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SKYSPAN ASIA (PVT.) LTD.SUPREME COURT.
DR. SHIRANI BANDARANAYAKE, J.
AMARATUNGA, J. ANDBALAPATABENDI, J.
S.C. APPEAL NO. 14/2006S.C. (SPL.) LA NO. 237/2005H.C. GAMPAHA NO. 59/2003L.T NO. 24/916/2000MARCH 12th, 2008
Industrial Disputes Act – Section 31(B), Section 31C(1) – Duties and powersof a Labour Tribunal – Common law principles – Applicability in employer andemployee relationship.
The appellant who was an employee of the respondent company had joinedthe company on 2.6.1997 and was promoted as a Head Supervisor on5.11.1998. In July 2000, the appellant was served with a charge sheet dated26.7.2000 containing five charges. The appellant was interdicted and after adomestic inquiry his services were terminated by letter dated 25.10.2000.The appellant sought re-instatement with back wages and compensation forwrongful termination before the Labour Tribunal. After inquiry the LabourTribunal made its order on 30.6.2003 and by that order held that thetermination was unjustified and ordered re-instatement with full back wages;the respondent appealed to the High Court, which allowed the appeal andset aside the order of the Labour Tribunal. Against that order the appellantpreferred an application to the Supreme Court for which special leave toappeal was granted.
(1) The paramount consideration by a Labour Tribunal is the needfor a just and equitable solution and for this purpose whatis necessary is to do justice between the parties to the appli-cation.
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(2) The concept of common law that gave prominence to the rights andduties of the employees under their contractual terms, which weretaken into consideration by the High Court Judge in deciding theappeal, are no longer applicable in Sri Lanka with regard to labourdisputes.
per Dr. Shirani Bandaranayake, J.
"Although the position under the common law, where either party wasentitled to terminate the contract of employment in accordance with itsprovisions without any consequential effect, the introduction of LabourLaws had modified this position. Through the establishment of theLabour Tribunals, the common law concepts, dealing with labourrelations were changed and the Industrial Disputes Act came into beingand Labour Tribunals were established under and in terms of the saidAct and expressly provided for the Labour Tribunal to take action,notwithstanding anything to the contrary in any contract of servicebetween an employer and his employee."
Cases referred to:
Urban Council, Panadura v Cooray 1971 75 NLR 236.
United Engineering Workers' Union v Devanayagam 1967 69 NLR289.
APPEAL from the judgment of the High Court.
Rohan Sahabandu for employee-applicant-respondent-appellant.
Chandana Liyanapatabendi with Ranjika Pilapitiya for employer-respondent-appellant-respondent.
December 16, 2008
DR. SHIRANI BANDARANAYAKE, J.This is an appeal from the judgment of the High Court of theWestern Province holden in Gampaha dated 20.09.2005. By thatjudgment, learned Judge of the High Court set aside the ordermade by the Labour Tribunal, Gampaha and allowed the appealpreferred by the employer-respondent-appellant-respondent(hereinafter referred to as respondent). The employee-applicant-respondent-appellant (hereinafter referred to as the appellant)thereafter preferred an application to this Court for which SpecialLeave to Appeal was granted.
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At the hearing, it was agreed that this appeal could be arguedon the basis of the following questions:
Did the learned High Court Judge consider the evidence ledin this case in the correct perspective, taking intoconsideration that the learned President of the LabourTribunal is only expected to make a just and equitableorder?
Is the approach to the matters in dispute by the learned HighCourt Judge erroneous?
The facts of this appeal, as submitted by the learned Counselfor the appellant, albeit brief, are as follows:
At the time material to this appeal, the appellant was a HeadSupervisor of the respondent Company on a salary of Rs. 10,500/-per month. He had joined the respondent Company as a SectionLeader on 02.06.1997 and was promoted as a Head Supervisor on05.11.1998.
