Managerial Level

03

ML-S11 Industrial Law

Chartered Institute of Personnel Management Sri Lanka (Inc.)

Web. www.cipmlk.org
Contents
SESSION 01: .............................................................................................................................................. 3

HISTORY OF LABOUR LAWS ................................................................................................................ 3

SESSION02: ............................................................................................................................................. 13

THE LEGAL FRAMEWORK OF INDUSTRIAL RELATIONS SYSTEM ............................................... 13

SESSION 03: ............................................................................................................................................ 27

LAW RELATING TO CONTRACT OF EMPLOYMENT ........................................................................ 27

SESSION 04: ............................................................................................................................................ 38

TERMINATION OF CONTRACT EMPLOYMENT ................................................................................ 38

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SESSION 01:
HISTORY OF LABOUR LAWS

INTRODUCTION

We talk about Labour Laws in the context of employer-employee relationship. The nature of the
employment, the responsibility of the parties, terms of the employment,how it can be ended and the
results of ending such a relationship are some of the aspects Labour Laws are concerned about.
Labour Laws further provide a mechanism to settle disputes arising out of this employer-employee
relationship and also a guidance regarding the responsibilities of law enforcing entities like, labour
commissioner, State, Labour courts etc,.

The present day Labour Laws have not come into being overnight. It is the result of a historical
development which has a close connection with the evolution of Human Societies.

The origin of Labour Laws can be traced back to the remote past and most varied parts of the
world. The party which contributed labour for the creation of wealth/value was always controlled by
another party and there were socially acceptable rules governing the relationship of these parties.
For example, where slavery was practiced, a Lord could impose even death on an errant Slave. The
Slave was a mere commodity or a ‘property’ to be bought, sold and is forced to work. Slavery was
institutionalized in many societies and was an essential economically important system to those
who benefitted from them. The Code of Hammurabi,(1760 BC) prescribed death for anyone who
helped a slave to escape. The famous Virginia Slave Code (1705) which is a collection of all
laws relating to slaves in United States of America contained similar rules. In England, by 1086
nearly 10% of the population was slaves. However slave trade was made illegal in England in 1102.
There is evidence of slavery in Asia too. Slavery in India was abolished by the Indian Slavery Act
V of 1843 and China abolished slavery only in 1906.

In the medieval era, in the European world, unlike today, labour was regulated through the socially
acceptable “status“ held by the labourer and not by the “contract’ between the parties. If a person
was a farmer his succeeding generations would essentially hold the status of the farmer. There was no
social mobility for the workers that would allow them to tread on other professions or social levels.
Even the free movement of the workers was restricted and they lived and worked within
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their geographical locations prescribed by the Feudal Lords. In medieval England, animal
husbandry was the main occupation. In addition, a considerable number of industries grew up with
the aim of making the social groups (e.g. villages) self-sufficient. Invasions made by rival nations
disrupted the flow of social development, yet stimulated the spirit of enterprise in other fields such
as industry and trade. Further they brought in the growth of villages, increasing number of freemen
and formation of trading towns and also immigration of artisans.

The first “ Statute of Labour” in England was not for the protection of labour or prevention of
oppression, but to compel the able-bodied labourer to work for hire at recognized rates of pay. In
1368, under certain statutes, judges were appointed to determine matters under these statutes and
to fix wages. In the 16th century some statutes provided penalties for paying wages less than the
statutory minimum. During this period the master-servant relationship was further regularized
through the introduction of statutory provisions, identification of craftsmen and labourers,
preventing free migration of labour, introducing technical training for apprentices in various crafts,
etc. The first landmark of modern labour law was the British Health and Morals of Apprentices
Act of 1802, sponsored by the elder Sir Robert Peel. Similar legislation for the protection of the
young was adopted in Zürich in 1815 and in France in 1841.

In order to follow the evolution of labour relationships and labour laws of the world in general,
and of Sri Lanka in particular, we must pay a brief visit to the history of development of labour
laws in England. This is because on one hand, ancient England sat on the most prestigious position
as the leading nation of the socio-economic development that took place in Europe in the medieval
times, and on the other hand, the development of labour laws in England made the most notable
influence for the progression of labour laws in Ceylon.
INDUSTRIAL REVOLUTION

Starting in the later part of 18th century, the industrial revolution transformed the previously
manual labour-based economy towards a machine-based manufacturing economy.

Industrialisation, which was a result of the industrial revolution, led to the creation of the “factory”.
The factory system was responsible for the rise of the modern “city” as large numbers of workers
migrated into the cities in search of employment in the factories. Though there were increased

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opportunities for working people for employment, they were under strict working conditions with
long hours of labour dominated by a pace set by machines.

Child labour was the labour of choice. In England and Scotland in 1788, two thirds of the workers
in 143 water-powered cotton mills were found to be children. The efforts of governments to limit
child labour were resisted by factory owners. However, in 1844 the first general laws against child
labour the ‘Factory Act” was passed in England. The law provided that children younger than nine
were not allowed to work, children were not permitted to work at night and the working day of
youth under the age of 18 was limited to 12 hours. About ten years later, the employment of
children and women in mining was prohibited.

The Industrial Revolution concentrated labour into mills, factories and mines, thus facilitating the
organisation of combinations or trade unions to help advance the interests of working people.
The main method the unions used to effect change was strike action. In England, the Combination
Act forbade workers to form any kind of trade union from 1799 until its repeal in 1824. Unions
slowly overcame the legal restrictions on the right to strike.

The eight-hour day movement or 40-hour week movement, also known as the short-time
movement, had its origins in the Industrial Revolution in Britain where industrial production in
large factories transformed working life. The working day could range from 10 to 16 hours for six
days a week. Robert Owen had raised the demand for a ten-hour day in 1810. By 1817 he had
formulated the goal of the eight-hour day and coined the slogan Eight hours labour, Eight hours
recreation, Eight hours rest. Women and children in England were granted the ten-hour day in
1847. French workers won the 12-hour day after the February revolution of 1848. The eight-hour
day movement forms part of the early history for the celebration of Labour Day and May Day in
many nations and cultures.

The Factory and Workshop Act of 1883provided that factories should not be carried on
without a certificate of conformity to follow certain conditions. The Employment of Women Act
1907 repealed an exemption in the act of 1901 (and earlier acts) relating to employment of
women in flax scutch mills, thus bringing this employment under the ordinary provisions as to
period of employment.

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In 1926 a General Strike against coal miners' pay cuts paralysed Britain, though was broken by
Winston Churchill, by the thenChancellor of the Exchequer. The Trade Disputes and Trade
Unions Act 1927was subsequently passed to prohibit any secondary action.

The National Minimum Wage Act 1998established a country-wide minimum wage, but did not
attempt to reinvigorate the Wage Board system. The Employment Relations Act 1999introduced
a 60 page procedure requiring employers to compulsorily recognise and bargain with a union,
though union membership remained at a steady 30 per cent level.

CREATION OF INTERNATIONAL LABOUR ORGANISATION

The Versailles Treaty created the International Labour Organisation in 1919 to draw up common
standards between countries. As per the Constitution of ILO, "Lasting peace can be established
only if it is based on social justice". The right to exercise one’s freedom of association, ban on
child labour, forced labour and importance of equality are the core standards of ILO and they have
influenced the legal systems of member countries to fashion their own legal regimes.
DEVELOPMENT OF LABOUR LAWS IN SRI LANKA FROM 1815 TO 1948

Before the advent of British to Sri Lanka, the traditional form of labour has been feudalistic in
outlook. The ‘Rajakariya System’ or the service tenancy meant the service rendered to the King.
Since the King was the supreme ruler and the owner of all the lands in the country and the subjects
were allowed to stay in the lands on the consent of the King, the subjects were expected to perform
certain services to the King. In this affair no wage was involved.

After this island was captured by the British in 1815, it was opened to a plantation based economy.
Under this economy, for the first time in the history of the island emerged the system of wage
labour.The British saw this island as a colony producing commercially important agricultural
products to Britain and Europe. They opened the hill country first to Coffee from about 1827 and
with the failure of it Tea and Rubber. Land was made available at cheap rates.

The British could not persuade the local people to work in the plantations which was a totally new
method of toiling. Since the plantations required large numbers of resident labour, they had to turn
to the Indian continent to recruit labourers. Wage labour system in Sri Lanka emerged with the

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employment of Indian labour in plantations and it has initiated the labour relations and labour law
system of the country. For the first time in the history of the island a wage-earning sector has
emerged.

The immigrant labour was put to work in these plantations without much training in any skill as
contract labour. The recruitment of such labour, working conditions at that time, and the wage
system could be compared only to near slavery conditions. However the laissez – faire attitude of
the British governments prompted the legislators to address these issues in a manner ensuring that
the employers remain the final beneficiaries.
EARLY LABOUR LEGISLATION IN SRI LANKA

The development of labour law in Sri Lanka is seen as a result of the intervention of State as a
means of achieving social justice. The earliest labour legislation was invariably connected with
the advent of Indian labour. The first recruitments of Indian labour began in the early forties of
the 19th century. At the start, the recruitment was done on small scale and was undertaken by
individuals. However, by 1910 the number of recruitments increased to 2,810,000. In the middle
of the 19th century the ‘Planters’ Association’ was formed, and one of the matters with which that
Association was concerned was the recruitment of labour for the plantations.

SERVICE CONTRACTS ORDINANCE

The earliest legislation in the field of Industrial relations was enacted in 1841 titled, “For better
regulation of Servants, Labourers, Journeymen and Artificers under contract of hire and service of
their Employers”. This statute was followed by Ordinance No.14 of 1845, amended several times
and finally was consolidated as Ordinance No.11 of 1865 –“Service Contracts Ordinance”.

