Tripartite Agreement on Proration of Wages extend to 31st December 2020 & subject to additional conditions

Tripartite Agreement on Proration of Wages

As a consequence of the resurgence on the Covid-19 outbreak in Sri Lanka and its inevitable effect on local enterprises, the validity of the Tripartite Agreement reached between the Minister of Skills Development, Employment and Labour Relations, the Employers’ Federation of Ceylon (EFC) and several Trade Unions on pro-ration of wages has been extended up until 31 st December 2020. However, the applicability of the Agreement to such extended period will be subject to the following:

  1. Such extension is not applicable to industries associated with leisure/hospitality and tourism;
  2. Entities seeking reliance on the Tripartite Agreement for pro-ration of wages are required to inform the Commissioner of Labour in writing prior to implementation. This appears to be a mere notification requirement as opposed to obtaining of approval prior to implementation.

Contrary to what has been circulating on social media, there are no specific Covid-19 regulations/arrangements which apply to termination/redundancy. This will be governed under the general law.

Scope/Ambit of Tripartite Agreement

The Tripartite Agreement (“Agreement”) contemplates the payment of wages on a pro-rated basis. It recognizes that a distinction must be drawn between employees who report to work and those that are unable to report to work due to prevailing restrictions. Those who are unable to report to work are categorised as being ‘benched’ – ie. Employees without assigned work).

The Agreement encourages employers to rotate employees wherever possible giving as much opportunity as possible to its workforce to supplement their livelihood. It is intended to cover monthly paid employees of all sectors and is in limited operation for May and June 2020 only. An employer, unable to meet wage payments as per the provisions of the Agreement is required to make representations to the Commissioner General of Labour.

Key terms of the Agreement

  1. Only applies to employees who report to work and those who are prevented from doing so due to restrictions imposed by employers or authorities (curfew etc.), who would be considered “benched”.
  2. Employees who fail to report to work despite being rostered/directed to do so without acceptable reasons, to be placed on no-pay for the days on which they were absent.
  3. Employers to apportion and pay wages for days worked. For days not worked (i.e. on “bench” without work) wages to be apportioned and paid either at the rate of 50% of the basic salary or Rs. 14,500/-, whichever is higher.
  4. In deciding wage payable on account of days worked by an employee, the monthly basic salary of an employee must be divided by either 30/26 days (method adopted by establishment in ascertaining daily rate) and multiplied by days worked.
  5. In deciding wages payable on account of days benched, ½ the basic monthly salary or Rs. 14,500/, whichever is higher, should be divided by 30/26 days, as applicable and then multiplied by days on bench.
  6. Basic salary used for such pro-ration of wages to be used for computation of gratuity during this period.
  7. Employers are encouraged to use social media tools to discuss, educate and implement these measures and engage with unions and works councils, where applicable, in implementing these measures.
  8. There was no agreement reached on any special considerations in relation to termination of employees during this period. This will be governed by general law.
  9. Recognized that suitable provisions may have to be incorporated in employment contracts permitting variation of terms of engagement (particularly, the payment of remuneration) in the face of such supervening events beyond the control of the parties such as pandemics.