ENFORCEABILITY OF RESTRAINT OF TRADE AGREEMENT UNDER NIGERIAN LABOR JURISPRUDENCE: IROKOTV.COM LTD. V. UGWU IN PERSPECTIVE

Abstract

When an employment contract is created, a term can be inserted wherein the employee is restrained, during and after the cessation of the contract, from engaging in any business that is competitive to that of the employer for a specified period or within a geographic location. Such an agreement is known as a restraint of trade/employment. The questions are, what is the essence of such an agreement and when will it be enforceable under Nigerian law? What is the impact of such an agreement on capital and the mobility of labor on Nigeria’s economy? What must employers who may be desirous of adopting the practice know? This article adopts the doctrinal methodology in appraising the validity and enforceability of restraint of trade agreement under Nigerian labor law by focusing on the decision of the NICN in IrokoTV.com Ltd. v. Ugwu. It analyses the validity of the practice under common law and pigeonholes when the same would be enforced by Nigerian courts. The paper highlights what employers who want to adopt restraint of trade clauses in employment contracts, must know and do. It discusses the defenses available to an employee who is unreasonably yoked by a restraint clause. It examines the impact of the judgment on the jurisprudence of restraint of trade in Nigeria; it argues that the judgment is a welcome development having balanced contending interests involved in the restraint of trade practice. It recommends that trade unions should sensitize their members on the position of law as laid down in the decision. Also, if the decision is appealed, the Court of Appeal (which is the final court on labor matters in Nigeria) should uphold the decision due to its rightness and plausibleness.