Bandaranaike v. Attorney-General (Sharvananda. J.)
A.F. JONES (EXPORTERS) CEYLON LTD.,
WANASUNDERA, J.. RATWATTE. J. AND SOZA. J.
S.C. APPEAL No. 53/81
C.A. APPEAL No. 700/76
M.C. COLOMBO No. 72083/A
MARCH 5 AND 29, 1982
Industrial Law – Industrial Disputes Act. ss. B and 10 – Collective agreement -Minister’s right to extend application of selected clauses of collective agreement -Recognised terms and conditions — Failure by employer to pay in terms of extension.
Whatever benefits a workman would be entitled to by way of an extension ofan application of a collective agreement are either the terms and conditions setout in the agreement or terms and conditions not less favourable than the termsand conditions set out in the agreement. Under section 8(2) of the IndustrialDisputes Act the extension operates by operation of law and there is no roomfor the selective application of clauses of a collective agreement. The recognisedterms and conditions are nothing but the totality of the terms and conditions setout in the agreement.
The Minister’s order should have the effect of an equal application of the lawand not be discriminatory of either the workmen inter sc.or the employer inter,se. A selective application of the clauses of a collective agreement can result in
794Sri Lanka Law Reports(1982) 2 S.L.R.
su'ch1 'discfirHiKAtion- This is another reason why any extension should be of-thewhole agreement.
Case referred to:
1. Express Newspapers Ceylon Ltd. v. Attorney-General S.C. 14/75 – S.C. Minutesof 12.11.1975.
H.W. Jayewardene Q.C. with Mark Fernando, IV. Siriwardene, Miss P. Seneviratneand 5. Ronald Perera for accused-appellant.
M.S. .Aziz-, Deputy Solicitor-General for Attorney-General.
" Cur.adv'. 'vuit.
May 18, 1982.
This appeal involves an important question of law as to the extentof the Minister’s discretion in extending a collective agreement andrelates to the proper interpretation of section 10 of the IndustrialDisputes Act. The question was raised by way of defence in aprosecution in the Magistrate’s Court, where the accused-appellantCompany – a tea export company – was charged with having failedto make certain payments to one of its employees and therebycontravened an order made by the Minister of Labour under section10 of the Industrial Disputes Act. By this order the Minister hadextended the provisions of Collective Agreement 3B of 1971 betweenthe Employers' Federation of Ceylon and the Eksath Thay, RubberSaha Merate Drauwya Kamkaru Samithiya to “every employer inthe Tea Export Industry employing not less than 25 workmen in tjiatindustry”. The accused-appellant was convicted in the Magistrate’sCourt and the conviction has been affirmed by the Court of Appeal. ’
The accused-appellant has challenged the validity of the extensionorder made by the Minister of Labour. Mr. Jayewardene who appearedfor the appellant has referred to the Minister’s order published inGovernment Gazette No. 14995/8 dated. 1st February, 1972 and drawnour attention to the fact that the order does not extend the wholeof the collective agreement but has sought to apply only certainselected clauses in the agreement. About ten clauses have beendeliberately omitted and Mr. Jayewardene submitted that these omittedclauses have an important bearing on employer-employee relationship.He also submits that, since the collective agreement has been hammered
A.F. /<• es Lid. v. Ralasubramaniam iWoruviundera, J.)
jut by a process 01 give and take and hard bargaining, none of theprovisions (except those obviously inappropriate in the present context).an be regarded as being superfluous and therefore'(he* entirety ofthe provisions has io be considered as constituting, one .single andntegrated agreement. He submitted that when section' "of theAct empowers the Minister to extend the collective''agreement by
, r. . ,ill';; y}ir 'J.i'i;. '
in order withiny limitation as to its applicability , a distinction
nas to be drawn between the contents of the' collective ^agreementwhich cannot be modified by hini and the applicability o'ltlie collectiveagreement, meanim the range of its operation, i.e.. as regards thetype of employer t the locality or area in respect of which theMinister can undoubtedly exercise a discretion.
• *;r.. i»hs.h'jii z rji.
Part III, Sectior A, of the Industrial Disputes Act deals withcollective agreemepis and sections 8 and.,10. need-special- examination.tJ^,,fpspu.SeftiAnv8(l) of the Act makcfuf&.jcollective agreementegally.;^ipding on me parties, trade unions,employers and workmen
referred to in that agreement, and the terms of the agreement ar,e;made implied tern -, in the contract of employment between the:employers and workmen bound by the agreement.
