Lesson-05

Labour Law
Employer -employee relationship
Employment involves two persons, the employer who
employs a person to do some work for him and an
employee or workman who undertakes to do that work. In
the kind of employment we are concerned with, there is an
agreement of the use of the service of the employee in the
way that the employer wants. This agreement is the best
indication of the true relationship between them.
Contract of Employment
A contract of employment can be defined as an agreement
between two parties one party (workman) agrees to hire
his service to the other (employer) for a consideration
which is called wages or salary.
It is important to establish a contract of employment
between the parties before the provisions of the Labour
laws can be utilized for the benefit of the workman.
Contract of employment/service and contract for
service
In order to establish the existence of a contract of
employment, it is necessary to distinguish between a
“contract of service” and “contract for service”, the
contract of service giving rise to the master and servant
relationship, while the contract for service arises an
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employer and independent contractor relationship. This is
a question of law depending upon the rights conferred and
the duties imposed on the parties by the contract.
Labour law gives all the benefits and protections to a
workman and not to an Independent contractor. Therefore
it is important to consider the difference between a
Workman and an Independent contractor.
There are three tests available to distinguish an
employee from an Independent contractor
1. The control test
Here it is found out whether the employer has control and
supervision over the employee regarding the manner in
which the work is to be done. If the employer has control
over the employee not only to tell what is to be done but
also to tell how the work has to be done, and to supervise
him, such an employee is a workman.
2. Economic Reality or multiple Test
In this test matters such as the right to engage work,
suspend and dismiss the employee, the method of payment
,whether the statutory deductions are made from the
wages for EPF and hours of work, who supplies the tools
& materials for the work are also considered in
distinguishing a workman from an Independent
contractor.
In Ready Mixed Concrete Vs. Minister of Pension the
above criteria were laid down in determining the master
and servant relationship. In this case a driver of a lorry
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had a contract with a company under which he drove his
own lorry but painted in company colors. He could employ
a substitute driver. He was paid on mileage and for the
work done. He did the repairs and maintenance in his own
expenses. Held he was an Independent contractor, because
he provided his own equipment (lorry)
2. Integration or organization Test
According to the above test under a contract of service a
man is employed as a part of the business whereas under a
contract for services, his work although done for the
business, is not integrated into it, but is only accessory to
it. That is an employee is part and parcel of the
organization. But an Independent contractor will perform
work for the organization and he is an outsider.
This test is used mostly for professional people. With the
developing technology and specialization, employers
recruit people for particular skills. Therefore the
employers may not have sufficient knowledge or skill to
instruct such employees how the work has to be done.
Therefore this a test is applied to see whether he is part of
the business or mere an accessory.
Cassidy Vs.Minister of health
A resident surgeon in a hospital was held to be an
employee ,even though the hospital did not have control to
tell how the work has to be done, because he was part of
the organization.

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Difference between workman and an Independent
contractor
Employee Independent
Contractor
1.Uses his own tools
1.Uses masters tools 2.he himself liable for
2.employer is liable for the his contracts and torts
contracts which entered by the 3.Usually has a specific
employee and torts duration
3.No specific time period to 4.Payment can done
complete the work according to the special
4.employee could be time rated, way
piece rated or performance 5..Independent
rated contractor is an
5.employee is an integral part of accessory
the business 5.Independent contractor
6.employee can claim EPF, ETF cannot claim
and Gratuity EPF,ETF,Gratuity
7.Usually employee cannot 6.He can delegate his
delegate his duties powers

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 ifferent Sectors of Employment
There are 9 sectors of employment.
1 .Government Servants/ State Officers/ Public
Officers
Government servants or public officers probably
constitute the single largest category of employees.
They are persons who hold paid office under the
Republic of Sri Lanka.
Applicable Laws: The Establishment Code
under Article 33(4) of the Constitution, the Cabinet is
empowered to formulate "schema of recruitment and codes
of conduct for public officers, the principles to be followed
in making promotions and transfers, and the procedure for
the exercise and the delegation of the powers of
appointment, transfer, dismissal and disciplinary control of
public officers,"
Remedies available to Public Officers
The Industrial Disputes Act expressly precludes public
officers from seeking any form of relief or redress under
the Act, in connection with their employment.
Article 55(5) of the Constitution takes away the public
officer's right to go to a civil court in regard to any
matter covering his appointment.
The only recognizable right of a public officer under
the Constitution is administrative appeals for redress;
but the Constitution also expressly reserves to a public
officer the right to petition the Supreme Court under
Article 126 for violation of his fundamental rights.
2 .Provincial Public Service

➢The Provincial Councils Act No. 42 of 1987 which came

into operation, under the 13th Amendment to the
constitution, established a public, service for each
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 Provincial Council, to deal with the subjects devolved to
such Councils.
3. Employees of Public Corporations

➢A public corporation is a creature of the modern State,

being created by an Act of Parliament as a semi-
government institution.
Applicable Laws :

➢Employees of corporations are not public officers or

government servants.