This statute was applied to “servants” including menial, domestic and other like servants,
kanganies and labourers whether employed in agricultural or other similar work. The most
important feature in the context of development of concept of contract of employment enclosed in
this statute was the status given to a written contract. Every verbal contract for hire of a servant
for all work other than the casual work was considered as a contract for a period of one month.
Such a contract has to be renewed monthly and could be terminated by either party by giving one
month’s notice.

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For a contract to be valid over one month, it has to be in writing and shall be valid for a period of
3 years. Both parties have to sign the contract in front of a Magistrate or a Justice of the Peace.

Breach of contract on the part of the employee was neglect of duty, misconduct whilst in service
and wrongful desertion. Making false statements of the former employment, altering certificates
of character, denying previous employment were some of the other offences. Breach of contract
on the part of the employer was, refusal to pay wages, refusal to continue full payment during the
whole term of the contract. The strict provisions enclosed in Ordinance No 11 of 1865 against the
worker were deleted by the subsequent amending Ordinance No. 27 of 1927.

The Ordinance further made wages a first charge on the estate. A labourer whose wages has not
been paid for the month worked could not be held responsible for unauthorized desertion. Further,
under this statute the employer is liable to find lodging, food and medical care for the workman
during a period of disability due to sickness.
ESTATE LABOUR (INDIAN) ORDINANCE NO.13 OF 1889

This law was passed consolidating the law relating to Indian labour. It made especial provisions
for the Indian labour employed on estates by extending the Service Contracts Ordinance to the
immigrants.

This law was applicable to ‘labourers’ including every labouer and Kangany employed on an estate
where ten or more acres are actually cultivated. All the labouers whose names are in the check-roll
and who receive advances of rice or money were regarded as having entered into a contract month
to month by implication of law. Either party can terminate such a contract by giving one month’s
notice.

This law further provided that the employer should fix the wages and wages have to be paid
monthly and within ten days from the expiration of the month. However there was no mechanism
to negotiate wages and it was unilaterally determined by the employers. Other important provisions
include:

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  Labourers could institute legal action jointly against employer for the recovery of
wages.
 Employer has to maintain a register of all employees working on the estate in any
manner.
 For married couples separate line rooms have to be provided.
 Unpaid wages shall be the first charge on the estate.
 Discharge certificates to be issued when the labourer quit employment.

MEDICAL WANTS ORDINANCE NO 19 OF 1912

This ordinance was enacted to consolidate and amend the law relating to medical wants of
labourers in the plantation districts. Every planting area was divided into ‘medical districts ‘ under
this law and each medical district was placed under a District Medical Officer and ‘apothecaries’.
Under this organization every medical district has a district hospital and ‘dispensaries’.

Responsibilities of the medical officer included visiting sick labourers on the written request of
the estate superintendent and if necessary to dispatch the sick to the hospital. He has to inspect all
children under the age of one year and advise the superintendent regarding the sanitary conditions
of the estate. On the part of the superintendent, the responsibilities imposed by the law includes,
informing every birth and death to the district medical officer, providing food and lodging to the
mother at the child birth and grant one month’s leave after a child birth. Further the estate has to
pay the government the cost of the drugs obtained for the labourers and the cost of medical officer’s
visits. The law provided for the establishment of Medical Wants Committees to advise the Minister
on matters relating to medical wants of employees.

During the years of the 1st World War, immigration decreased to a certain extent mainly due to the
fact, that the Indian government was more concerned about preserving labour for civilian
employment and also to supply manpower for the armed forces. Later a commission was appointed
by the Government to ascertain and report on whether it was desirable that a greater measure of
control and supervision was exercised by the Government. On the recommendations of the Board,
the government enacted Ordinance No.43 of 1921 making provision against the issue and use of
documents commonly known as tundus in respect of Indian labourers.

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 INDIAN IMMIGRANT LABOUR ORDINANCE NO. 1 OF 1923

This law was enacted to deal with the matters relating to recruitment, transportation, upkeep and
supervision of working and living conditions of Indian Immigrant labour in the island. The law
provided for the establishment of the Department of the Controller of Indian Immigrant Labour.
The Department and the controller were made responsible for health, medical care and the general
welfare of all the Indian labour. It became a general Labour Department with the coming into
operation of the Donougmore Constitution.

The next landmark statute was Minimum Wages Ordinance No. 27 of 1927 where minimum
wages was made legal for the first time in respect of Indians. This law was later extended to the
entire worker population by Wages Boards Ordinance No. 27 of 1941. This action was required
as the indigenous worker population was also growing by this time.

The first legislative measure that was enacted relating to the settlement of Industrial Disputes was
the Industrial Disputes (conciliation) Ordinance No.3 of 1931. For the first time this law defined
the term ‘Industrial Dispute’. However after the word war, it was felt that a more positive form of
legislation is required to face the post war situations, particularly industry unrests in essential
industries. Later, to make the law more effective, the statute was replaced by the Industrial
Disputes Act No. 43 of 1950. This law formed the basis of all subsequent state machinery for the
settlement of industrial disputes in the country.

Few other important pieces of legislation also were passed before the independence. Based on the
British law Workmen’s Compensation Ordinance No.19 of 1934 was enacted. The Trade Union
Ordinance No.14 of 1935 provided the mechanism for the workers to resort to trade union rights
collectively. With the growth of the mercantile sector there felt a need to introduce legal provision
to take care of the employment of workers in that sector. This need gave rise to the Shops
Ordinance No.66 of 1938. This law was improved later by giving coverage to office employees
as well.

Maternity Benefits Ordinance No, 12 of 1939 made provision for the payment of monetary
benefits to female employees on estates giving birth to children and also the provision of maternity
wards for resident female employees. The Factories Ordinance No.45 of 1942 was based on the
British law and covered even the government under its definition of ‘employer’.

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 POST INDEPENDENCE ERA

After Independence in 1948, the legislature of Sri Lanka time to time either improved the existing
labour laws or introduced new law. The most significant aspect is, all such legislations were based
on the concept of ‘Social Justice’ and intended to introduce more level playing grounds to the
workers.

The Minimum Wages Ordinance No 27 of 1927 permitted even a child of 10 years to work in
estates. This law was amended by lifting the minimum age to 14 years by Act no. 25 0f 2000. The
Trade Union Ordinance was amended 4 times since its enactment. With the ratification of ILO
Convention 87 in 1995, the Trade Union Ordinance was exposed to amendments which were long
overdue.

Benefits under the Maternity benefits Ordinance and Shop and Office Employees Act were vastly
improved. The Factories ordinance was amended many times and the Act No.32 of 1984 permitted
night work for female employees under certain restrictions. A Chief factories Inspecting Engineer
was also introduced.

The Wages Boards Ordinance No.27 of 1941 remain as the major statute regarding the fixing of
wages of the trades covered under the Ordinance and the wage determination is done by the
Commissioner of Labour.

Sri Lanka was admitted to the ILO in 1948. The subsequent years witnessed many important
developments in the arena of labour law. For example, the Industrial Disputes Act No. 43 of 1950
was amended several times. In terms of some of these amendments, resorting to certain unfair
labour practices has been identified as punishable offences. Refusal to recognize a trade union
having 40% strength of the workforce, for the purpose of collective bargaining is deemed an unfair
labour practice.

Statutes ensuring social security for the employees are an important sector in the study of labour
law. The state sector employees were protected from the beginning of public service with a pension
scheme. However, with the expansion of the private sector, the state had to intervene to introduce
a scheme of pension for private sector employees. The Employees’ Provident Fund Act No.15 of
1958 is a contributory pension scheme that was introduced to provide workers social security. It

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 has very far reaching effects as it was intended to protect the employee from the peril of economic
distress due to stoppage of earnings. Its success however depends greatly on the interest of the
employers to adhere to the statutory provisions and the enforcement of it by the State.

In the early 1970’s statutes were passed under Emergency Regulations. Statutes being reflections
of the socio - economic needs of the day, Termination of Employment of Workmen (Special
Provisions) Act No.45 of 1971 is said to be a tough law on the part of the Employers. Due to
financial constrains the State decided to cut down on the foreign exchange allocations for import
of raw materials by private sector employers. This led to retrenchments and layoffs in mass scale.
The Act strengthened the legal provisions to provide more security of employment especially in
‘scheduled employments’.

Employees’ Trust Fund Act, No.46 of 1980 is another social security measure where employers
were made responsible for contributing based on the employee’s monthly earnings. The Act covers
not only the organized wage earning sectors but also those self-employed. The Payment of
Gratuity Act, No.12 of 1983 made it compulsory for the employers to pay the qualified employees
a special Gratuity upon termination of employment.

After 1977 the Government has introduced certain policies which completely diverted the former
state-run economy into a private-sector based open economy. After the policy changes were
introduced, the development of laws also changed accordingly. The former employer – employee
relationship has different facets now with the facility opened to employees even to become share
holders of the companies where they work. In the private sector both employers and employees
tend to depend on collective agreements as the main weaponry of maintaining Industrial harmony.
With the Globalisation, the Organisations operate without physical /geometrical boundaries;
employees work from home and report to a virtual office; work made easy and fast in computerized
environments; all this has made understanding labour relations more complex. Future development
of labour laws will definitely embrace these rapid changes in our societies.

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SESSION02:

THE LEGAL FRAMEWORK OF INDUSTRIAL

RELATIONS SYSTEM

Introduction
The legal framework of the industrial relations system is based on the contract of employment
and the relationship between Employer-employee and the State. The nature of this relationship
is decided by many factors such as the economic policy, social developments and political
maturity of a country.

