Imo State pensioners and the law of contract
Over the past 18-24 months, the different tiers of government have struggled to pay salaries. There are states where workers have not been paid for many months, including one in which the governor, their employer, showed solidarity by joining them in their strike to protest delayed payments. There are state and federal institutions struggling to pay their staff in full at the end of every month. A prime example is the nation’s premier university, which for over a year has only paid 80% of what is due monthly. The perennial problem of pensioners’ pay has also refused to go away and many states have simply been unable to keep up. One of such states is Imo State, which has owed its pensioners for at least 12 months.
The approach of the government of Imo State to resolving this crisis, as reported in several national news publications and corroborated by pictures on social media, is the proposal to pay 40% of what is owed on the condition that the accepting pensioner waives the remainder. The accepting pensioners are asked to sign a document to this effect. The ostensible intent is that the signed waiver will serve as a shield to the government in any legal proceedings to claim the remainder.
The proposal has been rightly criticised by the workers’ unions and the governor, who no doubt has a juicy pension of houses and new cars and a full salary for life awaiting him after office, like many of his peers, should feel the ire of the people of his state. Legally, however, would such waivers be enforceable by the government in court? I am about to argue that they are not, and as such, the pensioners owed may want to consider (subject to their own lawyers’ legal advice) signing the waiver, taking their 40% and immediately suing for the balance. Here are my reasons.
While, generally, courts are minded to give effect to what parties agree between themselves and demonstrate an intention to be bound by, there are a few exceptions to the general rule. One of them is Duress. If a party to a contract can demonstrate that they were forced or coerced into entering a contract, the courts would usually decline to enforce the contract against that person. The governor of Imo State might argue that he did not hold a gun to the head of any pensioner who signed. However, withholding a person’s income for over a year, during which he/she has seen colleagues faint while queuing, or perhaps dying even, and dangling the threat of continued hardship over them if the proposal is rejected, strongly looks and sounds like duress or coercion.
There is also Undue Influence exception. This arises when a contract with unfair terms is entered into between persons, one of which is in a position of power over the other. In this case, it would be the government of the state over the citizens. The government owes the full amount and is not doing the pensioners a favour by paying them what it agreed to pay them several years’ ago, at the beginning of their service to the state. Further, while it is true that parties on equal footing make settlements all the time, the pensioners have not been given a chance to negotiate. Disputing parties with equal power would not agree to a 60% waiver without more to how it was arrived at. It is only the considerable power of the Imo State government over the pensioners that would induce them to agree.
There are also the defences of Unconscionability and Contrariness to Public Policy. Unconscionability examines the fairness in the negotiation of the contract, as well as its substantive terms. If a contract is patently unjust or oppressive to one party, the courts may find it unconscionable and refuse to enforce it. The pensioners, to my mind, have a compelling case that it is oppressive to have suffered the indignity and hardship of delayed payments for over a year, only to be compelled to waive 60% of their entitlement because there is no obvious alternative.
On the public policy front, the courts look at what it would mean for society for contracts of a particular nature to be enforced. If the government of Imo State is allowed to enforce this sort of waiver, what precedent does it set? Will it mean that state governments can escape their liabilities by orchestrating delayed payments and then offering a meaningless ‘compromise’? Will the state government one day be able to do the same thing to its serving civil servants? Will other state governments, or perhaps the federal government even, take a look and decide that the compulsory waiver is the way to go? At what level does the amount waived become illegal? Would it be okay for pensioners, contractors or current civil servants to waive 70%, 80%, 90% of the wages and entitlements due to them? What sort of society would that make us?
It is a shame that we are not yet a society in which people can look forward to their time off after decades of public service. It is a shame that our government is not ashamed about the way that many within its fold treat pensioners. It is a disgrace that in the midst of the want and penury, an increasing number of governors are assured a diamond-encrusted golden parachute when they leave office, given the obnoxious gubernatorial pension laws that various state houses of assembly have passed in recent years. One provision that needs to be inserted into those laws is a line to the effect that no payments will be due to any ex-governor/deputy/speaker in any year, if pensioners were owed by the state at any time during the preceding 3 years. The pensioners of Imo State deserve better. Nigerian pensioners deserve better.