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TERMINATION OF EMPLOYMENT: Act no 45 of 1971

A contract of employment may be terminated in several ways.


• Dismissal
• Retirement
• Lay off
• Death of a party
• Resignation
• Abandonment/ Vacation of post

S R De Silva: the contract of employment


• Termination by employer on disciplinary grounds
• Termination by employer on non-disciplinary grounds
• Termination by operation law
• Termination by efflux ion of time (maturity of the agreement)

Termination: Disciplinary termination (lay off & Retrenchment) and non disciplinary
termination (others)

TERMINATION OF EMPLOYMENT

Termination of employment can occur in any one of the following ways;

1. Termination by employer
1.1 Disciplinary termination
1.2 Non-disciplinary termination
2. Termination by operation of law
3. Termination by effluxion of time
4. Termination by employee

1. Termination by employer

1.1 Disciplinary Termination

1.1.1 What is Disciplinary Termination?

A workman who is aggrieved of termination of his services by the employer on


disciplinary grounds or otherwise, can make an application to the Labour Tribunal
for relief or redress under the Industrial Disputes Act.

1.1.2 Law governing Disciplinary Termination


Eventhough Termination of Employment of Workmen (Special Provisions) Act does
not apply to disciplinary termination, it makes it mandatory for the employer to
inform the workman in writing the reasons for such termination before the expiry
of the second working day after such termination when such disciplinary
terminations are made.

There is no statutory obstruction or bar to an employer in terminating the services


of a workman on disciplinary grounds as long as he acts justifiably and without
malice.

Unlike non-disciplinary termination, there is no specific statute governing


disciplinary termination. Nevertheless Industrial Disputes Act contains provisions
relating to disciplinary termination which enables a workman who is aggrieved of
termination of his services by the employer on disciplinary grounds or otherwise, to
make an application to the Labour Tribunal for relief or redress and a Labour
Tribunal is given jurisdiction to make a just and equitable order after an inquiry.

1.2 Non-Disciplinary Termination

In the area of non-disciplinary termination, an employer is restricted from enjoying


his rights of terminating a workman. This area of labour law is governed by
Termination of Employment of Workmen (Special .Provisions) Act. This Act has
done away with the employer’s inherent right to terminate a contract of service at
will, on grounds other than disciplinary grounds. The core reason for the
enactment of the said Act was the need felt at that era by the Government to
exercise a greater degree of control over retrenchment and lay off of employees in
the private sector on grounds of loss of business, lack of raw materials and so on.

In terms of the aforesaid Act a decision of an employer to terminate the services of a


workman on non-disciplinary grounds has to be sanctioned by the Commissioner of
Labour in writing.

Applicability of the Act extends to all,


o Wages Board employees,
o Shop and Office Employees
o Employees attached to a factory

2. Termination by operation Law

This means termination of a contract due to such factors as frustration of contract


and impossibility of performance.
3. Termination by effluxion of time

Common example is the arrival of a mutually agreed date to terminate the contract.

4. Termination by the employee

This may arise due to a variety of circumstances such as

4.1 Resignation

There are lot of issues relating to resignation such as whether a notice of resignation
can be withdrawn before acceptance, whether a notice of resignation needs
acceptance at all etc,. However it should be noted that resignation tendered under
duress would amount to a dismissal or constructive termination by the employer.

4.2 Vacation

This arise where a workman has been absent without leave or


authority

4.3 Abandonment of employment

This consists of absence without leave and an intention not to return. However it
must be noted that in this instance both elements must co-exist.

4.4 Repudiation of the contract by the employee

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