CEYLON PLYWOODS CORPORATION
v.SAMASTHA LANKA G.N.S.M. & RAJYASANSTHA SEVAKA SANGAMAYA
COURT OF APPEALS. N. SILVA, J.
C.A. NO. 498/81
T. NOS. R/19968 ; R/20032
21 MAY, 17 JUNE AND 02 JULY 1991
Industrial Law – Option to retire on agreed scheme on fixed quantum of benefits -Can a Labour Tribunal entertain application for further gratuity?
Workmen who elected to .retire according to an agreed scheme set out in acircular and received payments in.terms of it; cannot make a further application tothe Labour Tribunal for gratuity. The retirement and the gratuity and other benefitsbecame the subject-matter of a compromise and an arrangement evolved by theemployer on the one hand and the workmen on the other. The retirement itselfresulted from a specific election made by each workman to receive the benefit ofthat arrangement.
An application can be made to the Labour Tribunal for relief under s. 31B(1)(b) ofthe Industrial Disputes Act for relief when there is a “question” as to any gratuityor benefits that are due. But there is no such question where the gratuity andother benefits were the subject-matter of an arrangement set out in a circularwhich the workmen elected to accept. The workmen by making their applicationsto the Labour Tribunal were attempting to circumvent the terms and conditions ofthe circular after having received the benefits due upon it. A legal procedure inthe nature of an application to the Labour Tribunal in terms of section 31B(1)cannot be resorted to for such a purpose. The doctrine of approbate andreprobate (quod approbo non reprobo) is based on the principle that no personcan accept and reject the same instrument.
Assuming that the workmen had a right to make an application for gratuity, it wasincumbent on the President to consider whether the arrangement to pay gratuityand other amounts as set out in the circular was just and equitable. For this thefollowing matters would have been relevant:
the scheme of retirement, the method of computing gratuity and thepayment of .other amounts, was evolved after discussion with all therepresentatives of trade unions;
the workmen had a right to accept the scheme or in the alternative tocontinue in employment;
the workmen individually elected to accept the scheme of retirement and thepayments under it;
<4) the workmen in fact received the said payments prior to making theirapplications to the Labour Tribunal.
The schemes set Out in the circular does not constitute a general scheme but aparticular scheme eyolved after discussions with the trade unions on the basis ofa decision of the Cabinet.
Cases referred to:
Ceylon State Mortgage Bank v. Fernando 74 NLR 1.
The National Union of Workers v. the Scottish Ceylon Tea Co., Ltd. 78 NLR133.
APPEAL from an Order of the President of the Labour Tribunal.
H. L. de Silva, P.C. with H. D. A. de Andrado for respondent-appellant.
P. D. Gomes for applicant-respondent.
Cur adv vult.
20th September, 1991.
S.N. SILVA, J.
This appeal is from the order dated 11.09.1981 made by thePresident of the Labour Tribunal, Ratnapura, in applications R/19968to R/20032 (excluding R/20030). The workmen in whose favour theorder is made are represented by the Respondent Union.
The workmen were employees attached to the carpentry divisionof the Ceylon Plywoods Corporation at the Ampara unit. There were
six other onits of the carpentry division* located at different places.The Carpentry division incurred extensive leases, to the tune of aboutten million (R2, page 114) and upon a memorandum of the Minister ofIndustries, and Scientific Affairs the Cabinet granted approval to thewinding up of the division (R1, page 172). The winding up thusapproved involved inter alia, the retirement of workmen over the ageoil 50 and the absorption of the others to development projectsconnected with the Mahaweli and other State undertakings. The tradeunions of the Corporation objected to this scheme of winding upand a discussion was held on 19.04.1978 by the management(represented by the Chairman, General Manager and others) and 35representatives of the trade unions to which the workmen belonged.According to the minutes of this meeting-(R2 page 173) it was agreedto postpone the implementation of the decision to wind up thecarpentry division for a period of four months. It was also decided topermit the workmen, irrespective of age, to elect to retire, on orbefore 31.05.1978.'•
On the basis of the said agreement a circular and notices wereissued (R3 & R4). The circular R3 sets out the terms and conditionsof voluntary retirement offered to the workmen. They are:
that the workmen may apply .on or before 31.05.1978, to theGeneral Manager for such retirement, irrespective of age;
that the workmen who retire will be paid one month’s wagesfor each year of service (after deducting the amounts paid bythe Corporation as E.P.F. contributions) in respect of theperiod 1958 to 31.10.1972;
that in respect of the period after 01.11.1972 they will be paidhalf month’s wages for each year of service; and
in addition to the foregoing payments they will be paid threemonths’ wages.
