Deficiencies of the Prevailing Labour Law in Sri Lanka

Topics: Economics

DEFICIENCIES OF THE PREVAILING LABOUR LAW SYSTEM IN SRI LANKA BACKGROUND FOR THE STUDY 1. 1. Employment Employment is a An act of employing State of being employed The work in which one is engaged; occupation. An activity to which one devotes time The percentage or number of people gainfully employed: “a vicious spiral of rising prices under full employment” (William Henry Beveridge). 1. 2. Definition of Employee and Employer A person who is hired to provide services to a company on a regular basis in exchange for compensation and who does not provide these services as part of an independent business” “An employee is a person who works in the service of another person under an express or implied contract of hire, under which the employer has the right to control the details of work performance” (Black’s Law Dictionary).

“An employee is hired for a specific job or to provide labor and who works in the service of someone else” (the employer). The IRS classifies a worker as an employee as follows:

In general, anyone who performs services for an organization is an employee if the organization can control what will be done and how it will be done.

1. 0. Types of Employment There are a variety of employment types that can offer new staff including Permanent, full-time, part-time, casual, fixed term employment, traineeships and apprenticeships. 2. 1. Figure: Types of Employments Permanent employment Can work continuously until retirement. Letter of appointment must be given. Can be asked to undergo a probationary period.

If progress is unsatisfactory during probationary period, the period can be extended or service terminated.

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Even during the probationary period employees can enjoy all facilities under Labour Laws. Apart from permanent employment, there are other new forms of employment that are widely practiced in the world today. Full Time Employment Full-time employees work on a regular weekly basis and are expected to work a full week. Part Time Employment Part-time work is a new concept adopted only in few institutions such as BPO Companies.

They engage school-leavers and unemployed IT educated youth such as IT operators for a few hours in a day. Unfortunately, Labour Laws are silent on part-time workers. Part-time employees usually work on a regular ongoing basis. They are paid on a pro rata basis. They are entitled to the following to: Part-time workers are paid for the total number of hours they have worked. They do not enjoy any benefits such as leave, gratuity and ETF. However, they are entitled to EPF. Under the EPF, part-time employees are covered and shall enjoy the benefits of EPF. Casual Employment

Casual employees are employed on an irregular basis as needed. The can work as many hours as agreed between the employer and the employee. They: A casual employee has no right to expect daily or regular employment. A casual employee may report for work as and when they like and they can be employed as and when the employer pleases. The practice of having casual employees to substitute for absence of permanent employees is very common. However, the Termination of Employment (Special Provisions) Act gives coverage to an employee who has worked 180 days for a period of 12 months immediately preceding termination.

Where the nature of work is of a transitory nature, it would be considered casual employment and all such workers are treated as Casual Employees. However, where such work recurs at regular intervals and forms part of the business, it may fall under temporary employment. Labour laws are silent on “Casual employment”. It is, there for, necessary to treat them like any other employee. They should come under EPF and ETF coverage. A casual employee is one who is taken, either for work of a casual nature or on the basis of fulfilling a casual need.

Several companies maintain a register of those who are registered for work, when work is available. The difference between a casual employee and other employees is that a casual employee cannot be expected to report for work daily. There is no obligation to offer work on a daily basis too. Most organizations also recruit them at the gate and at the end of the day, if there is work the next day as well, he could be informed that he may turn up for work the next day as well. Casual employees are also paid on a daily rated basis and as far as practicable, paid daily or not later than at the end of the week.

Payment is also made by voucher and the signature of the employee is obtained. A casual employee employed on a weekly holiday should be remunerated at 1 1/2 times the normal hourly rate. His normal hours of work shall be nine hours a day inclusive of one hour for meals and he is entitled to overtime if he is called upon to work over nine hours. In the event the employer fails to provide work for the full day such employee shall be entitled to be remunerated on the basis that he has worked for the full day. All casual employees are entitled to EPF and ETF.

Fixed term or contract employees Fixed term or contract employees are hired for a fixed period of time, for example, for a specific project, or to replace an employee on sick leave or parental leave. Most organizations as prefer to offer a fixed term contract when it is felt that the nature of the work offered will last only for a limited period of time. When offering a fixed term contract it is necessary to: State the period of Contract from (Date/Month/Year) to (Date/Month/Year) As far as the date of expiry of the Contract, get the following Clause.

