met by the Respondent, no part of his benefits would have been computed thereunder".³

Where the provision of the handbook contravenes the employment contract

Where the provisions of the Handbook are inconsistent with those of the employment contract, the court will construe both provisions to determine the real intention of the parties. For instance, the provisions of the Handbook may be general on the subject and apply to all employees in that category whilst the employment contract will be specific and may even contain a clause stating that the provision is "notwithstanding" the provisions of the handbook or any other document. In such cases, the court will more likely uphold the provision of employment contract.

In some cases, the Court will uphold the Employee Handbook, where it is the latter document, this was the position in the case of Samuel Uhuaba v Aero Contractors Company Nigeria Limited 2018⁴, an unreported decision of the National Industrial Court, Imo Division.⁵

Conclusion

To construe the true intention of the parties in an employment relationship, the court considers both the contract of employment, and the terms and conditions of employment contained in an Employee Handbook, as same has been recognized as binding and enforceable on the employer and employee. It is recommended that the Employee Handbook should be incorporated in the contract of employment and acknowledged/signed by the employee.

1. It includes details of recruitment policy, onboarding pre-employment tests, probation, and confirmation, working days & hours, employment records, dress code, code of conduct, office etiquettes, transfers, internal communications policy, disciplinary procedures, grievance procedures, performance management, cessation of employment and terminal benefits.
2. Labour Act Cap L1, Laws of the Federation of Nigeria 2004
3. The decision of the Court of Appeal in N.B.C. PLC v. Ekpo (2020) LPELR-51997(CA) is also noteworthy, it reinforces the principle of incorporation by reference.
4. Available online at https://nicn.gov.ng/view-judgment/720
5. The Court held as follows:The handbook is a more recent development in conditions of service between the parties; no wonder therefore that in Exhibit C5, the defendant offered to pay 1 month salary in lieu of notice in line with the Handbook. The implication is that the defendant has opted to follow the condition for termination in the Handbook, which is either to give one-month notice to the claimant or pay the claimant one-month salary in lieu of the notice.

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