The workmen in whose favour the order has been made applied tothe General Manager (letters marked R6 to R69) indicating theirwillingness to retire with effect from 31.05.1978 on the basis of the
terms contained in the circular R3. It is not disputed that they havebeen paid all the sums due according to the said circular. Afterreceiving the payments these workmen made their applications to theLabour Tribunal. According to the evidence, in all 565 workmenretired under this scheme. It appears that the others have made noapplications to the Labour Tribunal.
The workmen concerned were originally employed in the RiverValleys Development Board for different periods ranging from 1951.In 1958 the National Small Industries Corporation was established.On 01.03.1972 these workmen were absorbed into the National SmallIndustries Corporation. Thereafter they were absorbed into theCeylon Plywoods Corporation. The claim of the workmen: is that theirperiod of employment in the River Valleys-Development Board prior to1958 has not been taken into account for the purpose of computingthe gratuity payable. The Corporation answered stating thatretirement was a choice offered to the workmen, irrespective of age,on the terms and conditions in the circular R3 and that the workmenelected to retire. The circular specifically states that the period ofservice on the basis of which a gratuity will be computed is from1958. Therefore the Corporation urged that the applications bedismissed. Learned President of the Labour Tribunal has observedthat the periods of employment of the workmen from 1958, upto 1972in the River Valleys Development Board have been taken into accountfor the purpose of computing the gratuity. Therefore, he has held thatthe periods anterior to 1958 should also be taken into account for thispurpose. On that basis, he had ordered that the workmen be paidone month’s wages for each year of service, for the periods prior to1958 in which the respective workmen were employed in the RiverValleys Development Board. The different periods in which theworkmen were so employed have been set out in the scheduleannexed to the order.
Learned President’s Counsel appearing for the Appellantsubmitted that the scheme for voluntary retirement and payment ofgratuity as contained in the circular marked R3 is not unfair or unjust.It takes into account a period of 20 years in which the workmen wereemployed in the River Valleys Development Board, National SmallIndustries Corporation and the Ceylon Plywoods Corporation. It isfurther submitted that the workmen elected to retire under thatscheme, after they were fully appraised of the terms and conditionsand could not now seek an alteration of those terms and conditionsby means of an application to the Labour Tribunal.
Learned Counsel for the Respondents submitted that on the basisof the decision of the Supreme Court in the case of Ceylon StateMortgage Bank v. Fernando,m a workman can make an application tothe Labour Tribunal to get an enhancement of the gratuity that is paidby an employer. He also submitted that a workman is not shut outfrom seeking a gratuity in the Labour Tribunal, merely because heaccepted the terms of retirement offered by the employer and reliedon the provisions of section 31B(4). Counsel cited the decisions ofthe Supreme Court in the case of The National Union of Workers v.The Scottish Ceylon Tea Co., LtdP in support of the proposition that agratuity should be computed on the whole of the period a workman isemployed and not only on a part of that period. On the facts, it wassubmitted that the union which represented the workmen did notparticipate in the conference at which the retirement was discussed.It was also submitted that the deduction of the contribution made bythe Corporation to the E.P.F., in respect of the period 1958 to 1972 isillegal.
The main issue to be decided is whether the workmen who electedto retire according to the scheme set out in the circular R3 andreceived the payments in terms of it, were entitled to seek furtherbenefits by making an application to the Labour Tribunal. If theworkmen are so entitled it has to be considered whether the schemecontained in R3 is in itself just and equitable and in any eventwhether the learned President erred in law in awarding further sumsto the workmen.