Included in the contract of employment “I agree to the cessation of my employment on.. ” A fixed term contract is one under which a person is employed for a fixed period. The contract will come to an end by mutual agreement at the end of the agreed period. When the management repeatedly gives a series of fixed term contracts to the same employee, it may be treated by an appropriate Court as a device and the employee being deemed to be a person on a permanent contract of employment. This is especially so where there is no break in service between the several contracts.

It is also desirable to omit any reference to the possibility of a renewal of the contract. Any further contracts should be new contracts and not mere extensions or renewals of the earlier one. A Fixed Term Contract of Employment is one, which is entered into for a fixed term without any guarantee that the Contract would be renewed on the expiry of the period stipulated. At the end of the period stipulated, the Contract automatically comes to an end. Fixed Term employees are entitled to enjoy all benefits of the Labour Laws. Temporary employment * A temporary employee is an employee taken to fulfill a temporary need.

If a vacancy is temporarily created by a permanent employee going on long leave such as maternity leave, study leave or where a special assignment has to be executed for which purpose extra employees are needed. It is important to issue “A letter of temporary employment” to such people. * Although the temporary employment is for a limited period, temporary employees will normally be entitled to the benefits of the labour laws. Outsourced Employment * Several institutions are at present outsourcing Accounting, human resources and other administrative function to specialized institutions established for such services. Although Labour Laws are silent on the terms and conditions of such employees most of such newly established institutions apply the shop and Office Act for the staff engaged by them. Major employment types at a glance Seasonal Employment * There is a distinction between seasonal and casual workers. Seasonal workers are employed during certain seasons of the year. * There are certain industries such as the agricultural industry, where certain categories of employees are employed during one season of the year and at the end of that season their employment comes to an end. If such workers are engaged during the next season it will be new employment and the question of continuity of employment does not arise. * In the event of a dispute regarding retrenchment of workers, the question as to whether such industry is of a seasonal nature or whether the work in that industry is done intermittently, shall be decided on by the Commissioner of Labour and his decision shall be final. * In the case of seasonal workers they are also entitled to benefits under the EPF and ETF. Apprentices Apprentices are generally training to be trades people, while trainees are generally learning the skills of a non-trade occupation.

Both involve: a registered training agreement; practical work; learning skills on and off the job; and Rates of pay covered by an award or agreement, or the Minimum Conditions of Employment Act 199 3 or the Workplace Relations Act 1996. Both apprenticeships and traineeships lead to a nationally recognized qualification. 2. 0. EMPLOYED POPULATION OF SRI LANKA The formally employed population of Sri Lanka in the late 1980s was shifting gradually from agriculture to manufacturing, trade, and service employment.

Nevertheless, over 40 percent of the work force remained agricultural in early 1988; most of these workers were smallholders, tenants, and plantation workers. The labor force growing most rapidly in the early and mid-1980s was in the service sector. However that the figure 3. 1. will show the distribution pattern of year 2006 that emphasized trend of employments. It is very clear that, 33 percent of the total employment contributes to the agriculture sector while these percentages are 41 percent and 26 percent for ‘service’ sector and ‘Industry’ sector respectively in Sri Lanka. 3. 0. THE PREVAILING LABOUR LAW SYSTEM IN SRI LANKA

The origins of labour laws in Sri Lanka can be traced back to the year 1841 when the first labour ordinance pertaining to contracts of employment of labour war introduced by then British Colonial Government to appease the interest of British planters when plantations were opened in the hill country first in Coffee and later in Tea and rubber as they found it exacting to get work done through Indian labour, who were brought down to Sri Lanka from South India. After the establishment of the Department of Labour, Labour law has been framed to protect the interest of all classes and grades of indigenous labours.

