Covid-19 and Certain Challenges for Employers in Sri Lanka

covid-19 and challenges for employers

Lockdowns, curfews and the virtual ‘pause’ of business activities and consequently the ‘pause’ of income generation, with the resulting prediction of a marked decrease in future income due to the hardly vibrant global and local economic order to be faced soon. Employers being faced with the daunting and unenviable task of facing the multitude of challenges before them in all aspects of business to include the sustenance of its employment workforce.

Employment Law in Sri Lanka law is considered to be pro-employee as the case in most developing countries with emerging markets.

The fundamental principles of law being that ‘no term of employment, express or implied and already contracted for can be altered or varied in any wise so as to be less favorable to the employee, without the consent of the employee or the Commissioner of Labor’ and that ‘termination of employment is permissible only on disciplinary grounds as a ‘punishment’ unless otherwise with the express consent of the employee or Commissioner of Labor, on the payment of the legally prescribed compensation for loss of employment; similarly the situation of redundancy, retrenchment and closure ’

Thus, with no other law or provision of law allowing for furloughs, pay cuts and termination of employment due to extraordinary or unforeseen circumstances such as the predicament faced with COVID-19 pandemic, employers would necessarily be compelled to work within the parameters of the mentioned legal provisions, albeit seemingly restrictive in the current context.

The policies of the Government thus far being implemented through the many different COVID-19 task forces appear to recognise the need to afford support to employers in the continuation of business. In this context it is expected that the administration of the law by the Commissioner of Labour would be on ‘just and equitable’ principles having regards to the exceptional and compelling circumstances vis-a –vis an employer. In this context the strict enforcement of the law against an employer on the basis of a unilateral reduction of terms of employment, on account of pay cuts sought to be implemented we hope would be unlikely to be ordered by the Commissioner of Labour, provided that such action is not apparently mala-fide; a more conciliatory approach being more suitable notwithstanding that the law per se is not thus enabling.

The general law, as outlined above, mandates that the termination of employment on the basis of a ‘retrenchment, redundancy or closure situation’ will warrant prior consent of the employee or approval of the Commissioner of Labour and the payment of the requisite compensation. The Commissioner of Labour having no discretion or authority to waive or vary the compensation payable, with the discretion to apply the law on ‘just and equitable’ principles in allowing the termination sought for by the employer. In the premises, employers may consider in the short term adopting a ‘mixed model’ with terminations and pay cuts on a structured basis.

Sri Lankan law is silent on the concept of having employees on furlough and is a practice not generally adopted. However, under the prevailing COVID-19 situation we cannot rule out the possibility that such option would not be sought by an employer and that relief will unlikely be denied.

Further, taking cognizance of the added and new challenges of employers The Skills Development, Employment and Labour Relations Ministry has appointed a Special Task Force ‘to prevent the spread of Covid – 19 at workplaces’ headed by Skills Development, Employment and Labour Relations Minister Dinesh Gunawardena. Representatives of the Employers Federation and trade unions being an integral part of the Force. The Ministry has requested all workplaces to form a committee in this regards which step we would suppose is with intent to have businesses up and running as soon as possible.

It is hoped that the application of the law by the Commissioner would take cognizance of the extreme adverse impact that COVID-19 would have on commerce and therefore it is sought from the Commissioner to administer the law resourcefully whilst adhering to ‘just and equitable’ principles to save the already endangered businesses with a global recession all but unavoidable.