➢The management has the right to frame schemes of

recruitment and promotions. Other terms and
conditions of service are given in the letter of
appointment which may refer to a code of regulations
applicable to that particular corporation. For
convenience, a corporation may adopt the
Establishments Code.

➢All Labour laws/other than the Termination

Employment of Workmen (Special Provisions) Act,
apply to such employees.
4. Domestic Sector

➢This category includes domestic servants, chauffeurs of

private vehicles and gardeners, helpers.

➢Domestic employees are not covered under the

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 Employees' 'Provident Fund (EPF) or the Employees'
Trust Fund (ETF) Acts.
5. Plantation Sector

➢Plantation workers are employed in the tea, rubber and

coconut estates and live away from the indigenous
population. Most of the workers, particularly in tea
plantations, are of Indian origin, although a large
number have been granted citizenship.
Applicable Labour Laws

➢In addition to being covered under the Wages Boards

Ordinance, the Maternity Benefits Ordinance, the
Industrial Disputes Act and the Payment of Gratuity
Act, there are some special laws which are applicable
exclusively to plantation workers. These are the Estate
Labour (Indian) Ordinance, the Indian Immigrant
Labour Ordinance and the Medical Wants Ordinance.
6 .Industrial Sector

➢The Wages Boards Ordinance covers the terms and

conditions of service of a large majority of employees in
the industrial sector, known as 'blue collar' workers.

➢They also enjoy several benefits stipulated by law, such

as EPF and ETF, maternity benefits
and to the payment of gratuity.

➢The provisions of the Industrial Disputes Act also apply

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to such workers.
7 .Mercantile Sector

➢The term 'white collar workers' is used to distinguish

employees in shops and offices in the
mercantile sector.

➢These employees who are covered under the Shop and

Office Employees Act and the Industrial Disputes Act,
the Payment of Gratuity Act, and the EPF and ETF Acts
8. Co-operatives Sector
Types of Employment Contracts
Employment contracts may be of different types:
permanent, temporary, casual, probationary, seasonal,
fixed-term, or that of an apprentice, trainee or learner.

1. Permanent
A permanent employment is where the contract is
automatically renewed each month until the employee
reaches the age of retirement.
The employee is guaranteed security of employment with
all benefits like EPF, ETF, bonus, gratuity and so on,
unless there is disruption of service due to illness or for
some other reason. Some of these reasons may be
misconduct on his part; or, termination of his services
unilaterally by his employer; or the establishment going
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into liquidation.
2. Temporary
A temporary employee is one who is recruited to fill a
vacancy created by a permanent employee going on leave;
or someone recruited to do a job which is of a temporary
nature, the duration of which is limited by the job or by
time.
Such employees are also entitled to EPF and ETF
benefits; and where the duration of employment exceeds
180 days in a continuous period of 12 months, the
provisions of the Termination of Employment of
Workmen (Special Provisions) Act shall apply, provided
the employment is in a scheduled employment and the
employer had 15 or more employees on the average in the
6-month period preceding such termination.
3. Casual
A casual employee is one who is employed by chance or
on no regular contract of employment. For example, an
odd-job gardener or a person who undertakes to wash and
polish a car; An employer cannot expect a casual employee
to arrive for work continuously. He cannot as a right
expects the work from employer.
4. Probation
Probation implies a 'fixed and limited period of time'
during which an organization employs a new employee in
order to assess his aptitudes, abilities, characteristics,
conduct and his devotion to work, before taking him into
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the permanent cadre. It is a trial period during which the
employee is tested by the employer. It follows therefore,
that the employer should have the right to discontinue a
probationer if he does not come up to expectations. But the
termination should base on bona fide reasons.
5. Seasonal
Certain types of employment - such as harvesting of paddy
or sugar-cane, drying of tobacco, working in tourist hotels,
etc., - are by their very nature seasonal. There is no
assurance of regular employment since work i s available
only during a certain season of the year and the employee
is discontinued at the end of that season. Nonetheless, any
such employee is entitled to EPF and ETF benefits for the
period he is employed.
6. Fixed-term Contract
A fixed-term contract is a contract of employment which
expires on a definite date, not on the happening of a
particular event or on the completion of a particular task
at some time in the future. A fixed-term contract does not
lose its legal character as fixed-term merely because it
provides for its premature termination by notice.
7. Apprenticeship (Trainees / Learners)
In the case of apprentice there is no contract of service.
Therefore, he cannot be considered a workman in the
normal sense. An apprentice is a person who is there to
learn the trade, and the master or employer has
undertaken to train him and prepare him to understand
the trade in which he is engaged .
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 Relevant labour Statutes
The shop and Office Employees Act (Regulation of
Employment and Remuneration) No 19 of 1954
This Act covers the following areas of the employees

 Terms and conditions of the employment

 Regulation of employment
 Hours of work
 Remuneration of persons employed there in
 Health and comfort of the employees
 Maternity benefits
 Weekly and annual holidays and leave
 Payment of remuneration
 Fixing of wage period and authorised deductions