In July 2000, the appellant was served with a charge sheetdated 26.07.2000 containing five (5) charges, which were asfollows (R1):
that being a Head Supervisor of the hand welding sectionhad conducted training sessions for all sections of theproduction department from June 21, 2000 to July 4, 2000whereas the instructions given for Supervisors were toconduct training for their respective sections;
that he had addressed certain grievances of the workersduring the said training sessions, and tried to give a badimpression of the Company to the workers;
that he had criticized the management and the Managersof the Company indicating various weaknesses and lapses;
that he had informed the workers that those who fail in thewritten test that would be conducted after the workshopwould be dismissed; and
that he had represented the management informally wherehe had no authority to do so in the circumstances.
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The appellant was interdicted with effect from 27.07.2000 andafter a domestic inquiry his services were terminated by letterdated 25.10.2000 with effect from 27.07.2000. The appellantsought re-instatement with back wages and compensation forwrongful termination before the Labour Tribunal.
Learned President of the Labour Tribunal, by his order dated30.06.2003, held that the termination was unjustified and orderedre-instatement with full back wages with effect from 27.07.2000.The respondent appealed to the High Court, which allowed theappeal and set aside the order of the Labour Tribunal.
Learned Counsel for the appellant submitted that the learnedJudge of the High Court had failed to appreciate that over theyears, Labour Laws have developed on the basis of sociallegislation, which had been the approach taken by the learnedPresident of the Labour Tribunal and that the learned Judge of theHigh Court had considered the matter in question under theconcepts of Common Law. Learned Counsel for the appellant alsocontended that the learned President of the Labour Tribunal hadcarefully considered the documents marked as R3 and R4,whereas the learned Judge of the High Court, only on a mereperusal of these two documents, had come to the conclusion thatthe Labour Tribunal was in error in its evaluation of the saiddocuments marked as R3 and R4. Learned Counsel for theappellant also contended that the High Court had erred in law andhas not appreciated the fact that the Labour Tribunal wasempowered by statute to give a just and equitable order. Referringto the award made by the Labour Tribunal, learned Counsel for theappellant submitted that the appellant should be entitled to bereinstated with full back wages.
Learned Counsel for the respondent, on the other hand,contended that the learned President of the Labour Tribunal hadfailed to evaluate the material placed before the Tribunal andespecially, there had been no proper examination of the twodocuments marked as R3 and R4. It was also submitted that interms of section 31C of the Industrial Disputes Act, the evidencethat was led at the Tribunal was sufficient to establish the natureand the seriousness of the misconduct involved. In these
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circumstances learned Counsel for the respondent contended thatthe termination of the appellant could be justified as correctly heldby the learned Judge of the High Court.
Having stated the submissions of both learned Counsel, let menow turn to examine those in the light of the two questions set outat the outset of this judgment.
It is common ground that the appellant was interdicted witheffect from 27.07.2000 and that his services were terminated byletter dated 25.10.2000. At the Labour Tribunal the respondent hadadmitted the termination of the appellant and the employer hadgiven evidence. In addition to the employer, Keerthi Vithanage, theQuality Control Engineer and Shanthilal Fernando, the HumanResources Manager had also given evidence whereas theappellant had given evidence on his behalf. Having considered thesubmissions and the relevant documents, learned President of theLabour Tribunal, on 30.06.2003 had ordered reinstatement withfull back wages for the period the appellant was out ofemployment, viz. from 27.07.2000 to 01.07.2003. Accordingly, theTribunal ordered the payment of Rs. 369,250/- to the appellant.
Learned Judge of the High Court thereafter had considered theappeal of the respondent and whilst allowing the said appeal, hadtaken the view that the order of the learned President of theLabour Tribunal cannot stand, for the following reasons:
Clause 13 of the letter of appointment issued to theappellant, clearly had given the authority to the respondentto terminate services of the respondent. Further therespondent had conducted a domestic inquiry, prior to itsdecision to terminate the services of the appellant andaccordingly the respondent's action in such terminationcould be justified.
