NATHAN AKAINYAH & ORS v. ECOBANK GHANA LIMITED
June 16, 2022
COURT OF APPEAL
GHANA
CORAM
- BARBARA ACKAH-YENSU (PRESIDING) JA
- JENNIFER DODOO (JA)
- RICHARD ADJEI-FRIMPONG (JA)
Areas of Law
- Employment Law
- Corporate Law
- Civil Procedure
June 16, 2022
COURT OF APPEAL
GHANA
CORAM
AI Generated Summary
The Court of Appeal dismissed an appeal by former executives and heads of department of The Trust Bank (TTB) against a High Court judgment concerning redundancy payments made during a merger process with Ecobank Ghana Limited. SSNIT and ETI arranged a share swap to merge TTB into Ecobank Ghana. Before the merger completed, the TTB Board declared the appellants redundant on 8 August 2011 and paid them under TTB’s Redundancy Policy in December 2011; the Board was then dissolved and an interim Board reversed the decision and demanded refunds, which the appellants made under protest. The majority opinion by Adjei-Frimpong JA held that Section 65(2) of the Labour Act requires an actual amalgamation causing severance that results in unemployment or diminution; because the merger only occurred in June 2012 and the appellants continued working without severance or diminished terms, the redundancy declaration and payments were unlawful. Dodoo JA agreed. Ackah-Yensu JA concurred in dismissing the appeal but reasoned redundancy was not premature and payments lawful, while concluding the appellants’ entitlement had lapsed and no liability transferred.
RICHARD ADJEI-FRIMPONG JA:
The facts of this cases are by no means complicated and we set them out to launch into our discourse in this appeal.
Some time around 2011, Social Security and National Insurance Trust (SSNIT), the then majority shareholder of The Trust Bank (TTB) went into a share swap deal with Ecobank Transnational Incorporated (ETI) for which TTB was to merge into Ecobank Ghana Limited, the subsidiary of ETI. In effect, if the deal was to succeed, TTB would cease to exist, in consideration of SSNIT obtaining shares in the subsidiary (Ecobank Ghana Limited).
In the process of the negotiation, the plaintiffs, among other officers, as Executive Committee Members and Heads of Department of TTB proposed to its Board through management that they be declared redundant. The reasons for this, shortly put were that, whereas some of them performed specialized roles at TTB which would make it difficult for them to fit into the proposed merged entity, others were nearing the age of retirement.
The proposal seemed to have found favour with the then Board of TTB which at its meeting of 8th August 2011 passed a resolution declaring the proponents redundant “for the purposes of the merger”. It was further resolved that compensation calculated in terms of the Redundancy Policy of TTB be calculated and paid to them.
At the trial, the fact of the existence of any such Redundancy policy was controverted as the defendants had contended that none had been approved and adopted. In any event, between 20th and 21st December 2011, the calculated sums were paid to the plaintiffs. The aggregate sum authorized to be paid to those entitled was Nine Million, Eight Hundred Thousand Ghana Cedis (GH¢9,800,000.00).
In the events that were to occur, the Board of TTB was on 20th December 2011 dissolved and an interim Board constituted. The new dispensation apparently not in favour of the previous decision and the payments already made, for reasons that were joined in the case, the plaintiffs were written to, to refund the monies paid to them. Sequel to that, the Interim Board on 17th January 2012 passed a resolution to formally reverse the resolution of 8th August 2011 which had declared the redundancy and allowed the payment of the monies.
Amenably, the plaintiffs refunded the monies but not without protest. In essence, they had insisted that the resolution of 8th August 2011 remained binding and that they were entitled to the payments. They eventually initiated the insta