Applicability of the Act

The Act covers employees in shops and employees in

practically all mercantile offices and those in cognate
employment
The term shop is defined to means
any premises in which any retail or wholesale business is
carried on and includes a residential hotel and any place
where business of the sale of articles of food or drink or
the business of a barber or hairdresser or any other
prescribed business is carried on.
An 'office' means
any establishment for the purpose of transaction of the
business of any bank, broker insurance company, shipping
company, joint stock or other company, estate agent,
advertising agent, commission agent, indenting or
forwarding agent, and includes establishments
maintained for the practice of a number of professions or
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businesses as detailed in the Act) It also covers trade
unions, “thrift societies, provident fund and pension
schemes, and anybody corporate or incorporate, and any
school or educational institution) It also includes :
(a) the office or clerical department of any shop, factory,
estate, mine, hotel, club or other place of entertainment or
of any other industrial, business or commercial
undertaking (including the business of transporting
persons or goods for fee or reward) and any undertaking
for the publication of newspapers, books or other literature;
and
(b) any other institutions or establishments declared to be
offices by regulations framed under the Act.
This Act will not apply for
 A funeral undertakers
 Employees of non-profit making clubs run
exclusively, for sports, recreational and other like
purposes.
 Temporary business which carries less than one
month
Benefits under the Act
1. Working hours

 08 hours-excluding lunch hour per day

 Should not exceed 45 working hours per week –If more
than 45 hours service obtained an additional hours must
be treated as over time .the maximum overtime obtained
by the employer per week is 12 hours, with the
employee’s consent it can be increased.

2. Holidays and Leave

A. 14 days annual leave

The year whish the employee joined the work he is not
entitled for annual leave. From the second year he
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 entitled annual leave but the number of days is
calculated according to the period he joined the work.

 If the employment commences during the 1 st

Quarter of the year -14 days
(From 1st Jan to 31st March)
 2nd Quarter (from 1st April to 31st June)
-10 days
 3rd Quarter (from 1st July to 31st Sep)
-7 days
 4 Quarter (from 1st Oct to 31st December)
th

-4days

From third year and in the subsequent years of

continues employment the employee shall be entitled to
14 days annual leave. Out of these 14 days 7 days can be
consecutive.
B. Mercantile holidays (7-8 days per year)
C. Full moon days (12 days per days)
D. Casual leave-(7 days per year)
E. Weekly holidays (11/2 days per week-any employee
who worked at least 28 hours in a week.)
F. Maternity leave
 For the first and the second child -84 days
(excluding holidays)
 For the 3rd and the rest of the babies -42 days
(excluding holidays)
 Still Birth -42 days
(excluding holidays)

3. Intervals & Rest
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  Every employee be allowed an interval of half an hour
for rest or for a meal at the termination of each period
of 4 hours, during which he had been "continuously
employed;
 Where such period of 4 hours falls between the hours
11 a.m. and 2 p.m. or between 7 p.m. and 10 p.m., the
employee should be allowed at the end of such period,
an interval of one hour for lunch or dinner as the case
may be, instead of the half-hour.

4. Special Protection to Children & Women Employees

 The Act totally prohibits employment of children under
14 years of age in or about the business of a shop or
office, and imposes restrictions on the employment of
women on overtime and after 8 p.m.
 Women shall not be employed in or about the business
of a shop or an office for a period exceeding 9 hours a
day.
5. Welfare of workers
 The Act stipulates the provision of suitable and
sufficient means of lightning and ventilation
 Suitable and sufficient facilities for the employees to
take their meals in the premises
 provision of sanitary conveniences and washing
facilities;
 Provision of seats behind the counter for women shop
assistants whenever the use thereof does not interfere
with their work.
 The employer is also obliged to provide and to maintain
the place in good repair and order.
 Furthermore, it prohibits employees residing in the
work premises without a permit from the
Commissioner
6. Maternity Benefits
 Every woman employee giving notice of impending
confinement shall be granted 14 days leave with full
remuneration prior to confinement.
 A woman employee shall not be employed or caused or
permitted to be employed within 3 months of the date
of confinement on any work as may be injurious to her
or to her child.
 Maternity leave as mentioned above
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  The Act forbids termination of the services of any
woman employee on account of pregnancy or
confinement.

7. Other provisions under this Act
 Every employer by whom any person is employed in
or about the business of any shop or office, shall furnish
such person on the date of his employment, with
particulars relating to the terms and conditions of his
employment embodied in a letter of appointment.
 Furthermore, he shall maintain in respect of each
employee, a service
record leave record and a remuneration record.
 In addition to the above records, the employer is
required to maintain a record of articles sold record of
fines and records of deductions in respect of security
and advances to the employees.