Sri Lanka has nearly 55 legislation to control labour relations but only 44 of them are not actively using today. Of the 44 statutes also some in operation have become obsolete and out of date although they still continue on a legal basis. However the major statues as follows: Main Labour statues NoOrdinance/Act NoYearName of ordinance/Act 1191934Workmen’s Compensation Ordinance 2141935Trade Union Ordinance 3321939Maternity Benefits ordinance 4271941Wages Boards Ordinance 5451942Factories ordinance 6431950Industrial Disputes Act 7191954Shop and Office Employees Regulation of Employment & Remuneration) Act 8151958Employees Provident Fund Act 9451971Termination of Employment of Workmen Act 10461980Employees Trust Fund Act 11121983Payment of Gratuities Act Workmen’s Compensation Ordinance No 19 Workmen’s Compensation Ordinance is an ordinance to provide for the payment of compensation to workmen who are injured in the course of their employment. It was formed in 1934. 1935 Trade Union Ordinance No 14 Trade Union ordinance is an ordinance to provide for the registration and control of trade unions. Maternity Benefits ordinance No 32

The Maternity Benefits Ordinance, as amended in 1957, entitled a woman who worked in a factory, mine, or estate to full compensation for a period of two weeks before her confinement and for six weeks afterward. The employee must have worked for the employer 150 days before her confinement to be eligible to receive the benefits. Wages Boards Ordinance No 27 In 1941 the government enacted the Wages Boards Ordinance, the first comprehensive piece of legislation regarding the payment of wages, the regulation of working hours, and sick and annual leave; the ordinance also empowered the government to establish wages boards for any trade.

The boards are composed of an equal number of representatives of workers and employers and three appointees proposed by the commissioner of labor. Part I of the Wages Board Ordinance applies to all trades defined as any industry, business, undertaking occupation, profession or calling. Factories ordinance No 45 The Factories Ordinance of 1942 established guidelines for industrial safety and sanitation and made each factory liable to government inspection. Because this ordinance and other similar legislation has not been enforced consistently, workers frequently protested their working conditions.

In the 1980s, strikes and boycotts often took place because of inadequate meals at factories that had their own lunchrooms or because of the lack of other facilities. The Factories Ordinance prohibited work for women between 9:00 P. M. and 6:00 A. M. In the years after independence, a further series of laws restricted the employment of women and children to designated time periods and places. A 1957 law, for example limited working time for women to nine hours. Other laws prohibited women and children from working time underground, in mines, for example.

Industrial Disputes Act Industrial Disputes Act is an act to provide for the prevention, investigation and settlement of industrial disputes and for matters connected therewith or incidental thereto. Shop and Office Employees (Regulation of Employment & Remuneration) Act The Shop and Office Employees’ act No. 19 of 1954 which is an Act providing for the regulation of employment, hours of work and remuneration of persons in shops and offices and for matters connected therewith. All shops and offices in Sri Lanka have been covered by a regulation made under this act.

Employees Provident Fund Act No 15 The Employees Provident Fund, established in 1958, provided a national retirement program for the private sector. The Provident Fund required an employer to contribute 6 percent of total earnings and an employee to contribute 4 percent of earnings exclusive of overtime pay. Participation in this plan grew quickly, and in the 1980s most salaried workers in the formal sectors of the economy were members. Government employees had their own pension plans. 1971 Termination of Employment of Workmen Act No 45

Termination of employment of workmen Act is an act to make special provisions in respect of the termination of the services of workmen in certain employments by their employers. Employees Trust Fund Act Under the Employees Trust Fund Act, every employer has to contribute at the rate of 3% each employee’s monthly earnings, to the Fund managed by the Commissioner of Labour. Employees are eligible to withdraw their balances at the termination of employment with their interest in the accounts. Payment of Gratuities Act

An Act to provide for a scheme for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments and for matters connected therewith or incidental thereto. 5. 0 Analysis of Data The data collected by primary and secondary sources, the following factors were found for the main question of the assignment whether the present law system in Sri Lanka protect the new types of employment. Figure 5. 1. – Methodology structure of the data collection 5. 1. Review and suggestions

Sri Lanka today has a very fine texture of laws to protect the interest of employees and to a lesser extent to safeguard the interests of employers as well. The department of Labour as a mediator between employers and employees has up to date performed its onerous task through its officers to maintain industrial peace and the enforcement of the legal right and claims, which labour has in the performance of work under their masters. Even though, The Sri Lankan legal system is enriched with many laws for protecting employees, there is hardly any legislation to protect the interests of the employers who are the investors.

