Treatment of application for contractual leave

In a decision it delivered on 31 May 2018 in Mr. Adewole Oluwasegun Ayotunde v Practical Habitat Limited (unreported Suit No. NICN/LA/124/2015), the NIC held that where a contract of employment provides that leave is to be taken at a time that is mutually convenient for both parties, an employer, in refusing an application for leave as inconvenient, must communicate the convenient period when the employee may re-apply for (and take) the leave; otherwise, the employer would be taken to have denied leave to the employee. The court also held that any applicable leave allowance must be paid strictly in accordance with the provisions of an employee’s contract of employment, failing which the employer may be made to pay the allowance over again.

The facts of the case relevant to this issue are as follows: The claimant’s contract of employment provided that the claimant would be entitled to proceed on annual leave at a time that was mutually convenient for both parties, and that a leave allowance amounting to 10% of his annual basic salary would be paid to him when he is going on leave.

Notwithstanding these provisions of the contract, the defendant pro-rated the leave allowance into 12 equal parts and paid it in equal monthly instalments to the claimant together with his monthly salary. The defendant also declined the claimant’s application for leave on the ground that the period selected by the claimant was not convenient, and requested the claimant to re-apply for the leave at a convenient time. The defendant, however, did not inform the claimant when the convenient time would be. The result was that despite the pro-rated monthly payment of leave allowance by the defendant to the claimant for the particular year, the claimant was never, in fact, granted, and did not take, his leave for that year. Upon termination of his employment, the claimant instituted the action and claimed for his leave allowance for the relevant year, among other reliefs.

Although the defendant adduced evidence of the pro-rated payment of the leave allowance in the course of the 12 months of that year, the court took the view that since the contract provided for payment of leave allowance when the claimant was proceeding on leave, and the parties were in agreement that the claimant did not proceed on leave for the relevant year, whatever payment was made to him in the course of the year was not “leave allowance” notwithstanding how the defendant described that payment in the claimant’s pay slip. The court, therefore, awarded the claimant’s claim for leave allowance. Further, the court held that the defendant actually “denied” the claimant his leave for the period, in so far as it did not communicate any convenient time for the claimant to re-apply for leave, upon refusing the claimant’s first application therefor. However, the court did not award any “damages” for this act of breach of contract as the claimant did not make any such claim. The claimant had instead claimed for “encashment in lieu of leave” on the basis that same was provided for in his contract, but the court refused the claim on the basis that there was no such provision in the contract.

It would appear to us that by this decision the claimant would have received employment related payments from the defendant in excess of amounts contracted by the parties. The decision is therefore difficult to follow in our view. But notwithstanding the difficulty in understanding the basis for the decision, employers should very well follow the rules established in the decision in order to avoid exposure to avoidable liability.