Employees Provident fund Act No 15 of 1958

 Objective of the Act

This Act provided for the establishment of a fund
called the 'Employees Provident Fund to grant
superannuation benefits to certain classes of employees.
The Central Bank collects contributions, maintains,
accounts and pays out benefits to the members
recommended by the Labour Department.
The object of the Act is to ensure that an employee receives
a lump sum in his old age, whereby he and his family could
live in retirement without depending on the State or society
or on the mercies of his relatives.
 Applicability of the Act
The provisions of this Act are applicable to all employers and
employees in a covered employment.An employee include
an apprentice or a learner who is paid remuneration, but
does not include the spouse of the employer or members
of the family.
 Covered employment does not include the following
categories
1. Employees in Public Service
2. Local Government Service
3. Employees in Domestic service
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 4. Employees in charitable institutions employing less
than 10 employees
5. Institutions giving training to juvenile offenders
6. Establishments where only family members are
employed.
7. Person under 14 years of age
8. Apprentices who have entered into an agreement of
apprenticeship

 Obligations of the Employer

An employer in a covered employment is required to

register himself with the Commissioner of Labour
within two weeks of the commencement of his
business.
The employer's contribution is a sum equivalent to 12%
of the total earnings of the employee while that of the
employee is 8%.
An employer and employee by mutual agreement, and
by notice send to the commissioner to elect to pay
contributions calculated at highest percentages than
prescribed under act. i.e 10%and 15%
 Total earnings in relation to EPF
Contributions are based on the earnings of the
employees. Earnings are defined in the Act as
follows:
i. wages, salary, or fees
ii .cost of living allowance, special living allowance and
other similar allowances;
iii. payment in respect of holidays;
iv. cash value of any food provided by the employer to
employees
v. meal allowance
vi.such other forms of remuneration as may be
prescribed.
 Total earnings does not include
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 i. Overtime payments,
ii. rent allowances,
iii. reimbursement of travelling If expenses,
iv. bonus payments,
v. service charges
 Refund of Benefits to Employees
EPF benefits are payable to members under the
following circumstances:
a) on reaching the age of retirement and on
termination of employment(male-55,female-50)
b) after a female employee ceases to be employed in
consequence of marriage
c) after such member ceases to be employed by
reason of a permanent and total incapacity for
work, as certified medically unfit
d) on taking up permanent residence abroad
e) after such member ceases to be employed in a
covered employment and takes up pensionable
employment in the public service or in the Local
Government Service.
f) The amending Act No. 14 of 1992 also makes
provision for a member who is an employee in a
public corporation or Government-Owned
Business Undertaking, to withdraw the total
amount lying to his credit in the event of being
retrenched from service.

Employees Trust Fund Act No 46 of 1980

The main objects of the Board are :
(i) to promote employee ownership, employee welfare,
economic democracy through participation in financing
and investment;
(ii) to promote the employee participation in management
through the acquisition of equity interest in enterprises;
and
(iii) to provide for non-contributory benefits to
employees on retirement.
Unlike the Employees' Provident Fund which is a
retirement benefit, the Employees' Trust Fund is an interim
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benefit which would assist the employee during his
working life.

 Applicability of the Act

The provisions of the Act applies to all employees of any
state or category (permanent, temporary, casual,
contract, piece-rated, learners and apprentices), employed
in al l public and private sector undertakings.
Self-employed persons and migrant workers may also join
the Fund on a voluntary basis.
 The Act is not apply for following employees
The Act exempts domestic servants; employees in
religious, social or charitable institutions employing less
than 10 employees; any industrial undertakings mainly
for the training of juvenile offenders, orphans, destitute,
or for persons who are deaf or blind. It also exempts any
undertakings where only family members are employed.
 Contributions
The employer of every employee to whom this Act
applies shall, in respect of each month pay on or before
the last day of the following month, a contribution equal
to 3% of the total earnings of such employee. The
liability for such contributions is cast entirely on the
employer. There is no recovery from the employee.
 Total earnings for ETF
The term earnings has the same meaning, as in the
Employees' Provident Fund Act. The following are part
of earnings:
 Claiming of ETF
A member could claim the amount standing to his
credit in the Fund in any of the following
circumstances:
a) on termination of employment, provided that he
had not made any withdrawals from the Fund
during the preceding 5-year period
b) where he is over 60 years of age
c) on migration, with the intention of not returning to
the country
d) on cessation of employment by reason of a
permanent and total incapacity for work
e) on taking up a pensionable appointment in Public
Service, Local Government or District Service, or
in the service of a local authority.
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 f) On the death of a member, the sum standing to
his credit in his individual account shall be paid by
the Board to his nominee, and if there is no
nominee, to the executor or administrator of the
estate of such employee or to his heirs.
 Other benefits under ETF
1.Life insurance
All employees who are members of the Fund are covered
by an automatic life insurance which entitles them to
insurance benefits provided
a) that the member was less than 70 years old at the time
of death;
b) that the member was in employment at the time of
death;
c) that contributions had been made in respect of that
member for
a period of at least 6 months;
d) Application for withdrawal of funds should have been
made
within 2 years of death.
2. Total and permanent disability insurance scheme.
Where a member is declared totally and permanently
disabled due either to an accident, paralysis, natural causes,
or to certain specified occupational diseases, a payment of 2
years average salary, subject to a limit of Rs. 100,000/- will
be made by the Fund.
3.In the event of total loss by physical severance of one hand
or one foot, the compensation is limited to Rs. 50,000/- or
one year's earnings, whichever is less.
4. Financial Assistance for heart surgeries
5. Reimbursement of the cost of intra Ocular lens
implanted following cataract surgery
6. Financial Awards for member’s children passing the
grade V exam.
7. Housing loans

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Payment of Gratuity Act No 12 of 1983
 This Act provides for payment of gratuity by
employers to their workmen, for the amendment of the
Land Acquisition Act, the Land Reform Law and the
Industrial Disputes Act.
 The Act is divided into 2 parts. Part I concerns the
payment of gratuity to workers in the plantation sector;
while Part II concerns such payment to all other
employees.