Section 8(2) provides for a limited extension’ of the- .cqllectiveagreement to all workmen in the same work place. It states.; t,
“(2) Where there-are any workmen in any industry., who arebound by a collective agreement, the employer in .that industryshall, unless thi re is a provision to the contrary |n that agreement,observe in respect of all other workmen in that industry termsand conditions of employment which are not less favourablethan the terms and conditions set out in that agreement.”
A reading of the above provision shows that it ca^ts^a statutoryobligation on the employer to observe terms and conditions whichare not less favouiable than the terms of the collective agreement,in respect of the oiher workmen at the work place.
Section 10, as the marginal note indicates, empowers the Minister;to extend the provisions of a collective agreement to certain employers,•who are not bound by collective agreement as provided by section,.s. Here too, the obligations arc cast on the employer while theworkmen would bi entitled to .enjoy the benefits, of. a collective
Sri Lanka Law Reports
(1982) 2 S.L.R
agreement. Section 10(2) is worded as follows:-
the Minister may, in respect of any industry to which anysuch collective agreement as is referred to in subsection (1)relates, make an order that every employer, or every employerof any class, in such industry in any distric or in Ceylon, onwhom that Agreement is not binding as provided in section 8,shall observe either the terms and conditions set out in thatagreement (hereinafter referred to as the ‘recognized terms andconditions’) or terms and conditions which are not less favourablethan the recognized terms and conditions.”
Subsection (1) of section 10 sets out the conditions that have tobe satisfied for the extension of a collective agreement. It states that –
“Where the parties to a collective agreement that is in force areone or more trade unions consisting of employers in any industryand one or more trade unions consisting of workmen in such industry,then, if the Minister considers that those parties are sufficientlyrepresentative –
of the employers and the workmen, or
of a class of employers and a class of workmen, or
of the employers and a class of workmen, or
of a class of employers and the workmen, in such industryin such district, or in such industry in Ceylon, he may makean order under subsection (2) in respect of every employer,or of every employer of such class of employers, in suchindustry in such district or in such industry in Ceylon, onwhom such agreement is not binding as provided in section 8.”
The other clauses of section 10 contains provision setting out theprocedure for making an extension order and also a provision – 10(5)- indicative of the extent of the Minister’s authority in respect ofsuch an extension order. A party to a collective agreement couldrequest the Minister to have the agreement extended to otheremployers. When the Minister proposes to act in terms of section10, the Commissioner of Labour has to give public notice of theMinister’s intention and call for objections. Section 10(5), which isin issue before us, reads –
“The Minister shall consider all objections to the proposed order
A.F. Jonr- Ltd. v. Balasubramaniam (Wanasundera, J.)
and may either not make the order, or make the order withor without am limitation as to its applicability."
Section 10(3) states that an extension order shall have the force oflaw. Section 10(8) states that an extension order shall be operativeonly so long as tht collective agreement is in force and will ceasewith the cessation of the collective agreement. Section 10(7) empowersthe Minister to rescind the extension order if he considers it necessary.
Now the kind oi order the Minister is empowered to make isshown in section !'1(2). He can order the employers concerned to‘‘observe either the terms and conditions set out in that agreement(hereinafter referred to as the recognised terms and conditions) orterms and conditions which are not less favourable than the recognisedterms and conditions. The Minister cannot alter the statute law. Forexample, he cannon by order lower the standards indicated by thelegislature and tell the employers that they need not observe thestandard laid down by the law, namely terms and conditions no lessfavourable than the recognised terms and conditions. Similarly theexpression “recognised terms and conditions" has a statutory meaning.It means the terms and conditions set out in the agreement. I donot think it would be legitimate for the Minister to abstract someof the terms and conditions from the agreement and call them “therecognised terms and conditions.” The order he makes is in respectof or with reference to "the recognised terms and conditions" whichard nothing but tht totality of the terms and conditions set out inthe agreement.
