It is normal practice in the aviation industry for airlines to sponsor their pilots' technical training. In order to recoup their investment, such airlines use training bonds which bind the sponsored pilots to remain in the service of the sponsor airline for a specified period, failing which they must repay the cost of the training. The validity and enforceability of such training bonds has been the subject of debate in employment law circles, especially in view of the recent amendment to the jurisdiction of the National Industrial Court (NIC) to include acts and practices which may constitute unfair labour practices. In Overland v Captain Raymond Jam the NIC was faced with the question of whether a training bond could be enforced against a pilot who had changed employer and the consequence of the breach of training bonds.(1)
Overland Airways Limited, an airline which specialises in commercial and charter flights, sued former employee Raymond Jam to recover the cost of sponsoring his training. The terms and conditions of the sponsorship had been outlined in two training bonds which required Jam to remain in Overland's employment for 36 months and 12 months, respectively. Jam had subsequently attended the training and acquired licences and qualifications as a result. However, despite the terms of the training bonds, Jam had resigned from his employment and repudiated the training bonds.
Jam argued that the training bonds were void and unenforceable because they constituted a restraint of trade and an unfair labour practice. Overland claimed that the training bonds were freely entered into by the parties and were necessary for the protection of its business interests. Overland further argued that training bonds are not contracts in restraint of trade and are enforceable in Nigeria and other jurisdictions.
The NIC exercised its discretion 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 NIC rejected Jam's contention that Overland's training bonds were at variance with the prevailing custom in the Nigerian aviation industry (in which pilots were allegedly bonded only for the validity period of their licence) on the grounds of lack of evidence.
The NIC then considered the reasonableness of the bonds and held that the 36-month and 12-month periods for which Jam was bonded were reasonable in the circumstances. The bonding and repayment terms were also held to be reasonable and not an unfair labour practice (as contended by Jam). However, the NIC adopted the practice of other jurisdictions wherein the amount that an employer is allowed to recover following a breach of a training bond is limited to the cost of the training pro-rated for the remainder of the bond period. Jam was therefore ordered to pay costs in accordance with this calculation.
This case is an important development in Nigerian labour law jurisprudence because it provides security to employers which are incurring considerable expenses in training their employees that such investment will be protected by the courts. Arguably, it will also reduce the tendency of employees to breach their contractual obligations because of better employment offers from competitors.
However, the case must be reconciled with other recent court decisions regarding restrictive covenants, particularly that of the Court of Appeal in Afropim Engineering Construction Nigeria Ltd v Jacques Bigouret(2) and Hygeia HMO v Simbo Ukiri,(3) where it was held that a non-compete clause in an employment contract was unconstitutional, contrary to public policy and unreasonable. The decision in Afropim was based on a curious finding that the clause – which was freely signed by the employee – was an attempt to "castrate an able-bodied man and render him unemployed and useless to himself and his family".(4) Because such decisions greatly undermine the principle of freedom of contract and clearly neglect employers' business interests, it is hoped that Overland will serve as a turning point in the attitude of the courts towards breach of restrictive covenant.
Although arguably the courts may need to apply more scrutiny to cases in which an employer seeks to enforce a restrictive covenant in circumstances where it would be unfair (eg, where the employer is guilty of breach of employment contract(5) or where it has terminated the contract of an employee who was still willing to offer his or her services), restrictive covenants ought to be promoted by the courts in order to encourage employers to invest in the professional development of their employees. This will have a positive impact in the quality of manpower in the labour force while promoting trust and respect between employers and employees.
For further information on this topic please contact Funke Agbor or Jamiu Akolade at ACAS - LAW by telephone (+234 1 462 2094) or email (firstname.lastname@example.org or email@example.com). The ACAS - LAW website can be accessed at www.acas-law.com.
(5) See Overland Airways v Captain Oladeji Folayan (Unreported Suit NIC/LA/19/2011) where Adejumo PNICN voided a training bond agreement on the grounds that the employer had breached the employment contract first by withholding the employee's salary in anticipation of the employee's breach of the training bond.
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