Payment of Gratuity for the other employees

Liability to pay gratuity
Part II of the Act imposes liability on every employer
who
 employs or has employed 15 or more workman on any
day during the period of 12 months immediately
preceding the termination of the service
 for the workman in any industry who has completed not
less than five years of service

Calculation of Gratuity
 Monthly rated workman-half month salary for each
year of completed service computed at the rate of
salary last drawn by the workman
 Daily payment workman -14 days salary for each
year of completed service computed at the rate of
such pay last draw by that workman
 Piece rated workman-The daily wage or salary shall
be computed by dividing the total wage or salary
received by him for a period of 03 months
immediately preceding the termination of his
employment ,by the number of days worked by him in
that period. Then it should compute as above.
The following employees are excluded by this act
 Domestic servant
 Personal chauffeur in a private household
 Employees of co-operative societies
 Employees who are entitled to a pension under any
non contributory pension scheme
 Workman designated under the Indian Repatriates
Law of 1978
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  Any establishment employing less than 15 employees
during the period of 12 months immediately
preceding the termination of the service of a
workman

Forfeiture of Gratuity
Any workman to whom a gratuity is payable under
Part II of this Act and whose services have been
terminated for reasons of fraud, misappropriation of
funds of the employer, wilful damage to property of
the employer, or causing the loss of goods, articles or
property of the employer, shall forfeit such gratuity
to the extent of damage or loss caused by him.
Where there is a dispute over such forfeiture, the
aggrieved workman may apply to a labour tribunal for
adjudication.

Penalty for Non-payment of Gratuity

Where an employer defaults in the payment of gratuity in
terms of the Act, the Commissioner shall, after such
inquiry as he may deem necessary, issue a certificate
stating the sum due as gratuity and the name and place
of residence of the defaulter to the/Magistrate having
jurisdiction in which the estate or establishment is
situate.
The Magistrate shall thereupon summon the defaulter to
show cause why further proceedings for the recovery of
the said gratuity should not be taken against him and in
default of sufficient cause being shown, the sum in default
shall be deemed to be a fine imposed by a sentence of the
Magistrate on such defaulter for an offence punishable
with a fine or imprisonment or both.

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Industrial Disputes Act no 43 of 1950

Objective
This act has been enacted to prevent, investigate and
settle industrial disputes. This act is applicable to the
employees in the private sector, semi Government
sector eg Corporations, Boards etc.
But it is not applicable to the employees of the Crown
(Government / Public Servants) and to the employees
in the Local Government Service and three armed forces
including the judiciary.
 Definition for the Industrial Dispute
An Industrial Dispute is a dispute or a difference
between
 an employer and a workman,
 employers and workmen or
 between workmen and workmen connected with
• Employment or non-employment
• Terms of employment
• Conditions of labour
• The termination of services of the workman or
• Reinstatement of service of a workman.
 Mechanisms to settle an industrial disputes
1. Conciliation
2. Arbitration
3. Labour Tribunal
4. Industrial Court
5. Collective agreements
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1. Conciliation

Conciliation means the intervention of a 3rd party to settle the

differences of the disputing parties. When there is an
industrial dispute, the commissioner of labour may settle it by
conciliation himself or refer it to an authorised officer for
settlement by conciliation.
Where a settlement which is acceptable to both parties is
reached, a memorandum containing the terms of settlement should be
prepared and it should be signed by the parties. Further if the
commissioner is of the view that such settlement relates to a major issue
he should also cause it to be published in the Gazette. This settlement
becomes part of the contract of employment and the parties are bound
by it. Because according to section 14, the terms of settlement shall be
implied terms in the contract of employment. Investigation shall be
concluded within one month after the commencement of such investigation.

2. Arbitration

a. Voluntary Arbitration

If the parties to the dispute consent, the commissioner may refer that
dispute for settlement by arbitration to an arbitrator nominated jointly
by such parties or in the absence of such nomination, to an arbitrator
appointed by the commissioner. This is known as 'voluntary arbitration'.
Because

a) He has to refer the dispute to an arbitrator, only after getting the

consent of the disputing parties.

b) The arbitrator can be nominated by the disputing parties. Only if they

do not nominate an arbitrator, the commissioner appoints the
arbitrator.

b. Compulsory Arbitration

• When referring an industrial dispute to an arbitrator, the Minister need

not get the consent of the disputing parties. Under section 4 of the
Industrial Disputes Act, if the Minister is of the opinion that an industrial
dispute is a minor dispute he may refer it to an arbitrator notwithstanding
that the parties to the dispute do not consent to such reference. This is
known as 'Compulsory Arbitration'.