The common Law concept of the contract was based on a Master and servant relationship under
the Roman Dutch Law, which was later influenced by the English Law concepts. Under the
Roman Dutch Law the relationship between the Employer and the Employee was treated as a
pure contract between equals as free agents. However, such a description does not divulge the
realities of the situation in relation to social and economic factors as the relationship in most
instances is not one between equals, as the economic disparity between the parties would often
show that the contract is not one between equals. The influence of English Law was seen mostly
in the area of the rights and liabilities of the Master and servant relationship in regard to third
parties. The contract of employment under the Roman Dutch Law imposed rights and duties on
both parties for the breach of which remedies falling short of specific performance were
available.

After 1750, the onset of Industrial Revolution brought in not only the technological and social
changes but also legal innovation. With this for some occupational groups a type of employment
contract emerged. In the traditional legal framework, law pertaining to employment contract,
bargaining, conciliation/Arbitration/, trade union law, industrial action, Health and Safety were
common features.

But with the advent of social welfare legislation, the contract of employment has undergone a
transformation with the emphasis on the protection of the Employee's rights especially in
relation to wages, conditions of employment, health and safety and termination. The

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 modifications in the Common Law have been brought about by legislation, the rise of the Trade
Unions and collective bargaining and have resulted in rendering the relationship to one more of
‘status’ rather than that of a strict ‘contract’.
Nature of Industrial Relations

When people work together, different types of work relationships emerge. They could
be between employees and employees" employees and employers, employees and employee
organizations, employee organizations and employers or employee organizations and employer
organizations. Unless all parties of a relationship cooperate, there would not be a maximum
benefit to any. Since people have different and sometimes conflicting interests, the ideal
situation cannot be achieved all the time. For example, the employee is concerned with what he
can earn from his employment and the employer’s interest is to earn more profits with the
minimum possible cost.

When these conflicting interests take a definite form as to damaging the industrial peace
and harmony, the State intervenes to protect some of the interests through legal control. As one
eminent scholar once mentioned in the context of industrial relations “law is a social institution
which seeks to balance conflicting interests and to satisfy as many claims as possible with the
minimum of friction”.1 This intention of the law has not been demonstrated in any other field
of law than in the field of industrial relations.

1
Roscoe Pound, ‘A theory of Social Interests’, papers and proceedings of the American Sociological Society, 1921

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 Features of a sound Industrial Relations System

1. Creates a more conducive environment for economic efficiency.

2. Concerns about employee welfare and wellbeing.
3. Encourages employee participation and productivity.
4. Provides a platform for employer employee dialogue.
5. Provides an effective dispute settlement process.
6. Provides a flexible labour market.
7. Ensures fair treatment at workplace.
8. Provides a mechanism for social security of the workers.

To understand the Industrial Relations System of a country, it is important to identify the

different levels it operates.
1. International level
ILO provides member countries guidance, training and standards of operation. Though
it is not mandatory to follow, once a convention is ratified, a member country is
expected to adopt the ILO standard to the legal system of that particular country.

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 2. National Level
The type of government and the policies of a country play a major role in deciding the
quality of industrial Relations of that country. In a democratic country, freedom of
association and freedom of expression is guaranteed whereas in a country run by a
dictator both would be crushed.
3. Industry level
Depending on the type of industry, the IR system addresses the issues inherent to that
industry. This is so, because characteristics of each industry differ from one another.
For example wages board decisions differ from industry to industry taking into
account the differences of the industry.
4. Organizational Level
Just like a government, each organization will have a people management system unique
to that organization. (The key result areas like recruitment and selection, rewarding
system, employee relations).

5. Departmental Level
This mainly refers to the day to day operational management of the line managers. The
way a line manager handles a daily issue could have a great impact on the organization.
Legal Framework of Industrial Relations system in Sri Lanka

Regulatory Laws Restrictive Laws Auxiliary - Autonomous

systems
Employment- Termination
Termination of Employment Customs
Shop & Office employees
Practices
Wages Boards Ordinance
Social Security Domestic Inquiry
Employment of WYPC Act
EPF, ETF, Gratuity Acts Procedure
Safety & Health Labour commissioner
Factories Labour Relations Collective Agreements
Workmen Compensation Industrial Disputes Orders
Maternity Benefits Trade Unions Ordinance Awards
Court Decisions
Contract of Employment

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 The protection granted by the above legislation applies to employees who are strictly called
“employees”. Therefore the distinction between Independent Contractors and Workmen has been
maintained in this area. This is so, especially because apart from the Shop and Office Employee's
Act, there is no other Statute which imposes an obligation on the employer to issue a letter of
employment to employees. In the said Shop and Office Employee's Act S.17 provides that "Every
employer by whom any person is employed in or about the business of any shop or office shall
furnish such person on the date of his employment with such particulars as may be prescribed
relating to the conditions of his employment". So, in the absence of a letter of appointment and
sometimes in the absence of documentation to establish such a relationship, the distinction between
Independent Contractors and Workmen becomes all the more important.
The Statutes dealing with Labour legislation such as the Industrial Disputes Act, The Shop
and Office Employees' Act, The Wages Boards Ordinance, The Workmen's Compensation
Ordinance, The Employees' Provident Fund Act, The Employees Trust Fund act, The Factories
Ordinance, etc have definitions of ‘Employers’ and ‘Workmen’ which facilitate the drawing of the
above distinction between Independent Contractors and Workmen.

Apart from the definitions in these statutes, where there have been ambiguities regarding the nature
of the contract of employment, Sri Lankan Courts have looked into the realities of the situation
and decided in favour of the employee. The Courts have in this connection used the traditional
tests, viz., The Control Test, The Integration Test and the Economic Reality Test. Vide Carson
Cumberbach &Co. Ltd. v Nandasena 77 N.L.R.73; Associated Newspapers of Ceylon Ltd. Vs
De Silva 1978-79 2S.L.R.173; Ceylon Mercantile Union v Ceylon Fertilizer Corporation 1985 1
S.L.R. 40; Perera v Marikkar Bawa Ltd. 1989 1 S.L.R. 173.

State intervention in industrial relations in Ceylon started from about 1830 with the growth of
coffee and tea plantation industries. With the introduction of Indian labour to plantations, several
pieces of legislation were introduced. The first legislation thus introduced to regulate the terms
and conditions of employment was Ordinance No. 05 of 1841 entitled as “for the better regulation
of servants, labourers & journeymen, artificers’ under contract of Hire and Service of their
Employers”. This law was later consolidated into Ordinance No 11 of 1865. This law provided
that except in the case of casual employment, a verbal contract for the hire of any servant should,
unless otherwise expressly stipulated, be deemed to be a monthly contract for hire and service.

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 Such service would be automatically renewed unless terminated by one month’s notice on either
side. State intervened in these instances as a regulator of imported labour, to ensure that the labour
was subject to stringent controls, so that the work on the plantations could be maintained to the
benefits of the owners of the plantations. The emphasis in the early years was on the protection of
interests of the employers.

In 1908 the government set up a Commission to inquire into the conditions of Indian Immigrant
labour. Establishment of Department of the Controller of Indian Immigrant labour in 1923 was a
landmark development in industrial law in Sri Lanka. This department was later transformed into
the Labour Department. After 1945 this department functioned under the Commissioner of Labour
who was entrusted with the following functions.

1. Establishment of minimum terms and conditions of employment through wages boards and
remuneration tribunals
2. Recommending, implementing and enforcing labour legislation
3. Administration of a national provident fund and approved private provident fund.
4. Administration of occupational safety and health.
5. Conducting worker education programmes.
6. Conducting vocational training programmes for unemployed youth.
7. Handling industrial relation issues through industrial relations Division.

This study of legal framework applicable to Industrial Relations will be done under the
following three categories.

1) Employment and its Termination – Nature of the contract of employment, Shop & Office
Employees Act, Wages Boards ordinance, Factories Ordinance, Employment of women,
Young persons and Children Act, Maternity Benefits, Termination of employment of
workmen Act, rules regarding disciplinary termination of employment.
2) Recognition of Trade Unions – Registration and Recognition of Trade Unions, Trade
Union Action, its effect on the contract of employment
3) Settlement of Industrial Disputes – Conciliation, Arbitration and Awards of Arbitrator,
Industrial Court and Labour Tribunal

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 Employment and its Termination

When a person is referred to as a workman, he may be employed as a permanent,

temporary or casual workman, or on probation or as an apprentice, or on a fixed term contract.
The nature of one’s employment determines his rights and accordingly the redress he can
anticipate. For example, when a fixed term contract is not renewed, and there is nothing in the
contract which gives the employee a right of renewal, he has two options namely, before a
labour tribunal or an Industrial court or an arbitrator. Since an employee has to prove
termination by his employer, in order to invoke the jurisdiction of the labour Tribunal, his
chances for a redress before it, is very minimal.

In relation tojob security, the common law action for ‘wrongful dismissal’ is an action forbreach
of contract. ‘Wrongful’ at common law refers simply to the failure togive reasonable notice of
dismissal, and does not include any general notion ofunfairness. The traditional rule in common
law jurisdictions was that the
Employer would be within its rights in terminating the contract for any reason ornone at all,
subject to giving the requisite notice or paying a monetary sum tothe employee in lieu of notice.
The only exception would be where the terms ofthe contract specify that there will be no
dismissal except for just, or specifiedcauses.The notion of ‘unfairness’ in dismissal had to be
introduced by legislative
intervention in virtually all systems; it was not a natural offshoot ordevelopment of private law
norms or concepts. Unfair or unjust dismissallegislation originated in continental European
systems in the inter-war periodand in the decade immediately after 1945, and has since been
adopted in someform by most systems with the exception of the United States. ILO
ConventionNo. 158 defines its core elements which include a requirement that theemployer
should normally have a valid reason for terminating the employee’semployment.