Hence, the existing labour statutes have to be amended to protect the interests of the investors, especially the foreign investors. If not, they will have a conducive environment for investment and Sri Lankan Economy. The industry and service sector representing the highest proportion of Sri Lankan Employed population(Figure 3. 1),but the labour legislation of this country is equally applied to the industries that come under the BOI” and no power has been granted to the Board to enter into an agreement to exempt or modify or vary the provisions of labour legislation.

But it is interesting to note that even though the post 1977 policy of the successive governments has been attracting more foreign investment, the labour legislation of the country has been applied without any change in the context of foreign investment In Sri Lanka, the State intervention to protect the interests of the workers who do not have equal bargaining power with the employers has resulted in the enactment of large number of labour statutes. The question does arise whether the labour legislation is over protective of employees and weigh heavily in favour of them.

If so, it will have an adverse impact on creating a conducive environment for foreign investment in Sri Lanka. The Factories Ordinance shall also be amended from time to time in accordance with the changes in the technology and the substances used in the factory to ensure the safety, health and welfare of the workers. In Consumer Education and Research Centre v Union of India Ramaswamy. J stated that “The right to health to a worker is an integral facet of meaningful right to life to have not only a meaningful existence but also robust health and vigor without which worker would lead a life of misery. The evolution of the right to health of the workman as a part of his human right and the pervasion of modern technology and the various types of chemical substances with the foreign investment require the intervention of the State to ensure the safety, health and welfare of workers. The brochure on Labour Standards and Relations issued by the BOI, prescribes the conditions subject to which the female workers could be employed on night shift. If these conditions are strictly adhered to, the employment of female workers on night shift will not have deleterious effects.

The absolute prohibition of night work for the female workers may be a discrimination against them and may affect their chances of employment by discouraging the foreign investors. Therefore, in the context of foreign investment what is required is regularized night work for the female workers. Although, there are a number of labour statutes to protect the interests of the workers, still, some of them require amendments in the context of foreign investment.

The Workmen Compensation Ordinance’4 provides for the payment of compensation to workmen for personal injury caused by accident arising out of and in the course of employment15 or for occupational diseases mentioned in Schedule lll16 or for the disease which is reasonably attributable to the nature of the workman’s employment. As to payment of gratuity, the Payment of Gratuity Act 23 is applicable to the employer who employs fifteen or more workmen24 and in respect of the employer who employs less than fifteen workmen, the workmen has to make an application to the Labour Tribunal 25 for gratuity.

It is suggested that the Payment of Gratuity Act should be amended to make it applicable even to the employer who employs only one workman. As to the contribution of the employer to the employees’ provident fund, the employers should be induced to enhance their contribution. 6. 0. Conclusion In Sri Lanka the Statutory measures that are available are fairly satisfactory in protecting the workers. There are certain areas where there can be some improvement, specially the need for a mandatory letter of appointment, categorization of fixed term contracts, settling the questions relating to casual employment, etc.

However, the problems are not mainly regarding inadequacy of legal provisions, but in the implementation and enforcement of same. The weakness in the enforcement machinery has been stated above. The mechanisms and the machinery available are not adequate and not very satisfactory and this is an area, which has to be strengthened. It is appropriate to state that in employer-employee relationship the survival of one party depends on the survival of other. Hence, the industrial law cannot be static and it has to change with the time.

In Sri Lanka, in the present trend of industrial policy, the protection of the interests of the foreign investors draws special attention for the benefit of the present and future workforce of the country. References A. T. M. Nurul Amin, The Informal Sector in Asia from the Decent Work Perspective, ILO, May 2001. S. R. De Silva, “Some Aspects of Labour Administration and Development in Sri Lanka A. T. M. Nurul Amin, The Informal Sector in Asia from the Decent Work Perspective, ILO, May 2001.

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Deficiencies of the Prevailing Labour Law in Sri Lanka. (2017, Dec 09). Retrieved from

Deficiencies of the Prevailing Labour Law in Sri Lanka
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