• He may refer a dispute to an arbitrator even if that dispute is pending in

the labour tribunal. It has been held by the courts that making such a
reference does not amount to interference with the judicial process .

 As per the Industrial Disputes (Hearing and Determination of

Proceeding) (Special Provisions) Act No. 13 of 2003, when an industrial
dispute is referred by the Commissioner or by the Minister, the
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 Arbitrator has to make his award (decision) within three (3) months from
the date of the reference. However, additional two months are permitted
in certain circumstances.

3. Labour Tribunal

Labour Tribunals were established under Industrial dispute Act to offer

special protection with least delay and cost for the employees against unfair
dismissals and some Gratuity matters. The Labour Tribunals (LTs) were
established with three-fold objectives in view. First, they have to be easily
accessible to workers; Second, they have to dispose of cases expeditiously and
Third, they have to provide inexpensive remedy.

 Who can make an application to the labour tribunal?

i. A workman
ii. A trade union on his behalf

 On what matters the above parties can make an application?

According to section 3 IB, a workman may make an application for relief in
respect of any of the following matters:-
1. The termination of his service by his employer

2. Non-payment of gratuity or any other termination benefits by an

employer who has less than 15 employees

3. Forfeiture of gratuity in terms of the Payment of gratuity Act

4. Such other matters relating to the terms of employment or the conditions of

Labour

 Procedure for make an application

 An application must be made to the labour tribunal in writing.

 As per Industrial Disputes (Amendment) Act No ll of 2003, the

application must be made within a period of three (3) months from the date
of the termination of the services of that workman

 As per the Industrial Disputes (Hearing and Determination of Proceeding)

(Special Provisions) Act No. 13 of 2003, the labour tribunal should make its
order within Four (4) months from the date of the making of the Application
by the workman. This four month rule will apply to appeals against a LT
decision to High Court, Appeal court and Supreme court.

4. Industrial Court

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The Industrial Court also has been established to solve industrial disputes. However
only the Minister can refer matters to an industrial Court.

A workman cannot directly make an application to the Industrial Court. The Industrial
Court consists a panel of five persons appointed by the President of Sri Lanka. The
Minister may select/appoint one or more persons to the court.

According to the Industrial Disputes Act, an Industrial Court has three main functions

 To hear disputes referred to it by the Minister. That is to function as an

arbitrator.
 To hear appeals from the awards made by the labour commissioner
 To reconsider (to hear in appeal) the awards made by another Industrial
Court

Just and Equitable order

As per the Section 17(1),24(1) and 31(1) c Industrial Disputes Act, the
Arbitrator, Labour Tribunal and the Industrial Court should make orders as
may appear to them to be just & equitable. Just & equitable means a fair & a
reasonable order. A just & equitable decision has the following limitations. Sri
Lankan Courts have identified the guidelines to be followed in making awards or
orders as follows,

 The law of the land should be followed

 In granting a just and equitable order the tribunal and arbitrators should act
judicially by following the principles of natural justice.
Ex.Weeramanthry J. has expressed this view in CTB Vs. Gunasinghe
Ex.U.C Panadura Vs.Cooray

 The decision must not violate any statutory provision or decisions of the
higher courts.

 The decisions should be reasonable.

 Before they give their award or order, they should consider all the
material evidence and material question involved must be considered
related to the case.

 A just an equitable order must also contain reasons why they made such
award or order. It must not take in to account irrelevant matters and
extraneous issues. Ex.CTB Vs.Thungadasa

 In making the award or order, they are not bound by any contract of
employment or collective agreements made between the employer &
workmen.That means the order must not contrary to the public interest.

Ex.In Manager Nakiyadeniya Group Vs.Lanka Estate Workers Union

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5. Collective Agreement

The Act recognises a collective agreement as a method of settling Industrial

disputes.

This is defined under section 5(1) of the industrial Dispute Act. This has been
defined as "An agreement made between

a) any employer or employers and

b) any workman or trade union or trade unions consisting of any workmen

Relating to;

1. The terms & conditions of employment

2. Privileges, rights, duties of the employer & the workmen

Effects of a Collective Agreement

1. Every collective agreement is binding on the parties and to the employers

and workman referred to in that agreement once it is published in the Gazette.

2. The terms of the agreement shall be implied terms in the contract of

employment

3. Where there is a collective agreement in an industry, the employer in that

industry unless there is a provision to the contrary, should observe in
respect of all the workmen, whether they are party to the agreement or
not, the terms and conditions in the a greement which is not less
favourable to such workman.

4. A collective agreement can be used to settle an existing dispute or to avoid

disputes in the future.

5. A collective agreement can be made even for the settlement of disputes

among workmen and workmen or among employers and employers.