Accordingly learned President of the Labour Tribunal hadnot addressed his mind to clause 13 of the letter ofappointment issued to the appellant.
Since the respondent is a private Company, the provisionsof the Evidence Ordinance would not be applicable and itwould not be necessary to prove a fact in terms of the
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Evidence Ordinance. Accordingly even hearsay evidencewould be sufficient for the purpose of terminating theservices of an employee.
It is not necessary to place all available evidence before theLabour Tribunal in order to justify the termination, since theLabour Tribunal should consider the evidence led before thedomestic inquiry to arrive at a decision.
If an employer becomes aware that the employee isconducting himself in a manner detrimental to the employer,irrespective of the fact as to from where he obtains theinformation, the employer could terminate the service of theemployee.
The employer should have the right to terminate theservices of an employee, who disregards orders, and in thisinstance, the Labour Tribunal had not considered the lettersof warning, marked as R3 and R4, issued to the appellant.
The allegations leveled against the appellant by the respondentwere based on a preliminary investigation carried out by therespondent (R1). According to the respondent, the appellantfunctioned as a Head Supervisor of the hand welding section andwas given instructions to conduct a training session for theworkers in his section. In fact these instructions were given to allHead Supervisors and the allegation was that the appellant hadconducted the said training session for all the sections of theProduction Department from 21.06.2000 to 04.07.2000. Further itwas said that the appellant had addressed certain grievances ofthe workers during the training sessions to create a badimpression of the respondent to its employees. In that respect theallegation was that the appellant had criticized the managers andthe management of the respondent Company indicating variousweaknesses and lapses on their part. Further it was stated that,
the appellant had informed the workers that a written testwould be held soon and those workers, who fail in the saidwritten test would be dismissed immediately;
that the appellant had represented the managementinformally, where he had no authority for such represen-tation.
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Learned President of the Labour Tribunal having consideredthe matter before him was of the view that, the respondent had notled any evidence to show as to how the appellant had criticised themanagement. Although the respondent had alleged that theappellant had been critical of the management, the respondenthad not placed any material before the Labour Tribunal tosubstantiate this position. On perusal of the evidence that was ledbefore the Labour Tribunal, it is evident that the respondent hadnot been successful in either leading or corroborating the evidencein order to substantiate its position.
The witness Keerthi Vithanage, who was the Quality ControlEngineer, had stated that he had received complaints fromworkers that the appellant had been giving advice to persons notin his unit, and that he had been criticizing the management.However, no evidence had been led on this position. Vithanagehad stated in his evidence that he had seen the appellant talkingto others, but at that given time he had not been with the workers,but was inside his room, which was located some distanceaway.
The said Keerthi Vithanage had clearly stated in his evidencethat,
Accordingly except for the fact that Keerthi Vithanage had seenthe appellant being with a group of workers, he had not been ableto state as to how and in what context the appellant had criticizedthe management with the workers. Further, although Vithanagehad referred to complaints, none of those were produced beforethe Tribunal.
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The other witness, who was from the Human ResourcesDepartment had not been able to state as to what he had heard orseen at the relevant time.
In the aforementioned circumstances, the Labour Tribunal hadcorrectly come to the conclusion that on a consideration of thetotality of the evidence led, the allegations, which are questions offact, have been proved on a balance of probability. The High Courtas stated earlier had gone on the basis that hearsay evidence isadequate and that there is no necessity to call for witnesses interms of the Evidence Ordinance.
