APRIL 2015 NEWSLETTER LITIGATION

ACAS-LAW SUCCESFULLY ENFORCES TRAINING BOND IN FAVOUR OF

EMPLOYER IN LANDMARK JUDGEMENT

The firm recently secured a landmark judgment at the National Industrial Court on behalf of

Overland Airways, an airline company which operates a fleet of aircraft for commercial

flights and charter purposes (‘Overland’ or ‘the Company’).

The firm instituted an action1 on behalf of Overland against Captain Raymond Jam (‘Captain

Jam’ or ‘the Defendant’), a pilot who was formerly in the employment of the company to

recover the cost of sums expended in sponsoring some specialised training of Captain Jam.

The terms and conditions for sponsoring the trainings were contained in two training bonds

which required Captain Jam to remain in the employment of the Company for 36 months

and 12 months respectively. Captain Jam thereafter attended the trainings and acquired

licences and qualifications as a result. However, contrary to the terms of the training bonds,

Captain Jam resigned from the employment of the Company and repudiated the training

bonds.

In the action instituted on behalf of Overland, Captain Jam argued that the training bonds

were void and unenforceable because they constituted a restraint of trade and an unfair

labour practice. It was argued on behalf of Overland that the training bonds were freely

entered into by the parties and were necessary for the protection of the Company’s

business interests. It was further argued on behalf of Overland that training bonds are not

contracts in restraint of trade and are enforceable in Nigeria and other jurisdictions.

In a well-reasoned decision delivered by Honourable Justice B.B Kanyip, the court exercised

its jurisdiction to have recourse to international best practice and noted that in other

jurisdictions particularly India, training bonds are enforceable subject to the overriding

condition of reasonableness. The court rejected Captain Jam’s contention that Overland’s

training bonds are at variance with the prevailing custom in the Nigerian aviation industry

where pilots are allegedly bonded only for the validity period of their licence on the ground

that there was no evidence adduced to support such contention.

The court then considered the reasonableness of the bonds and held that the periods of 36

months (3 years) and 12 months (1 year) for which the Defendant was bonded are

reasonable in the circumstances of the case. The terms of the bonding and repayment terms

1 Suit No. NICN/LA/597/2012 - Overland Airways Limited v Captain Raymond Jam. Judgment was

delivered on Wednesday 15 April, 2015.

were also held to be reasonable and not unfair labour practice as contended by the

Defendant. However, the court adopted the practice in other jurisdictions where the

amount an employer is allowed to recover following a breach of a training bond is limited to

the pro-rated cost of the training for the remaining period of the bonding period before the

employee breached it. The Defendant was ordered to repay the cost of the training which

was pro-rated for the period left in the bonding period.

This case is an important development because it provides comfort to employers who incur

considerable expenses in providing training for its employees that such investment will be

protected by the courts. Arguably, it will also reduce the tendency of employees to

flagrantly breach their contractual obligations due to the lure of better offers of

employment from their employer’s competitors.

It is therefore important to restate the position of the law as held in this case which is that

training bonds are contracts in restraint of trade but are enforceable if they are considered

to be reasonable. The test of reasonableness is whether the restraint is necessary for the

protection of the parties’ interest and is not contrary to public policy. Employers are

therefore advised to seek legal advice before drafting their training bonds to be certain that

they would pass the test of reasonableness.

QUALIFICATION

The contents of this newsletter are meant for the general information of our clients and friends and do not amount to legal advice. All enquiries on the subject may be made to: Olugbenga Bello at obello@acas-law.com or Funke Agbor at fagbor@acas-law.com. Adepetun Caxton-Martins Agbor & Segun 9th Floor, St. Nicholas House, Catholic Mission Street, Lagos Island, Lagos State, Nigeria. Telephone: +234 (1) 462 2094; 4622480; 740 6743 Fax: +234 (1) 461 3140 Website: acas@acas-law.com"