3. Trade Union Ordinance No 14 of 1935

Definition

Section 02 of the Trade union ordinance defines a trade union as any association or
combination of workmen or employers, whether temporary or permanent, having among
its objects one or more of the following objects.
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a.)The regulation of relations between workmen and employers, or between workmen and
workmen or between employers and employers or

b. The imposing of restrictive conditions on the conduct of any trade or business

c. The representation of either workmen or employers in trade disputes

d. The promotion or organisation or financing of strikes or lockouts in any trade or

industry or the provision of pay or other benefits for its members during a strike or lock
outs in any trade or industry or the provision of pay or other benefits for its members
during a strike or lock-out
Registration of Trade Unions

 Section 08 of the ordinance stated that, every trade union formed should
register itself within 3 months from the date it was so established.
 Every application for registration of a trade union shall be made to the Registrar
in the prescribed form and shall be signed by at least 7 members of the union,
any of whom may be officers thereof.-Sec 09 The application should be with
following particulars,

a.The names ,occupations,and addresses of the members making the application

b.The name of the Union and the address of its head office
c.The titles ,names, ages, addresses and occupations of the officers of the union.

The employees who cannot form Trade Unions

1. Judicial officers
2. Members of the armed forces
3. Police officers
4. Members of any corps established under the agricultural corps ord.

Immunities / Privileges/Rights and liabilities of the trade Unions

A trade union enjoys certain rights, immunities or privileges when it is registered.
1. Every trade union and office bearers have immunity from civil action in respect of
any act done in contemplation or in furtherance of a trade union -Sec 26
2. No action can be maintained against a trade union for tortuous act alleged to have
been committed by or on behalf of a trade union in contemplation or furtherance of a
trade dispute .-Sec 27
3. No action can maintainable against any trade union on the grounds that the objects
of the unions are in restraint of trade -Sec 29
4. Trade Unions will not be liable for criminal prosecution.
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5. Registered trade union may sue and be sued and prosecuted under its registered
name. - Sec 30
6. A registered trade union may own movable or immovable property in the name of
its trustees.
7. A registered trade union may possess funds including a political fund which could
be used for political objects

Trade union actions

1. Picketing
Picketing is understood to mean persons either singly or in groups attending at or near
premises connected with a dispute. The aim may be to communicate information; or to
persuade others; or to cause physical obstruction. The lawfulness of the acts of pickets
depends upon the nature of their attendance and the means used (peaceful or not).
2. Go- Slow
Go -slow is a deliberate slowing down of work and production below normal levels. It is
considered as an unfair labour practice, since it affects production and causes financial loss
to the employer.
A go slow is a breach of contract, for it is an implied condition of service that an employee,
in so far as he is capable of working, should work at a reasonable speed in order to promote
those commercial interests for which he is employed. If he deliberately goes slow, he breaks
his contract and is guilty of grave misconduct which severe disciplinary action
Where more than one workman is guilty of the same misconduct, it is unfair labour
practice for an employer to select at random some of the employees and dismiss them as it
would be discriminatory to punish a few and to let others go scot free.
3. Work to Rule
Work to rule occurs where an employee performs his duties by interpreting them strictly
according to the rules and standing orders issued by the establishment, the objective being
to wilfully disrupt the smooth operations of the establishment, without openly violating its
rules.
It would be a breach of his employment contract for an employee to give the employer's
rules an unreasonable construction. Where, in obeying lawful instructions, the employee
seeks to obey them in a wholly unreasonable way, it will amount to disrupting the
system.
Work to rule involves-a breach of the positive obligation of faithful service owed by an
employee to his employer.
4. Boycott

Boycott is refusal to deal with or patronise a business. It is an unfair labour practice and
thus illegal, amounting to misconduct. It is not a strike or a limited form of it. Boycott
may be used not only against those who have a trade relationship with the employer but
also against those who have a trade relationship with the employer, such as buyers
suppliers or transporters.

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5. Gherao
The term Gherao means a physical blockage of a target either by encirclement or forcible
occupation. The target may be a place, a person or persons, usually the managerial or
supervisory staff of an industrial establishment. Some of the offences complained of are
cruel and inhuman - like confinement in a small space without lights or fans and for long
periods without food or communication with the outside world. Gherao is an act of
serious misconduct.

6.Strike
The term strike generally denotes the collective action resorted to by a body of employees
to express its grievances and to win its demands from an employer.
A strike involves two essential ingredients: a complete cessation of work and concerted
action. It is a consequence of an industrial dispute and it is to coerce or force the employer
to accept the terms and conditions affecting employment, proposed by the striking
employees.
Mere absence from work does not amount to taking part in a strike. There should be
evidence that the absence of the workmen was the result of some concerted action with a
view to enforcing an industrial demand.
The right to strike is a legitimate trade union mechanism available to I workers and
their organisations for the promotion and protection of their economic and social interests.
Although the right to strike is not stated in explicit terms in any of the labour laws of Sri
Lanka, the immunity from, or victimisation for any act done in contemplation or in
furtherance of a trade dispute granted to workers under the Trade Unions Ordinance,
enables workmen to go on strike.
However, the freedom to strike has its limitations, in that it does not include the
freedom to commit or threaten physical violence to person and/or property.