Following laws are applicable to contracts of employment depending on the nature of the
employment.
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 i. Shop & Office Employees Act
ii. Wages Boards Ordinance
iii. Factories Ordinance
iv. Maternity Benefits Ordinance
v. Employment of Women, Young Persons and Children
vi. E P F Act
vii. E T F Act
viii. Gratuity Act

During the period an employee is in service, rules, regulations, circulars and practices adopted
by the workplace are applicable to the contract of employment. In addition, terms of any
collective agreement is also applicable as implied terms of his contract of employment by virtue
of the employee being a member of a trade union. However, one cannot gather all the terms
applicable to the employment of a person just by looking at the letter of appointment. It is now
established law that breaching of an implied term even could be a misconduct that warrants
dismissal. S R De Silva in his ‘Law of Dismissal’ states that “ …..it would be unusual to find
in a letter of appointment that theft or insubordination is a breach of the terms of employment.
The reason is that the law relating to employer and employee implies………into every contract
of employment certain terms which are so fundamental to the employment relationship that
they need not be expressly stated…..”

Termination of employment could take place due to Disciplinary grounds or non-disciplinary

grounds. When it comes to the termination due to disciplinary grounds, it is usual to hold a
Domestic Inquiry before taking such action. Unlike in some other countries like India, there is
no statute in Sri Lanka making it obligatory for an employer to hold a domestic inquiry before
the termination of service. The only circumstance in which it is legally obligatory to hold a
domestic inquiry is where it is required to be held under the terms of a collective agreement or
contract of employment.

The mere absence of a domestic Inquiry will not invalidate a dismissal but that could be a fact
that a superior court may take into account at some instances. In All Ceylon commercial and
industrial workers’ union Vs. Weerakoon Bros. Ltd, (1973) the court took that fact into

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 consideration against the employer and stated thus “….A domestic inquiry is a measure
indicated by considerations of natural justice, and where one has not been held there is a
departure from that very salutary principle……”. It is seen that the requirement of a domestic
inquiry prior to a dismissal has been developed by the application of principles of natural justice
and the courts of law in our legal system as a safeguard.

The primary reason of dismissal under disciplinary grounds is “Misconduct”. The meaning of
the word is not static and the list of misconducts is also not exhaustive. It has a relative meaning
and even a relatively legal /acceptable conduct could be interpreted as misconduct depending
on the circumstances. For example, in The all Ceylon Commercial and Industrial Workers’
Union vs. Asbestos Cement Industries Ltd, it was held that the strike was unjustified and that
the non-employment of the strikers was justified. In a similar situation in The all Ceylon
Commercial and Industrial Workers’ Union vs. The Ceylon Glass Company.,Ltd the
Industrial Court held “ The management of a Company whose employees are on strike is not
obliged to cease the conduct of its business. It has a right to employ others to take the place of
the strikers”.

Termination of employment of Workmen (Special Provisions) Act No. 45 of 1971 was

introduced to address a particular situation existed at that time. (This was discussed under the
History of Labour Laws) This law has provided wide coverage for terminations on grounds
other than disciplinary reasons thereby providing the necessary protection for employees.

In terms of Termination of employment of Workmen (Special Provisions) Act No. 45 of 1971

no employer can terminate the schedule employment (includes employees covered by Shop &
office Employees Act, Wages boards and factories Ordinance) of any workman without the
prior written approval of the Commissioner (Sec.2). Termination for any non-disciplinary
reason is also covered. This includes non-employment whether temporarily or permanently.
The legislators have been careful not to safeguard employees from termination when there are
sufficient grounds for such a termination. For example, the Act does not apply to a workman
who has worked less than 180 days in the 12 months preceding the date of termination,
retirements in terms of a letter of appointment or collective agreement, etc.

T he dis missal o f wo rk ers fo r ‘eco nomic’ reaso ns is o ne o f t he mo st

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 controversial areas of legal intervention into the employment relationship. The
just ificat ion for limit ing the protective role of the law in this context is that
when employing entities undergo organizational restructuring, the sustainabilit y
of the enterprise must take priorit y over job securit y. Thus the law generally
r esp ect s the ‘ ma nager ia l p r er o gat ive ’ to d is m is s wo r ker s as a cost - cut t in g
measure. This approach is reflected across international law, European law, and
UK law. For instance the ILO acknowledges that the ‘operational requirements
o f t he u nde r t a king’ ma y ju s t if y t e r minat io n o f e mp lo yme nt ( I LO
Recommendation No 119 of 1963, Art 2(1) and Art 12)
Recognition of Trade Unions

Recognition of Trade unions is based on the recognition of Freedom of Association.

International Labour Organisation recognizes this right as a key objective of the organization.
This fundamental right ensures the freedom to associate (even to employers) for all lawful
purposes. Article 02 of the Freedom of Association and Protection of the Rights to Organise
Convention1948 (No. 87) of ILO states,

“ Workers & Employers without distinction whatsoever shall have the right to establish and
subject only to the rules of the organization concerned, to join organizations of their own
choosing without previous authorizations” However, there are two restrictions to this concept.
Article 8(1) requires organisations to respect the law of the land. This is based on the maxim
that ‘public safety is the highest law’. Article 8 (2) stipulates that the law of the land shall not
be such or applied so as to impair the guarantees provided for in the Convention.

Freedom of association has been guaranteed under the present Constitution as a fundamental
right of the people. These rights are however, subject to certain restrictions prescribed by law.

Representat ion of workers through independent trade unions which negot iated
pay and condit ions of employment on their behalf with an e mployer or groups
of e mp lo ye r s be ca me t he p r e do m in a nt mo d e l ar o u nd w hi c h t he co l lect iv e
la bo u r law of t he t went iet h c e nt u r y de v e lo p e d. It i s r e f le ct ed in t he core
principles of freedom of associat ion of the ILO and in the pract ice of many
s ys t e m s . H o w e v e r , s ys t e m s d i f f e r i n t h e n a t u r e a n d e x t e n t o f s t a t e

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 e nc o u r a ge me nt fo r co lle c t iv e ba r g a in i ng p ro vid e d , t he le ve ls a t w h ic h
bargaining takes place, and the mechanisms for determining the
representativeness of unions.

The Trade Unions Ordinance No.14 of 1935 is the main piece of legislation dealing with trade
union rights prevailing in Sri Lanka. A Registrar is appointed under the Ordinance for the
administration of the Ordinance. Registration of trade unions is carried out by the Department
of Labour. The minimum number of membership needed for the registration is 7. A trade union
which functions without a valid registration is treated as an unlawful association.

No action or any other proceeding is maintainable in any civil court against registered trade
union or officer or member in respect of any act done in contemplation of trade dispute.

Trade Unions Ordinance does not apply to any combination of judicial officers, police officers,
members of armed forces, prison officers, members of the Agricultural Corps established under
the Agricultural Corps Ordinance.
Law relating to Settlement of Industrial Disputes

“The Industrial Disputes Act created a special system of courts for the settlement of
Industrial Disputes. The powers of these courts go well beyond those of the common law courts.
These courts and tribunals, unhampered by the common law of master and servant and the
contract of employment, have built up a separate body of industrial law, governing such
important matters in the field of employment as termination and terms and conditions of
employment.”2

The Dispute must be connected with the ‘employment or non-employment or the terms of
employment or conditions of labour of any person’. Following examples will show the actual
interpretation of these terms.

i. An employer has already employed a person and the union is opposing it.

2
The legal framework of Industrial relations in Ceylon, S R de Silva, 1973

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 ii. An employer informs the union that he wishes to employ a particular person and the
union opposes it.
iii. An employer dismisses an employee and refuses to employ him.
iv. An employer contemplates terminating the service of an employee.
v. Reinstatement of a person.
vi. Refusal by the employer to employ a person.

Industrial Disputes Act No 43 of 1950 has three distinct approaches to the settlement of
Industrial Disputes;

I. Collective Bargaining
II. Conciliation and Arbitration
III. Labour Tribunals

l) Collective Bargaining

Under this provision of law the rights and obligations of the parties who have joined in a
collective agreement and the manner in which that relationship would be brought to end will be
discussed.

Section 5 of the Act defines a Collective Agreement in the following manner;

(a) Which is between

i) Any employer or employers and
ii) Any workman or any trade union or trade unions consisting of workmen
(b) Which relates to the terms and conditions of employment of any workman or to the
privileges, rights or duties of any employer or employers or any workman or any trade
union or trade unions consisting of workman or to the matter of settlement of any
Industrial Dispute.

A collective agreement could cover a large number of matters relevant to the employee work-
life including privileges, rights or duties of parties and dispute settlement. Parties enter into
agreements after negotiations and agreeing on the terms and all the other aspects. Before
publishing the agreement in the Gazette the Commissioner of Labour (LC) should satisfy
himself that the terms and conditions are not less favourable than those applicable to any other

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 workman in the same or a similar industry in such district (Section 6). The most important
aspect of the Collective Agreement is that the workman can achieve better terms than the terms
he has already agreed with the employer as an individual worker.

All the Labour Statutes provide for access to the relevant authorities in the event of breaches of
the statutory provisions by employers. The Commissioner of Labour is empowered in relation to
the various Statutes to grant relief to workmen when complaints are made to him regarding non
compliance with statutory requirements. Such complaints may relate to non-payment of wages,
non granting of leave, non-granting of bonus payments, non conformity with the Provident Fund
and Trust Fund Acts, non payment of gratuity, etc.
The Industrial Disputes Act has provision for conciliatory measures to be taken by the
commissioner of Labour when complaints are made to him by employees. Such conciliations can
relate to a wide range of industrial disputes inclusive of termination of employment. If by a process
of conciliation, a settlement is arrived at, the Commissioner of Labour is empowered to record
such settlements which are thereafter binding on the parties.
The Commissioner of Labour has also been conferred the power to refer industrial disputes for
settlement by Arbitration. The Industrial disputes Act has provision for voluntary arbitration as
well as compulsory arbitration. Voluntary Arbitration is referred to by the Commissioner where
both parties agree to a reference to arbitration, while compulsory Arbitration is referred to at the
instance of the Minister of Labour. The reference to compulsory arbitration can be in relation to
matters pertaining to minor industrial disputes as well as major disputes inclusive of termination
of employment.