It is not disputed that a workman or a trade union on behalf ofa workman, who is a member of that union, could make anapplication to a Labour Tribunal for relief or redress in respect of:
the termination of his services by his employer;
the question whether any gratuity or other benefits are dueto him from his employer on termination of his services andthe amount of such gratuity and the nature and extent of anysuch benefits; and
such other matters relating to the terms of employment orthe conditions of labour, of a workman as may beprescribed. (Section 31B(1) of the Industrial Disputes Act)
Section 31C(1) of the Industrial Disputes Act deals with theduties and powers of a Labour Tribunal with regard to theapplications in terms of Section 31B of the Industrial Disputes Act.The said Act clearly states that it shall be the duty of the LabourTribunal to make all such inquiries into the specific applicationmade and hear all such evidence and make such order, which isjust and equitable. According to section 31C(1) of the IndustrialDisputes Act,
"Where an application under section 31B is made to a labourtribunal, it shall be the duty of the tribunal to make all suchinquiries into that application and hear all such evidence asthe tribunal may consider necessary, and thereafter makesuch order as may appear to the tribunal to be just andequitable" (emphasis added).
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The need to hear all such evidence in order to properly inquireinto the application made by a workman had been considered bySirimane, J., in Urban Council, Panadura v Cooray(A), where it hadbeen stated that, though an employee's application for reliefbefore a Labour Tribunal should be heard with sympathy andunderstanding, yet the Tribunal must act judicially. Moreimportantly it was held that the Labour Tribunal should not shut itseyes to positive evidence. Further in United Engineering Workers'Union v DevanayagamM, it was clearly stated that the paramountconsideration by a Labour Tribunal is the need for a just andequitable solution and for this purpose, what is necessary is to dojustice between the parties to the application.
Learned Judge of the High Court referred to the documentsmarked as R3 and R4 and had held that by these documents theappellant had been primarily warned by the respondent and thatthe learned President of the Labour Tribunal had not paid anyattention to the contents of these documents.
An examination of R3 clearly indicates that the position takenby the learned Judge of the High Court, is not correct. The saiddocument (R3) dated 24.02.1999 is a letter issued not to theappellant directly, but to all the Supervisors, indicating steps theyshould take to avoid mistakes and to maintain good supervision.This document had been issued by the Chairman of therespondent Company. The document marked as R4 dated
was issued to the appellant by the Human ResourcesManager of the respondent Company regarding the 'BusbahnhufDingelstaedt Project' and had drawn the attention of the appellantto his obligations as a Supervisor to advice the work force in orderto avoid mistakes. This letter indicates that the Company hadissued certain guidelines for the Supervisors to follow regardingsupervision in order to avoid mistakes and obtain a high yield fromthose projects they had undertaken. Therefore, a careful perusalof the order of the Labour Tribunal clearly shows that the positiontaken by the High Court in this regard is not correct. In fact theLabour Tribunal had considered the issue based on thedocuments marked R3 and R4 and had come to the conclusionthat R3 is a document, which was a kind of a general circularissued to all the Supervisors and R4 also gave general instructions
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based on the role of the appellant as a Supervisor. Accordingly, theLabour Tribunal had taken the view that on a balance of probabilitythe respondent had not been able to prove past bad conduct of theappellant.
It is therefore apparent that whilst the learned President of theLabour Tribunal had considered the application after evaluatingthe evidence before him, the learned Judge of the High Court hadbeen of the view that there is no necessity for the respondent tojustify its decision to terminate the services of the appellant, sincethe latter had given his consent at the time of acceptance of hisletter of appointment for such termination. The High Court had forthis purpose, referred to clause 13 of the letter of appointmentdated 30.05.1997 (R2). The said clause reads as follows:
“TerminationYour employment with the Company after confirmationmay be terminated by either party giving one month'snotice or by paying an amount equivalent to one (01)month's remuneration. However, the employer reservesthe right to terminate this contract of employment withoutsuch notice or payment or remuneration for reasons ofinsobriety, insubordination, gross neglect in the basicduty, misconduct or theft.