Illegal Strikes

A strike could be held illegal If it is in violation of sections 32(2), 40(1) (/), 40(1) (fff) and
40(1) (m) of the Industrial Disputes Act. Strikes are also illegal when workmen go on
strike in violation of any law or emergency regulation in force for the time being.

7.Lock-out
Lock-out means withholding of work by an employer from his employees with a view to
forcing or compelling them to accept his terms of employment. It is a weapon available to
the employer in order to persuade his employees by coercive means to accept his demands.
It is resorted to sometimes by the employer as a security measure and in certain other
instances, as a weapon corresponding to what the employees have in the shape of a strike.

The Trade Unions Ordinance defines a lock-out as :

"the closing of a place of employment, or the suspension of work, or the refusal by an

employer to continue to employ any number of persons employed by him in consequence
of a dispute, done with a view to compelling those persons, or to aid another employer

29
in compelling persons employed by him, to accept terms or conditions of or affecting
employment."

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 Termination of Employment of Workmen (Special Provisions)
Act No. 45 of 1971

Termination on non disciplinary grounds is covered by the Termination of

Employment of Workmen (Special Provisions) Act No. 45 of 1971

Section 2 (1) of the above Act prohibits the termination of any workman in a scheduled
employment without ,

a) the prior written consent of the workman ; or

b) the prior written approval of the Commissioner of Labour.

Applicability of the Act

 The Act covers all employees in scheduled employments employing 15 or more

employees within 06 months period of terminate the employment.

 The definition of the scheduled employment includes all employees covered by the
Factories Ordinance, the Shop and Office Employees Act, and persons employed in
any trade which that the Wages boards Ordinance has applied .

 An employee is deemed to have worked over a year, if he has worked I

minimum of day 180 days in a continuous period of 12 months. All
authorised leave is counted as days worked. Employees on probation have
worked 180 days in a continuous period of 12 months, would covered by
the Act.

 In the following Instances the provisions of this act will not apply,
a) to an employer by whom less than 15 workmen on an average have been
employed during the period of 6 months preceding the month in which
the employer seeks to terminate the employment of a workman; or
b) to the termination of employment of any workman who has been employed
for a period less than 180 days in a continuous period of 12 months; or '
c) to the termination of employment of any workman who has been
employed by an employer where such termination was effected by way of
retirement in accordance with the provisions of any collective agreement, or
any contract of employment;

d) to the Government in its capacity as an employer; or

e) to the Government in its capacity as an employer of the Local
Government Service; or
f) to any other local authority in its capacity as an employer; or
g) to any co-operative society in its capacity as an employer; or
h) to any public corporation in its capacity as employer; or

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 i) to the termination of employment of any workman who has been
employed by an employer in contravention of the provisions of any law
for the time being in force.

Procedure for made an application

 Where an application for approval to terminate a scheduled employment is made by an

employer under this Act, the Commissioner, in his absolute discretion. ‘may decide to
grant or refuse such approval, and such decision shall be given in writing to both the
employer and the workman within 3 months from the date of receipt of such
application.

 Commissioner may in his absolute discretion decide the terms and conditions subject to
which his approval should be granted, including any particular terms and conditions
relating to the payment by the employer to the workman of a termination of such
employment.

 The commissioners decision made under the above provision is final ,conclusive and
cannot be called in question by way of writ or in any court tribunal or other institution
established under the IDA

However, a writ may lie against the Commissioner's decision, if it is not consistent
with the evidence adduced at the inquiry, or if the Commissioner has
made a finding for which there is no evidence, or i holding the inquiry there is a
violation of the principles of natural justice in the procedure adopted by the
Commissioner.
As long as the Commissioner has followed the correct procedure in conducting the
inquiry and there is evidence to support his findings, the Appeal Court would not
review the Commissioner's findings even though in the Court's perception of the
evidence, it may be inclined to come to a different conclusion.
Powers of the Commissioner

The Commissioner has wide powers under the Act .

i. to enter and inspect at all reasonable hours of the day or night any place in
which workmen are employed in scheduled employments for the purpose of
examining any register or record of wages, or of ascertaining whether the
provisions of this Act are being complied with; or

ii. where any such record or register is not available for examination, to require
the production of such record or register on a specified later date for
examination in such place or at his office; or

iii. to cross examine any person whom he finds in such place and whom the
Commissioner has reasonable cause to believe is an employer or a workman; or

iv. to hold such inquiries as he may consider necessary for the purposes of this
Act.

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Consequences of an illegal termination

Where an employer terminates the scheduled employment of a workman in contravention of

the provisions of this Act, such termination shall be illegal, null and void, and
accordingly, shall be of no effect whatsoever. If an employee’s service are terminated in
contravention of the provisions of the act, the commissioner is empowered to restore the
order and the workman be continued in employment with back wages and other benefits.

The provisions with regard to retrenchment contained in IDA do not apply to workers
covered by the TEW Act.

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