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 The Commissioner of Labour has also been conferred the power to refer industrial disputes for
settlement by Arbitration. The Industrial disputes Act has provision for voluntary arbitration as
well as compulsory arbitration. Voluntary Arbitration is referred to by the Commissioner where
both parties agree to a reference to arbitration, while compulsory Arbitration is referred to at the
instance of the Minister of Labour. The reference to compulsory arbitration can be in relation to
matters pertaining to minor industrial disputes as well as major disputes inclusive of termination
of employment.
There is also provision under the Industrial Disputes Act for employees to seek relief from Labour
Tribunals in relation to Termination of Employment, and in relation to non-disciplinary
termination of employment to seek relief from the Commissioner of Labour under the provisions
of the Termination of Employment (Special Provisions) Act.
Labour Tribunals have been conferred a special jurisdiction to grant just and equitable relief
including the granting of reinstatement of workmen where termination of the employment is
determined as being unjustified. However, such orders can be subjected to an appeal firstly to
the High Courts and thereafter even to the Supreme Court.

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SESSION 03:

LAW RELATING TO CONTRACT OF

EMPLOYMENT

Introduction

Before Industrial Revolution

Before industrial revolution, the law relating to contract of employment was in a much
undeveloped status in most legal systems. During feudal era the Master (employer)was
considered as having proprietary right on his servant. Any breach of the terms of contract by
the servant (employee) brought in criminal consequences.

The common law principle of employment believed and treated that the master and servant were
both in equal situations as free agents. They have entered into the contract of employment
voluntarily on free will as parties with equal bargaining powers. Accordingly employment was
considered as a mere contractual relationship between two parties that can be terminated at the
will of either party.
Effect Of Industrialization
With the industrialization, the master and servant approach changed to employer and employee
relationship due to three significant developments. Firstly, with the influence of Trade Unions,
terms agreed upon through collective bargaining were recognized as implied terms of each
contract.

Secondly,introduction of new statutes based on social welfare ideals changed the nature of the
contract. The statutes provided the necessary safeguards in the areas of health, safety and
welfare. These safeguards were introduced to protect the economically weak party from
exploitation.

Thirdly, the establishment of a special judicial system consisting of labour courts and a process
for arbitration provided the possibility of seeking justifiable remedies in the event the contract
of employment is unjustifiably terminated or terms of employment contract are arbitrarily
changed.
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 What is a Contract of Employment?
“A contract is a promise or set of promises which the law will enforce”.
(The Law of Contracts - C G Weeramantry, Vol.I, pg. 84) The elements of a contract
are offer and acceptance by competent persons having legal capacity who
exchange considerationto create mutuality of obligation, and, in some circumstances, they
enter into contracts in writing.

A contract of employment is a voluntary relationship into which the parties may enter on terms
laid down by themselves within limitations imposed only by the general law of contract.The
contract becomes operative when a person offers his services to another who hires them for
remuneration.
Parties to contract

Contract of employment must take place between the parties who are capable of contracting. The
law has prescribed such instances as shown below:
1) Parties should be ina particular age to enter into contract. Eg. as per Shop and Office
Employees Act females over 18 yrs, males over 16 yrs could be employed.
2) The manner women, young persons & children should be employed is as per the
Women,Young Persons and Children Act and the Factories Ordinance.
3) The time a person is employed under a contract of employment also should be within the
period prescribed by law. Eg: Maximum 8 hours a day.
4) The parties must be of sane mind and capable of understanding the consequences of their
actions.
5) All terms and conditions of contracts which are illegal or contrary to public policy will be
disregarded by law and any disciplinary action against a person who has not performed
such a contract shall not be maintained by law. Eg. employment contract in an illegal
business.

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 Written/Oral Contracts

There is no strict rule that a contract of employment should be in writing. However, a written
contract makes it convenient for the employer as well as the employee to ascertain the terms and
conditions of employment. When there is no written agreement, the terms and conditions of the
contract of employment derives from the, statutory provisions, terms of collective agreements or
awards of labour courts, common law and custom or usage and practices in the workplace.
Under the Shop and Office EmployeesAct it has been made mandatory to provide certain details
to the employees (Sec17) in writing in a language the employee is fully conversant with ; “every
employer by whom any person is employed in or about the business of any shop or office shall
furnish such person on the date of his employment with such particulars as may be prescribed
relating to the conditions of his employment”

Expressed Or Implied Terms

Generally a contract of employment (letter of appointment) contains the following expressed
terms.

1) Designation and the nature of the appointment

2) Date of appointment
3) Basic remuneration and the scale of remuneration
4) How the remuneration is paid (weekly, fortnightly, monthly)
5) COL allowance if any
6) Other allowances if any
7) Period of probation. How it could be terminated
8) If transferable
9) Place of employment
10) Normal hours of work
11) If training is required
12) Leave entitlement
13) Overtime rates payable
14) Payment if EPF/ETF & gratuity payments
15) Promotional prospects
16) How the contract could be terminated

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 A contract of employment does not consist only of expressed terms. It is not possible to reduce
everything into writing and include in the letter of appointment. Therefore, when the terms and
conditions applicable to a particular contract are to be determined, it is required to consider the
circumstances under which the employment has been offered and accepted.
Contracts of employment sometimes carry a term which prohibits an employee from engaging in
any other business without the expressed permission of the employer. This is so, because it is
presumed that the employee’s time belongs to the employer. However, it has been decided in The
Ceylon Bank Employees’ Union v The Bank of Ceylon (1979) 79NLR 133 that a blanket
restriction imposed on an employee prohibiting him from engaging in any other gainful activity
even outside his normal hours of work would be unreasonable as long as it cannot be established
that such an activity has a material bearing on the employment and that it actually results in a
conflict of interest.
In most contracts of employment, there is a term emphasizing that the employee should not divulge
the information that he may come to know in the course of his employment to any outside party.
In some instances, a condition is applied on an employee prohibiting to compete with the employer
at a point the employment relationship between them comes to an end. This restriction implies that
an employee cannot use the business secrets, its customers and manufacturing formulas etc, for his
benefit even after the cessation of the employment relationship. It is now decided law that unless
there is some exceptional proprietary interest owned by the employer that requires protection of
such information, a complete prohibition is unreasonable.
Generally all the rules, regulations and policies existed in a workplace but unstated in the letter of
appointment when an employee joins the workplace, would become implied terms of his contract
of employment unless expressly excluded.

The following list provides an example:

I. Terms agreed upon under collective agreements

II. Terms imposed by court decisions (Labour Tribunal, Industrial Court)
III. Statutory provisions
IV. Arbitrators awards
V. Organisation’s Rules governing conduct
VI. Properly adopted value system of the work place
VII. ary practices of the work place (Eg. duties of an employee)

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 Contract Of Service And Contract For Service
The ‘employer - employee’ relationship would arise only from a contract of service (employment).
An ‘independent contractor’ would, on the other hand have a ‘contract for service’ and not a
‘contract of service’. While the first situation is referring to the master and servant relationship the
second situation refers to an employer and independent contractor relationship.

‘Master’ and ‘servant’ are the terms used by the common law to describe that relationship which
existed between the person called the ‘servant’ who agrees to serve another person called the
‘master’. The essence of the relationship of master and servant is the rendering of service by the
servant and the control the master has over the work. An independent contractor on most occasions
uses his own discretion regarding the time and manner the work would be performed. However,
there is no mechanism provided by the common law to identify the relationship between the
employer and independent contractor.

The courts have developed various tests for determining whether a person is a servant or an
independent contractor.All these tests are only guidelines to distinguish the contract of service
from a contract for service and non are conclusive. Each situation must be considered on its own
merits.
Guide Lines to distinguish contract of service from contract for service:

1. The right of control of the other. What is most important here is not what specific orders were
given, but who is entitled to give the orders as to how the work is to be done.
In Ready Mixed Concrete Vs Minister of Pensions (1963) 1 A.E.R 43 the following criteria, which
is now known as ‘The Control Test’ were adopted in determining the master servant relationship.
I. Selection
II. Orders
III. Control
IV. Right of Dismissal
V. Payment of Remuneration
However, the control test has its own limitations, since it has become difficult to apply the test
where the employee exercises professional skill or performs work of a highly technical nature.
Lord Denning in BeloffVs Pressdram (1973) 1 A.E.R.241 stated that’ the greater the skill the

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 servant possesses the less the control the master will have over him’. It is now accepted that the
following conditions are to be considered in determining the relationship:-
a) The servant agrees that in consideration of wage or other remuneration he will provide his
own work and skill in the performance of such service for his master.
b) He agrees expressly or impliedly that in the performance of that service he will be subject
to the other’s control in a sufficient degree to make the other the master of service.

Whether the work done is an integral part of the core business of the principal.
This question was considered by Lord Dening in Stevenson, Jordon and Harrison Vs Mc Donald
and Evans ( 1952) I T. L. R. iii. According to this test (The Integral Test), “under a contract of
service a man is employed as a part of the business, whereas under a contract for services although
done for the business, it is not integrated to it but is only accessory to it”.
The courts also observed that the independent contractor frequently carries on an independent
business while under a contract of services a man sells his labour and services to the enterprise of
another.