The language of section 8(2) also supports this view. Both undersection 8(2) and section 10(2), whatever benefits a workman*, wouldbe entitled to by way of an ‘extension’ are either “the terms andconditions set out in the agreement” or terms and conditions “whichare not less favourable than the terms' and conditions set out in theagreement.In fact under section 8(2) the extension operates byoperation of law and question of the selective application of clausesdoes not arise. The precise extent,of such terms and conditions,namely, the rights and benefits accruing to the workmen,, will haveto be gleaned from an examination of the entire collective agreement.This is a question of interpretation which is often,.of a complexnature. One would not normally expect a Minister, who us- concernedwith decisions on broad policy matters to be made the arbiter inrespect of detailed and factual matters of this type. There is also no
Sri Lanka Law Reports
(1982) 2 S.L.R.
appeal from the order of the Minister. To take anv other view wouldbe to place an undue responsibility on the Ministei and it is doubtfulwhether such a view will be conducive to the maintenance of industrialpeace, in the country.
, There is also another aspect to the matter. The Minister’s ordershould have the effect of an equal application of the law and notbe discriminatory of either .the workmen inter s> or the employersint& se. By a process of selection of the clauses that should beextended – and this can be done at the absolute discretion of thetyini^tjer. – it is not;,difficult to imagine cases where some workersmay.ri^eJt more advantageously placed than others while, on the, otherhand some ,employers.may be at a disadvantage and handicapped asCQtppa.fed..tq,,others. The legislature could not have intended such aresqlt when the-whole intention of the law was to spread the benefitswon underj a, collective agreement to other workers not bound bythat agreement. As regards employers who do business in a highlycompetitive field, it is equally necessary that one set of employersought not,to be given favoured treatment, by the State at the expenseof others.,:
The view I have taken above gains support fiom the provisionsof section 10(9) which has spelled out the intentions of the legislaturein no uncertain terms.. Section 10(9) has set out the procedures forresolving problems concerning the nature, scope and effect of therecognised terms and conditions or of terms and conditions not lessfavourable than the recognised terms and conditions in cases of suchextension. These questions as stated earlier can be of a complexnature. It is not..difficult to visualise casesrwhere rights and obligationsmay be so interwoven that the greatest care and skill would beneeded to come to a finding as to what are the applicable rightsand benefits. It is therefore not surprising to find (hat the legislaturehas provided, for such matters to be decided in the first instance bythe Commissioner of Labour with an appeal from his .decision to theIndustrial Court, indicating that it has followed the accepted procedurein this^country for compulsory arbitration of matters that can leadto industrial disputes. Section 10(9) states –
“If any question arises as to the nature, scope or effect of the- recognized terms and conditions in any industry in any district
SCA.F. Jones Ltd. v. Balasubramaniam (Wanasundera. J.)799
or in Ceylon or as to whether an employer is observing therecognized terms and conditions or is observing terms andconditions which are not less favourable than the recognizedterms and conditions, that question shall be decided by theCommissioner, subject to an appeal within the prescribed timeand in the prescribed manner to the industrial court, and thedecision of that court on that question shall be final.”
I am therefore of the view that Mr. Jayewardene is correct whenhe submitted that the words ‘‘with …. any limitations as to applicability”in section 10(5) do not refer to the contents of the collective agreementbut refer only to the range of its applicability, e. g., as regards thetype of employer or whether it should be in a district or in thewhole of Ceylon.
In the Court of Appeal, Victor Perera, J., was inclined to takethe same view, but he considered that he was bound by the judgmentof Pathirana, J., in Express Newspapers Ceylon Ltd. v.Attorney-General, and was therefore unable to give relief. It hasbeen submitted that the decision in Express Newspapers has notadequately dealt with this matter and in any event that decision isnot binding on us.
Although our ruling is decisive of this case and the appeal isallowed, our judgment should not be viewed with any sense ofapprehension by labour or the Labour Department.
It would appear that hitherto the Labour Ministry has acted onthe assumption that section 10 has vested the Minister with a wideranging power in the application of a collective agreement so as toenable him to select such of the provisions as are in his opinionsuitable for extension. We have ruled that this view is not tenablein law. With the need to bring in the entire collective agreementinto the picture, labour will now have the opportunity of extractingthe full extent of the rights and privileges they are legitimatelyentitled to from the agreement that has been extended. This was'not possible earlier because of the selective application of the provisionsof the agreement and because of the finality of the Minister’s decision.
Sri Lanka Law Reports
(1982) 2 S.L.R.
As far as this cape is concerned, we hold that the Minister’s orderunder section 10(2); is )?ad-because it deals with only portions of thecollective agreement apd-not. jyith its entirety. We therefore set asidethe conviction and acquit the* accused.
The appeal is. therefore, allowed.
RATWATTE, J. – I agree.
• • ■
SOZA, J. – I agree.