Employment act of Sri Lanka: Key Features & Impacts on Labour laws

Employment act of Sri Lanka: key features & impacts on Labour laws

The proposed new ‘Employment Act’ -

The Labor laws of Sri Lanka being promulgated over the years to meet the evolving needs of industrial relations and contained in several different pieces of legislation. In the recent unprecedented times such as the Covid-19 pandemic, the economic and political crisis and Sri Lanka’s current trajectory to an economic recovery, the framework of law was challenged to bring within its scope the many new situations and circumstances requiring regulation. In this context the Ministry of Labor has commenced a comprehensive review of Sri Lanka’s Labor laws.

It is intended that revised legislation takes the form of a unified ‘Employment Law’ to facilitate the more efficient use and implementation of legislation in the industry. The process is in its initial stages with the draft Law receiving comment and discussion as between the Ministry Committee, Advisory Committees and stakeholders to include trade unions and the private sector. The proposed time line for having the Act in operation is the end of 2024.

The draft law titled the ‘Employment Act of Sri Lanka’ ( referred to as the ‘draft Act’) provides in its pre-amble as being an ‘Act to provide for the recruitment of employees to an industry or service, contract of service, termination of service, period of service, leave, maternity leave, payment of remuneration, the establishment of National Remuneration Council, payment of gratuity, employment of women, young person and children, settlement of industrial disputes, registration of trade unions, professional safety, health and welfare, work from home, employment of foreign workers, prevention of workplace violence and harassment, record keeping and matters connected or incidental thereto’. The draft Act defines ‘employment’ as meaning ‘employment in an industry or service’.

Distinctive features of the draft Act are that it is seeming to make industrial relations more equitable as between the parties, with the sentiment otherwise being that legislation and the system is weighted in favor of the employee, whilst also recognizing and so providing for regulation in current global employment trends, approaches and processes.

A summary of the more salient provisions as identified in the draft Act are -

A recognition in law, for the first time of and for -

  1. A 05-day week as opposed to the current 05 ½ days, flexible working hours, part time employment and work from home;
  2. ‘Paternity leave’;
  3. The category of workers in homes known as ‘domestic Workers’
  4. A Social Security Insurance Fund in the case of unemployment, to provide for maternity and health and compensation benefit;
  5. The regulation of Man Power Suppliers and Employment Agencies;
  6. An E-Wages system;
  7. Uniform age of retirement of 55 years

Further provisions are -

  1. More equitable consideration of trade union rights such as a fairer assessment of unfair labor practice on the part of both trade unions and employers, and so removing the opportunity for legislation to be used inequitably to the advantage of trade unions; increasing the minimum number of 7 members required to form a trade union, mandatory representation of a prescribed minimum percentage of women on the executive board of a trade union and greater regulation of trade union’s rights such as the right of strike;

  2. A more simplified and efficient process for termination of employment with compensation in given situations, to include situations of restructuring or business reorganization etc. Similarly, to allow for suspension of employment or lay off of employees temporarily for a specified period in crisis situations such as non-availability of raw materials, lack of work, breakdown of machinery or for reasons considered to be beyond the control of an employer;

  3. A wider scope and application of laws to deal with discrimination in employment and harassment and sexual violence in the workplace;

  4. More current legal provisions in the areas of occupational safety, health and welfare of employees;

  5. A uniform application of working terms and conditions for employees irrespective of category/designation of workers or nature of work, e.g.: employee’s currently considered to be within the application of the Wages Boards Ordinance and those under the Shop and Office Employees Act;

  6. Streamlining overtime working hours and payment;

  7. Regulating trainees and apprentice engagement and those engaged in employment while studying in educational institutions;

  8. The creation of a ‘National Remuneration Council’ with wider scope and authority to determine minimum wages across a broader cross section of worker and industry categories and so doing away with the ‘Wages Boards’ empowered with only a limited application;