Whether the employer has a right to the exclusive service of a person.

This is a material question to decide if there is an employer-employee relationship between two
parties. An independent contractor has no obligation to render exclusive service to en employer.

Ownership of Assets (tools) and the Financial Risk.

In James Appuhamy Vs Shammugam ( unreported) S.C. 69/76 it was held that a taxi driver
employed by the owner of a Taxi (hiring car) was a workman. In this case the owner of the taxi
employed a driver who received no salary but one third of the profits of daily earnings. Ownership
of the asset (taxi) and the financial risk (the chance of profits or the risk of loss on the total
investment) shouldered by the owner were the salient factors that made court come to this decision.
Termination of Contract of Employment
The contract of employment comes to an end due to many reasons such as retirement, resignation,
dismissal, end of contract period, retrenchment and vacation of employment.

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 Retirement
Retirement is predetermined since generally every organization has adopted the practice as to what
the retirement age of the employees is. The appointment letter generally refers to the retirement
age. If in case one’s service is retained by the employer beyond the date of retirement, it will be as
a contract employee.
Resignation
This is the method the employee voluntarily brings the contractual relationship to an end. The
letter of resignation is an offer to end the contract of employment by the employee and it will be
effective only if this offer is accepted by the employer. An employee can withdraw his letter of
resignation only before the acceptance of the same by the employer. In Ambagamuwa Korale
Multi-Purpose Cooperative Societies’ Union vs. The all Ceylon Cooperative Employees’ Union-
SC147/67,S.C.M 19.12.68the employer issued a notice of termination to the employee, but the
employee had already tendered a notice of resignation which was accepted by the employer. It was
decided that notice of termination had no effect.
Vacation of post
In the case of an employee who has absented himself without leave or authority, the employer
usually finds him as having vacated the post asserting his absence as a desertion or abandonment
of work. However in court cases it is often stated that the intention to vacate or abandon the
employment must co-exist.
Ending of contract period
When the employment is intended to be for a specific period, parties have a clear mind as to when
it would come to an end. Therefore, the contract automatically lapses on the expiry of the agreed
period. No obligation will arise on the part of the employer to extend the contract beyond the
agreed period.
Types of Employment
Different designations are assigned to employees in a workplace depending on the type of
employment. Sometimes these designations or ‘labels’ given by the employer has no relevance to
the type of employment as such terms are assigned in order to avoid certain legal red-tapes.The
designations which are prevalent in Sri Lanka are Probationers, Apprentices, Fixed term
employees, Temporary Employees, Casual Employees, Seasonal Employees etc.

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 Probationers
Probation means the ‘testing of conduct or character of a person’. Usually a period of probation is
set out in the contract of employment for the purpose of enabling the employer to assess the
capacity and capability of the workman. Therefore, a probationer is on trial until the period of
probation expires. The probation period could be extended if the employer is not satisfied with the
performance of the probationer.
A probationer belongs to the permanent cadre of employees. The only difference between the two
is that different principles apply to the termination of service during probation. In State
DistilleriesCorporation .v. Rupasinghe(1994)2 Sri L R 395it was decided:
“What then is the principal difference between confirmed and probationary employment?
In the former, the burden lies on the employer to justify termination; and this he must do
by reference to objective standards. In the latter, upon proof that termination took place
during probation, the burden is on the employee to establish unjustifiable termination, and
the employee must establish at least a prima facie case of mala fide before the employer is
called upon to adduce evidence as to his reasons for dismissal; …”

Whether a probationer’s servicers could be terminated before the expiry of the probationary period
has been a question considered in many cases. The acceptable norms regarding this question are
as follows.
I. On reason of misconduct
II. On reasons of unsatisfactory work, termination could be effected only at the end of the
probation period, unless provided for by the contract for such a termination.
III. When a probationers’ work is not satisfactory the employer can terminate the contract at
the expiry of the probation period without giving reasons. However it is important that
bona fide reasons exist.

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 Principals relating to the service of a Probationer

1. Unless the letter of appointment otherwise provides, a probationer is not entitled to automatic
confirmation on completion of the period of probation. If then he is allowed to continue his service,
he continues as a probationer. Hettiarachchi v. vidyalankara University 76 NLR 4, Ceylon
Ceramics Corporation v. Premadasa (1986) 1SLR 287

2. Even in the absence of any additional terms and conditions, a simple probation clause confers on the
employer the right to extend the probationary period;Elsteel Ltd v. Jayasena S.C Appeal No 20/88

3. The employer is not bound to show good cause for terminating a probationer’s service. The Labour
Tribunal may examine the grounds of the decision only for the purpose of finding out whether the
termination was mala fide or amounted to victimization or an unfair labour practice.Moosajees Ltd v.
Rasiah (1968) 1 SLR 365

4. The question whether the probationer’s services were satisfactory is a matter for the employer. It cannot
be objectively tested. If the employer decided that the probationer’s services were not satisfactory, it would
be inequitable and unfair in the absence of mala fides, to foist the view of the tribunal on that of the
management.CeylonCement Corporation v. Fernando (1990) 1 SLR 361

5. A suggestion of mala fide is not sufficient. The tribunal must make a finding that the termination of a
probationer’s service was actuated by mala fides or ulterior motive.Swarnalatha Ginige v. University of
Sri lanka S.C.appeal No. 66/93

Apprentice
There is no contract of service in this instance; he is not an employee in the normal sense. In a
contract of apprenticeship the employer agrees to instruct or teach the apprentice in his trade and
to maintain him during the existence of the apprenticeship period by paying him an allowance.
And the apprentice agrees to serve the master and learn from him.
Under common law principles on employment, an apprentice or trainee does not have a contract
of employment. Under statutory law, apprentice is sometimes included in the definition of
“workman” (Eg; Industrial Disputes Act, EPF act, Termination of Employment of Workmen Act
and Gratuity Act.

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 In Sri Lankan context, following are the expressly recognized forms of apprenticeships:
1. Apprentices identified under the Wages Boards (eg; engineering, printing & garment trades
etc.,).
In certain Wages Boards, a monthly allowance is prescribed for apprentices for each year of the
apprenticeship. It is not mandatory on the employer to offer employment to the apprentice once he
completes apprenticeship.
2. Trainees employed under the Employment of Trainees (private sector) Law No.8 of 1978.
This law is applicable to employers and apprentices or trainees who have particularly entered into
a contract to provide apprenticeship under this law. The contract is to provide training to the trainee
in the trades specified in the Act for a period not exceeding one year. The Act specifies the
payments depending on the type of training. On the conclusion of successful training, the employer
is expected to provide employment in the trade he obtained training. The contract can be terminated
on disciplinary grounds by the employer, on giving 30 days notice by the trainee himself or with
the permission of the Commissioner of Labour on the ground that the apprentice has failed to
obtain the required training within the specified period. EPF Act and Workmen Compensation
Ordinance are applicable. For work in excess of normal working hours, overtime (daily rate/8 x1
½) is paid.
3. Apprentices under the National Apprenticeship Act No.49 of 1971 and Apprentices under the
National apprenticeship and Industrial Training authority (NAITA) established under the new law
Tertiary and Vocational Education Act No 20 of 1990. A contract is signed between the employer
and the trainee regarding the matters specified by the law and is registered with NAITA. The
contract must contain provisions regarding the type of training, the period of probation, leave
during training, manner of terminating the training etc.

Fixed term Contract (contract labour)

A fixed term employee is a person who is under contract with the employer where he has agreed
to serve for a determined period of time. In a fixed term contract since there is no termination by
the employer an employee cannot seek redress from a Labour Tribunal.

In terms of section 59(A) of Wages Boards Ordinance, the employer is liable to ensure that workers
are paid due wages during the period a contract of service exists. In the event the direct employer
(agent or contractor) does not pay the wages, the principal employer is liable to pay such wages.

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 Casual Employment
A casual employee is one employed by chance on no contract of employment. He will be offered
employment as and when work is available. He cannot expect work from the employer as of a
right.The nature of work assigned to such a workman is a significant factor in determining whether
the employee is a casual employee. In some court cases, work which does not come within the
meaning of ‘main business of a company’ and therefore is of an irregular nature, has been
considered as ‘casual work’.
The regularity of work is also another factor that could indicate the nature of the employment. For
example, if you employ a garden cleaner at irregular intervals when you think fit, that is a casual
employment. If you employ this garden cleaner regularly once a month, he will not be a casual
employee anymore, because his employment becomes stable and periodical.
However in many court cases it has been pointed out that using the mere terminology will not turn
a particular employment a casual one. The decision should be taken by analyzing the facts of each
case.

Casual employees are covered under the provisions of Termination of employment (special
provisions)Act, Wages Boards Ordinance, Workmen Compensation Ordinance, Factories
Ordinance, S&OE Act, Trade Unions ordinance, Industrial Disputes Act, EPF Act, ETF Act.
Seasonal employment
This is a form of employment where an employer engages the employee during a particular
period/season of the year Eg. those employed in the residential tourist hotels, tobacco drying, sugar
cane industry, Tea growing industry etc,.At the end of the season the employer is allowed to
conclude the contract.Seasonal workers should be paid with EPF but they do not come under the
ID Act in cases relating to retrenchment.

Temporary Workers

Temporary employment is created to fill a temporary need such as a replacement of another who
is on long leave. Work is limited either by time or job. EPF, ETF provisions are applicable and the
employee is entitled to sick, casual and holiday leave.

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SESSION 04:

TERMINATION OF CONTRACT EMPLOYMENT

Introduction
There are many ways that a contract of employment may come to an end. These instances are
given below.

