Termination on Grounds of Misconduct - Case of the "Barberyn Reef Hotel"

Termination Due to Employee Misconduct

The prevailing labour laws and industrial relations provide for various types of disciplinary measures an employer is permitted to take in Sri Lanka (e.g. dismissal, suspension without pay, demotion transfer stoppage of increment, deferment of increment, reduction of bonus, warning, fine), in the event an employee commits an offence/misconduct which disrupts the smooth functioning of the business.

When determining the type of the disciplinary measure to be used, an employer is required to take into account factors such as, the gravity of the offence, the employee’s past record of service/ length of service, the possible attitude of a Labour Tribunal regarding that matter and the possible effect such disciplinary measure may have on the work place, as well as the possibility of unrest it may cause.

This is mainly because, in the event a particular disciplinary measure taken is considered to be ‘out of proportion to the offence’, or is so disproportionate to the offence as to shock the conscience, the Court shall interfere with the said disciplinary measure, and may even infer that the employer has acted mala fide or in bad faith.

In this backdrop, it would be pertinent to address the very recent judgment by the Supreme Court (“SC”) in relation to an industrial dispute case (Suriyarachchige Raju v Barberyn Reef Hotel Ltd), upholding an order of the High Court (“HC”) in setting aside an award made by the Labour Tribunal of Kalutara (“LT”).

Facts of the Case;

The “employee”, Suriyarachchige Raju had been employed with the Barberyn Reef Hotel, the “employer”, as a Chef for a period of 18 years, and on a particular day, the employee had been found sleeping in the restroom whilst on duty. The reason attributed by the employee for the conduct alleged, was the aggravation of his diabetic condition. However he had been served with a letter, suspending him from service on the following day.

The allegation against the employee was, he neglected mandatory services for a period exceeding 3 hours by going to the hostel without permission during work hours on the same day he was found sleeping. A further allegation was that the employee frequently reported to work late, and that he had been warned on several occasions in writing. As a disciplinary measure, the employee had even been sent on no pay leave. Consequently the employee was suspended from services with the relevant charges framed against him, requesting him to show cause within 7 days as to why disciplinary action should not be taken against him to which, the employee failed to show cause. Only after a lapse of a month or so, did the employer take the final step of terminating the services of the employee. As reflected by the charges it seemed that the employee’s services were terminated specifically for being absent from his workstation.

However, on application to the LT by the employee pleading that his termination of services was unjust and unreasonable, the LT ordered the reinstatement of the employee without back wages, and an appeal against this order was filed by the employer at the HC, where it was held that the employer was justified in terminating the services of the employee, since the employee failed to show cause as requested. Accordingly the order of the LT was set aside, which resulted in the employee challenging the HC verdict with an appeal to the SC.

Observations made by the SC

  1. Absence from work without prior authority;
    The fact that the employee was absent without prior notice was taken into account by the SC since this was an offence/misconduct that would have led to the disruption in the working of the kitchen as another person would have to be assigned the usual tasks of the employee at short notice, requiring the process of providing the meals on time challenging.

    The SC was of the view that the unreasonable conduct of one party in the employer-employee relationship, should not burden the other party.

    The following opinion of Weeramantry J in the case of Colombo Apothecaries Co. Ltd v. Ceylon Press Workers Union (1972) 75 NLR 182 was taken into account by the SC, where it was emphasized that the consideration should not be whether the total number of days on which the employee was absent was within or in excess of his leave entitlement, but rather the impact on the smooth working of the establishment.

    “While an employee is no doubt entitled to his quota of leave, he must not, as far as is avoidable, draw on this leave without prior notice to the management; nor must he repeatedly draw on such leave in such a manner as would throw out of gear the work of the establishment he serves”.
  2. Sleeping on duty;
    It was revealed at the LT, that the work of the employee was necessary for putting together the meals served for the guests of the employer hotel on time. This was a job where the work simply had to be completed by a given deadline in keeping with the standards of the employer hotel as an Ayurvedic resort, catering predominantly to foreign tourists.

    Therefore, the conduct of sleeping while on duty was considered to be a neglect of mandatory services, which in turn could result in the disruption of the smooth functioning of business.
  3. Whether the completion of the “work for the day” is to be decided by the employer or employee;
    The SC rejected the submission maintained by the employee that on the day he was found sleeping he had “finished his work for the day”, stating that it is a matter for the employer, and not the employee, to decide whether the work for the day was completed or not.
  4. What is a “just and equitable” decision in an industrial matter?
    The SC held that the conclusion reached by the LT was misdirected, as it was based on the assertion of a “breach of the rules of natural justice, by not affording the employee an opportunity to show cause to the charges, and that the termination was not ‘just and equitable’.

    The SC went on to uphold the decision of the HC to set aside the award granted by the LT, as the LT had granted relief on a misconceived factual premise that the employee had not been given an opportunity to explain the allegations against him, when in fact, it was the employee who failed to respond to the allegations within the stipulated time period.

    Further, the SC stated that although the employee’s affliction (aggravation of a diabetic condition) prevented him from reporting to work on some days could be looked upon with sympathy, the failure to inform his employer cannot be considered lightly. Accordingly, the SC upheld the judgment of the HC to be just and equitable in terms of law.

    It was also held that a just and equitable decision in an industrial matter is one which takes into consideration the situations of both the employer and the employee and assumes a holistic approach to the issue at hand based on the existing legal framework. Therefore, it is clear that equity is not sympathy and that a court is barred from reaching a just and equitable decision based solely on sympathetic considerations
  5. Holding a domestic inquiry; is it compulsory?
    Although the employee has claimed that no domestic inquiry was conducted before reaching the decision to terminate his service, the SC was of the view that though it is accepted that a domestic inquiry could be useful in establishing the bona fides of the employer, as per the case of St. Andrew’s Hotel Ltd. v Ceylon Mercantile Union, Case No. 138/85, it is not mandatory to hold a domestic inquiry unless there is a special provision to do so in terms of the contract of employment or the collective agreement.


Accordingly, it was held that employees are not only expected, but are under a duty to rise up to industry demands in this ‘highly competitive present-day business world’ and to act reasonably, with a sense of responsibility.

Therefore, whilst holding the employee to be entitled to his statutory dues for the period of service with the employer, the SC decided to dismiss the appeal, thereby justifying the termination of services of the employee.

This is only an overview of the applicable law and should not be relied upon as legal advice or recommendation by D. L. & F. De Saram, a leading law firm in Sri Lanka.

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