During the existence of laissez-faire state, the employer-employee relationship was based on the common law principlesand it was an accepted fact that an employer could give effect towhat the employer and employee had agreed upon at thecommencement of their relationship. Referring to the applicabilityof common law concepts and its input on the contract ofemployment. S.R. de Silva (The Contract of Employment, mono-graph No. 4, 1983, pg. 2) states that,
"There was a time when the common law regarded anemployer as having a proprietary right in his servant withcriminal sanctions attaching to breaches of contract byemployees. It is this concept that made a stranger
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wrongly injuring a servant liable not only to the servant,but also to the master. Even though the common law hascome a long way since that time, in the modern commonlaw the contract of employment is still considered moreor less conclusive in determining the rights of the partiesand it implies rights and duties only in the absence ofcontractual terms. This attitude is based on thefundamental misconception of the common law that thecontract of employment is a voluntary agreemententered into between parties of equal bargainingstrength. The common law looks upon employment as amere contractual relationship between two partiesterminable at the will of either party, subject to thecondition of notice in certain cases."
These concepts of common law that gave prominence to therights and duties of employees under their contractual terms,which were taken into consideration by the learned Judge of theHigh Court in deciding this appeal, are no longer applicable in ourlegal system. Along with the collapse of the laissez-faire state andwith the emergence of the modern welfare state, countries hadtaken steps to establish special systems of Courts for the purposeof granting just and equitable orders. In Sri Lanka, the IndustrialDisputes Act came into being to provide for the prevention,investigation and settlement of industrial disputes and for mattersconnected therewith or incidental thereto. Labour Tribunals wereestablished under and in terms of the said Act and Section 31B4clearly states that,
"Any relief or redress may be granted by a labourtribunal to a workman upon an application made undersubsection (1) notwithstanding anything to the contraryin any contract of service between him and his employer"(emphasis added).
It is therefore quite clear that the common law principles statedearlier are no longer applicable in Sri Lanka with regard to labourdisputes and as stated by Lord Devlin in United EngineeringWorkers' Union v Devanayagam (supra),
It is to be noted that although this position would have beencorrect under the common law, where either party was entitled toterminate the contract of employment in accordance with itsprovisions without any consequential effect, the introduction ofLabour Laws had modified this position. Through theestablishment of the Labour Tribunals, the common law conceptsdealing with labour relations were changed, and the IndustrialDisputes Act, as stated earlier, expressly provided for a LabourTribunal to take action, notwithstanding anything to the contrary inthe contract of service between an employer and his employee. Infact in the well known case of the United Engineering Workers'Union v Devanayagam (supra), Lord Devlin, referring to Section31B(4) of the Industrial Disputes Act empowering a LabourTribunal to grant relief contrary to the terms of a contract ofservice had said that,
"Indeed in this sub-section the statute is doing no morethan accepting and recognising the well known fact thatthe relations between an employer and his workman areno longer completely governed by the contract ofservice."
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"The common law of master and servant has fallen intodisuse."
The High Court however had quite contrary to the aforesaidposition had gone on the basis that, in terms of clause 13 of theletter of appointment, the respondent could have terminated theservices of the appellant.
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In these circumstances, it is apparent that the High Court hadbased its decision in terms of the common law applicable toemployer-employee relationships and had failed to appreciate thechanges that had taken place in the legal concepts dealing withlabour disputes, since the introduction of the Industrial DisputesAct in this country.
Accordingly, on a careful consideration of the aforementioned,it is apparent that the approach taken by the High Court in decidingthis application cannot be accepted.
For the reasons aforementioned, the questions, which were setout at the out set of this judgment are answered as follows:
Learned Judge of the High Court had not considered theevidence led in this case in the correct perspective, takinginto consideration that the learned President of the LabourTribunal is only expected to make a just and equitableorder.
the approach to the matters in dispute by the learned Judgeof the High Court is erroneous.
Accordingly I allow the appeal, set aside the judgment of theHigh Court dated 20.09.2005 and affirm the order of the LabourTribunal dated 30.06.2003. The respondent is directed to reinstatethe appellant with effect from 01.01.2009 with back wages, asdirected by the Labour Tribunal from 27.07.2000 upto 01.01.2009,where his monthly salary was agreed upon Rs. 10,500/-
I make no order as to costs.
AMARATUNGA, J.-I agree
BALAPATABENDI, J.-I agree