1. Termination by the employer on disciplinary grounds and constructive termination

2. Termination by the employer on non disciplinary grounds (Termination of Employment of

Workmen (Special provisions) Act of 1971

3. Termination by operation of law such as frustration, impossibility of operation

4. Termination by effluxion of time

5. Termination by the employee such as resignation, vacation of post

In this lesson our discussion will be limited to termination of employment due to dismissal from
service on grounds of misconduct.

MISCONDUCT
Definition and operation
Misconduct has been defined as “an act inconsistent with the fulfillment of expressed or implied
conditions of service or if it has a material bearing on the smooth and efficient working of the
concern”

There is no definite law defining the degree of misconduct which would justify a dismissal.
Therefore each case of misconduct must be considered on its own merits.

Breaching of terms and conditions of the contract of employment generally amounts to

misconduct. However not all misconducts amount to dismissal. Breaking of an implied condition
(which is not expressly stated in the contract of employment) also could amount to a misconduct
and then warrants for dismissal. Eg: Theft or insubordination which is not stated as misconducts

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 in a letter of appointment. However, such acts are covered by the words ‘Any act bringing the
Company or service to disrepute etc.” enclosed in the letter of appointment.

A termination may take the form of a discharge. A discharge is a release from contractual
obligations of an employee and accompanied by a notice or payment in lieu of notice. A discharge
generally does not cause any blemish on an employee’s character.
Acts of Misconduct
Doing something which has been prohibited could be

2.1.1 Minor Misconducts - Pl. see Attachment - 1

2.1.2 Major Misconducts - Pl. see Attachment - 2

The classification of misconducts as minor and major misconducts is as per the general practice in
the private sector. There could be variations to this classification in some places depending on the
environment and industry. One important aspect in this regard is that these lists of misconducts are
often not exhaustive. The employer generally retains the discretion to vary, amend and add to the
lists of misconduct.
Legal provisions that expressly prohibit the employer from taking disciplinary
action against theEmployee

1. Section 40 – IDA –
It is an offence to terminate the service of, reduce to a lower grade, punish any employee for the
reason he has become entitled to the benefit of any collective agreement, settlement or award of
an Industrial court or arbitration.
2. Section 40 – IDA –
When a dispute is pending for settlement through Arbitration or Industrial Court, no employee
concerning that settlement can be terminated or taken action against without the written approval
of the Arbitrator or the Industrial court.
3. Section 49 – Wages Boards Ordinance
Dismissals due to the reason that the employee
 Has become a member of a wages Board
 Has given information to authorities regarding the matters under WBO
 Has absented himself after giving reasonable notice to the employer to attend to duties as
a member of a WB

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 4. Section 57 – Shop & Office Emplo yees’ Act
Dismissals or punishments of any employee for
 Giving any information to authorities regarding the matters under S&OEA
 Becoming entitled for any benefit under the S&OEA

5. Section 18 – Shop & Office Emplo yees’ Act

 Dismissals or punishments of any female employee
 Due to reasons arising out of the pregnancy or confinement
6. Part V – A of IDA (Act No. 56 of 1999)
Dismissals or punishments of any female employee
 For being a member of a trade union and for engaging in trade union activity
 For making any statement in good faith before an authority or any tribunal

Termination on the grounds of misconduct or indiscipline is a situation that gives a vast power in
the hands of the employer. The renowned Administrative Law expert Wade thus states;
“A disciplinary power is a power to inflict punishment for an offence, and if there is one case more
than another which demands fair procedure and the right of self-defense that is it. In any event, it
is surely a misuse of language to classify a power to take away a man’s livelihood as merely
disciplinary”
Hence, we must now discuss the established practices regarding dismissal of an employee.

The process of Dismissing an employee

There is no written law in Sri Lanka which would say that an inquiry must be held before
dismissing an employee. In the State sector the procedure to be followed in dismissal is stated in
the Government Establishments Code. In the private sector, rules relating to Discipline and
Disciplinary control may sometimes contain either in Disciplinary codes, rules, or circulars. There
may also be establishments where rules are silent about such matters. In some others, the
disciplinary rules may be included in collective agreements.

Whatever the case may be as seen above, it is important to follow a legally accepted fair practice
when dismissing an employee. Some reasons as to why Disciplinary procedure should be observed
may be stated as follows:

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 I. Punishment of an employee without following a disciplinary procedure is arbitrary.
It would prevent the accused employee the opportunity to exculpate himself. Such
an action was not viewed by Labour Courts favorably.
II. Even if the guilt of an employee can be established without a disciplinary inquiry,
there may be other factors which are relevant to the question of punishment.
III. The principles of natural justice require that a person must be informed of the
charges against him and an opportunity given to meet them. It helps to establish
bona-fides of the employer.
IV. It provides the employer an opportunity to record the evidence against the accused
and also the accused’s own evidence and that of others who might not be available
at the time of the Labour Tribunal matter.

Principals applicable to Inquiry procedure

Requirement of bona-fides
In one Indian Case, the meaning of the requirement was explained in the following manner –

“A groundless belief formed from ignorance or rashness is plainly not sufficient – the belief must
be entertained in good faith and those words were meant, I think to require an honest persuasion
founded after fair inquiry and consideration”.

Thus a disciplinary decision induced by personal ill will, corrupt motive or other improper reason
can be impugned.
Requirement to observe the rule of law
The Rule of Law in this context requires that:

a. The Law will be applied over all persons without discrimination.

b. The application of the Law be simultaneously done and
c. Same standard and interpretation of the Law be applied over all persons concerned.

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 Requirement to avoid delay
It is accepted that a “delay in justice is a denial of justice”. The reasons as to why timely action
should be taken are as follows:

i. Time factor (delays) makes witnesses forget incidents as well as details of incidents
ii. Passage of time could also make witnesses not available when required.
iii. Documentary/real evidence gets lost or could be tampered with.
iv. Personnel in the organization tend to lose confidence.
v. Delays could be construed as abandonment of the case.

The requirement of Natural Justice

Unwritten rules of English Common Law came to be accepted by the Courts in their review of
decisions of other courts of inferior jurisdiction.
The rule against bias: no man to be the judge in his own cause.
A judge is disqualified in hearing a case if he has even the slightest interest in the subject matter
of the inquiry unless consented by all parties. similarly, a judge is disqualified in hearing a case
where there is a real likelihood that he would have a bias in favour of one of the parties.
Rule regarding right to a hearing: no man to be condemned unheard.
Following principals are relevant here:

 Each party should have the opportunity of knowing the case against him and of stating his
own case
 Each party must have the chance to present his version of the facts and make his
submissions.
 Each party must be able to comment on all the material considered by the judge.
 Neither side must communicate with the judge behind the other’s back.

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 The requirement of reasonable opportunity
Reasonable opportunity would mean providing following opportunities to an accused officer.

Preliminary Inquiry

When an incident takes place which should be inquired into or a disciplinary offence is committed
by an employee or information is received regarding an incident that is being committed, the
disciplinary authority must inquire into such incident before coming to a conclusion.

The disciplinary authority himself or by appointing an investigation officer must initiate the
inquiry. If there is a suspect, the inquiry officer must be of a position above the rank of the suspect.

In this instance there is no accused; there may be suspects. This is a fact finding stage. All required
witnesses should be called and statements be taken. Similarly, production, documents may be
taken into custody. There is no order to call witnesses and statements are recorded in the first
person and in the language most familiar to witnesses. The investigating officer may ask questions
for the purpose of getting clarification or the full story. The statement should be given to the
witness to read and obtain his/her signature. It shall be counter signed by the investigating officer.

The officer conducting the investigation must at the end of it should state in his investigation
report ; if there is a prima facie case, against whom, regarding what offences, to what extent and
if it is necessary to interdict the suspect/accused.

The report must be submitted to the disciplinary/appointing authority.

Serving a Show-cause Letter or Charge Sheet.

Charges arise when there is substantial evidence of an offence. Hence when charges are drafted
due care must be given that there is evidence to prove such charges. The charges must be clear and
there is no specific number of charges that a charge sheet may contain. Every charge sheet should
contain a list of documents and witnesses, an offer to examine the documents and statements along
with the person who is representing the accused. The date the explanation should be submitted,
and if no explanation is received, the result of it also must be mentioned.

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 Providing facilities to peruse records.

Sufficient time and facility should be given to the accused to peruse the documents and statements.
However, there is no hard and fast rule that copies of the statements should be released to the
accused.

Opportunity for explanation.

When requested by the accused, if reasonable sufficient additional time should be give to submit
the explanation. Once the explanation is received the disciplinary authority can decide if the
explanation is satisfactory or not. If it is not satisfactory, action will be taken to proceed with the
domestic inquiry and the accused will be accordingly notified. If the explanation is acceptable,
then the disciplinary authority may decide to impose minor punishments or exonerate the
employee.
Conducting a Domestic Inquiry

The domestic Inquiry could be held either by a panel of inquiry officers or a single inquiry officer
who are accepted as independent by both parties. They must conduct the inquiry according to the
principles of natural justice. It is the duty of the inquiry officer to make a thorough investigation
without resorting much to the legal formalities and to obtain the best evidence.

The role of the prosecuting officer in a Domestic Inquiry is to conduct the inquiry on behalf of the
prosecution (Company). The person representing the accused (Defending Officer) could be
anybody other than a Lawyer or an officer of the same rank. Generally if the employee is a member
of a Trade Union, an officer appointed by the Trade Union could represent the accused.

The inquiry commences with the accused being asked by the Inquiring Officer as to whether he
pleads guilty or not guilty. If the accused pleads guilty, he should be asked if he has any statement
to make. If the accused pleads not guilty, then the inquiry should commence. The prosecuting
officer has to lead evidence against the accused in order to prove the charges against the accused
officer. The witnesses can be cross examined by the Defending Officer. If any new facts are
revealed at the cross examination, the prosecuting officer can re-examine the witnesses to clarify
such matters. A witness is entitled to give evidence in the language he is most comfortable with.

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 All the proceedings of a domestic inquiry must be recorded. It is preferable to get the signature of
the witnesses to the recorded proceedings. Before that he must get the opportunity of reading it.

At the end of the inquiry both parties make written submissions to the Inquiry Officer and it is the
duty of the Inquiry Officer thereafter to analyze the evidence and the submissions and make his
final report.

The Inquiry Officer has to find whether the accused is guilty or not guilty of each charge. He can
make his recommendations as regards the accused and the charges.
Burden and Quantum of proof at a domestic inquiry
The rule that every person is presumed innocent until he is proven guilty is accepted even at the
Domestic Inquiry. It is the duty of the Inquiry Officer to ascertain facts of the case. When arriving
at his conclusion he should consider a fact to be proved or disproved. After considering all
available evidence he could be satisfied that the fact does not exists or considers its non existence
so probable that a prudent man could in the circumstances act in the presumption that it exists or
otherwise.

In Domestic Inquiries the burden of proof falls on the Prosecuting Officer. This is based on the
general rule that ‘the person who asserts must prove’ whether the allegation is an affirmative or
negative one and not the person who denies. In a case of termination of service on misconduct, the
quantum of proof required is the balance of probability.
Punishment
Though punishment alone is not a complete remedy for eradication of offences they cannot be
ignored since the ultimate end anticipated is reducing the incidents of indiscipline. Selecting an
appropriate punishment is always important because a Court is entitled to interfere with a
punishment where it considers it out of proportion to the offence. In selecting the punishment the
following factors should be taken into consideration.

1. The gravity of the offence.

2. Employee’s record of service.
3. The fact whether he has been found guilty and punished of the same offence before.
4. The appropriateness of the punishment.

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 The punishments that could be imposed after an employee is found guilty could be listed in the
following manner.

Warning
Suspension
Fines
Suspension of increments
Deduction of value of loss
Demotion or reduction in rank.
Transfer
Dismissal

The Effect of Dismissal

As a consequence of the dismissal the employee will be removed from service. Such an employee
could challenge the decision of the employer by making a complaint to the Labour Tribunal. Such
a complaint could be inquired into by the Labour Tribunal and come to either of the following
conclusions.
1) Reinstatement - This is a restoration of the status quo. Hence should be restored to the
same post with all the benefits as if he has never been dismissed.
2) Reinstatement and back-wages - There may be specific order to pay back-wages in addition
to reinstatement.
3) Compensation in lieu of Reinstatement- There is no specific rule as to how the
compensation is ordered. The under-lining rule is that the employees’ loss must be
compensated. Therefore, compensation will be ordered in the event the termination is not
justifiable but due to a certain reason reinstatement could not be ordered.

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 Attachment I

LIST OF MINOR OFFENCES

 Absence from a place of work without permission.
 Abuse, threat or assault of an employee at the place of work or inside the premises of the
Company whether due to a private matter or not.
 Abuse, threat or assault of an employee outside the premises of the company when its
cause is due to a matter connected to work and conduct at the work place.
 Allegations or statements made against an employee which the employee making them is
unable to prove reasonably as being correct or true which in its effect causes or is
intended to cause disrepute, disrespect, pain or mind, loss of prestige etc.
 Alterations and quarrelling whether the quarrel relates to a private matter or not at work
place or premises of the Company.
 Being found straying from work place without reason or permission.
 Being found smelling or under the influence or liquor or other intoxicant whilst at work
or in the work place or premises of the Company.
 Breach of any rule or instructions for the maintenance of good order and discipline or
cleanliness.
 Breach of requirements of general conduct.
 Carrying unauthorized persons in a vehicle of the Company.
 Collecting money within the work place or premises of the Company for purposes and in
a manner not sanctioned by the Management.
 Creating nuisance or disturbance in place of work or premises.
 Damage to property or goods of the Company.
 Dereliction of duty.
 Disregard of any notice in connection with smoking, chewing betal or consuming liquor.
 Distributing, displaying or exhibiting in work places or on the premises of the Company
any hand bill, poster, emblem or device or other literature without the prior sanction of
the Management.
 Exceeding the stipulated time for meal intervals and rest pauses.
 Failure to comply with any lawful and reasonable order of a superior in relating to work
and conduct.
 Failure to keep time schedules in work.
 Failure to maintain essential records.
 Failure to provide the Management with such personal information as date of birth,
identity card number, particulars of parentage, rice ration book, residential address and
private assets owned by the employee, hen required to do so.
 Failure to report an accident to a vehicle of the Company.
 Failure to return from leave without reasonable cause.
 Failure to wear uniform whilst being on duty.

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  Gambling in the work place or premises of the Company.
 Habitually late attendance.
 Idling on duty.
 Incivility to the public.
 Indifference to instructions regarding work and failure to reach the stipulated production
standards.
 Late attendance.
 Leaving place of work before normal closing time without permission.
 Malingering.
 Minor acts of indiscipline.
 Misuse of property of the Company.
 Negligence at work.
 Offences under general, administrative, financial or disciplinary or instructions.
 Partaking of liquor or other intoxicant whilst on duty.
 Persistent unauthorized absence from place of work.
 Rudeness or insubordination to Superior at place of work or premises.
 Sleeping on duty.
 Slowing down work.
 Unauthorized halting of vehicles.
 Unauthorized use of vehicles belonging to the Company.
 Unpunctuality.
 Unwillingness to perform normal duties.
 Wearing untidy or dirty uniforms.

Attachment II

LIST OF MAJOR OFFENCES

 Abuse of power or authority for personal gain or other ends.
 Acting in a manner calculated to cause loss or harm to the Company, or to affect adversely
its goodwill, good manner or prestige.
 Acting in collusion with competitors, suppliers, customers, agents to the detriment of the
Company.
 Aiding and abetting in any of the above.
 An act of misconduct resulting in serious consequences.
 Anti Social Acts.
 Assaulting, threatening or causing bodily harm to anyone while on duty or at the work
place or premises of the Company.

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  Being a member of an unlawful association or group which has as its intent or objective
the overthrow of the established Government of Sri Lanka, or the duly constituted Board
of the Company.
 Being found drunk and disorderly in the place of work or premises of the Company.
 Breach of requirements of general conduct.
 Causing damage or loss to the work in progress of the Company.
 Causing damage to or loss or goods or articles or other property belonging to the Company,
such damage or loss being attributable to gross negligence or default.
 Committing any criminal offence.
 Committing mischief within the Company premises or in respect of its property.
 Conviction in a Court of Law for a Criminal Offence.
 Criminal trespass within Company premises.
 Dereliction of duty resulting in serious consequences.
 Disclosure to any unauthorized person information relating to the business of the Company.
 Driving the vehicles of the Company under the influence of liquor or intoxicating drugs.
 Failure to observe safety precautions.
 Forgery and falsification of Documents.
 Giving false evidence at inquiries.
 Giving false information regarding necessary personal particulars at the time of
employment or subsequently when called upon to do.
 Gross abuse of any common facilities provided by the Company for the use and benefit or
employees.
 Gross impropriety.
 Habitual indiscipline.
 Inflictment of punitive orders by a Statutory Body.
 Insolence, insubordination or disobedience, whether alone or in combination with other, to
the orders of a Superior given in the course of his legitimate duties.
 Interference with any safety or security devices installed in the work places or premises of
the Company.
 Issue of unlawful instructions or orders to subordinates.
 Mailing or distribution of anonymous or signed letters and other communications with
intent to cause dis-satisfaction, damage to the character and reputation of persons and the
good name of the Company.
 Misappropriation of the funds of the Company.
 Misuse of power, authority for personal gain or other ends.
 Molesting of a female employee and any attempt to outrage her modesty.
 Negligence resulting in serious consequences.
 Offence under general, administrative, financial or disciplinary regulations or instructions.
 Participation or inciting others to participate in activities detrimental to the interests of the
Company such as un authorized interruption of work, sabotage or any other activity not
falling within the scope of legitimate Trade Union activity.

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  Rash, negligent or dangerous driving of vehicles of the Company resulting in death or
injury to any person, vehicle or other public or private property.
 Repetition of an act of minor misconduct.
 Riotous or disorderly behavior or any act subversive of discipline in the place of work or
premises of the Company.
 Sleeping on duty in the case of those required to be awake, alert and vigilant as Watchers,
Security Guards.
 Smuggling.
 Taking or giving bribes or gratification in the performance of duties.
 The destruction, mutilation or secretion by any employee of any document or article
entrusted to him in the course of ones duties.
 The encouragement or incitement by any employee to any other employee to impede the
work of the Company in which other employee is employed.
 The failure of an employee to return to any other employee any document or article which,
having properly been in the custody of such other employee, was removed from such
custody by the first mentioned employee whether in the course of his duties or otherwise.
The failure of such employee to return any document or article to its proper place of custody
whether in the office of the Company or elsewhere.
 The failure of any employee to return any document or article to its proper place of custody
whether in the office of the Company or elsewhere.
 Theft, fraud, dishonesty, misappropriation including temporary misappropriation, in
connection with the business and or property of the Company.
 The impairing by any employee of the efficiency of, or the impeding by such employee of
the working of, any vehicle, machinery, apparatus or other thing used or intended to be
used in the performance of the work of the Company.
 The impairing by any employee of the work of the Company.
 Refusal of an employee to work or to work reasonable overtime or to work at times when
requested to work by his superiors or to obey lawful orders in relation to essential and
urgent work.
 Trafficking or trading in drugs.
 Unauthorized use of vehicles for improper uses.

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