The workmen filed their applications in the Labour Tribunal on27.02.1979 complaining that their services were terminated withoutreasonable cause, on 31.08.1978. It appears that 31.08.1978 wasmentioned as the date of termination because the workmen receivedthree months wages from 31.05.1978, according to R3. At the outset,it has to be noted that the basis of the applications to the LabourTribunal is completely incorrect. The workmen have failed to disclosein their applications that they voluntarily elected to retire with effectfrom 31.05.1978 pursuant to a scheme of retirement offered to themand that they received all payments due under that scheme.
Be that as it may, the inquiry in the Labour Tribunal proceededsolely on the question of gratuity that- is payable by the employeralthough there was no specific claim for gratuity, as such, in theapplications.
The matter of gratuity is dealt with in section 31B(1)(b) of theIndustrial Disputes Act. This provision enables a workman to make anapplication to the Labour Tribunal for relief or redress in respect of:
"the question whether any gratuity or other benefits are due tohim from his employer on the termination of his services and theamount of such gratuity and the nature and extent of any suchbenefits”.
It is the submission of learned President's Counsel that in this casethere is no “question" as to the gratuity that is due since that matter isthe subject of a separate arrangement arrived at by the employerand each of the workmen concerned.
The workmen have not disputed that they became aware of thescheme of voluntary retirement as contained in R3 and that theyindividually responded to it. The circular specifically states the periodin respect of which gratuity is payable, the basis of computation andthe other benefits that the workmen will be entitled to, uponretirement. In the letters R6 and R69 the workmen have specificallyelected to retire on the basis of the scheme set out in the circular R3.Therefore the retirement and the gratuity and other benefits becamethe subject-matter of a compromise and an arrangement evolved bythe employer on the one hand and the workmen on the other. Theretirement itself resulted from a specific election made by eachworkman to receive the benefit of that arrangement.
It is clear from the provisions of section 31B(1)(b) that anapplication can be made to the Labour Tribunal for relief when thereis a “question” as to any gratuity or benefits that are due. In thisinstance there is no “question” whatever as regards the gratuity andother benefits-that were due. The gratuity and other benefits were thesubject-matter of circular R3 (referred above) which the workmenelected to accept.
The workmen by making their applications to the Labour Tribunalwere attempting to circumvent the terms and conditions of thecircular after having received the benefits due upon it. A legalprocedure in the nature of an application to the Labour Tribunal interms of section 31B(1) cannot be resorted to for such a purpose.The doctrine of approbate and reprobate (quod approbo nonreprobo) is based on the principle that no person can accept andreject the same instrument.
In this instance the conduct of the workmen is certainly one ofapprobating and reprobating. Furthermore, as noted above, the verybasis of their applications upon a wrongful termination, is incorrect. Ihold that the workmen had no right to make any application to theLabour Tribunal for redress or relief, because their retirement fromemployment and the payment of gratuity and other benefits were, thesubject-matter of the circular R3 which the workmen elected toaccept and act upon.
Learned Counsel for the respondent relied on the decisions of theSupreme Court in the two cases referred to above,
In the case of Ceylon State Mortgage Bank v. Fernando (supra) anapplication was made to the Supreme Court for Writs of Certiorariand Prohibition against the Labour Tribunal to prevent the Tribunalfrom proceeding with an application for gratuity that was pendingbefore it. The workman had retired from the service of the bank on theground that he was lacking in proficiency in the official language. Onretirement he was paid a gratuity which was determined by the bank.The application for a Writ was made on the premise that the amountpaid as gratuity was approved by the Minister as required under therules, and that the Bank is statutorily prohibited from paying anythingmore. The Writ was refused on the basis that the bank as theemployer determines the quantum of gratuity that has to be paid toits employees. It was held that a payment in excess of the amount
already determined would not be “contrary to the statute”. It is to beseen that this decision does not in any way support the claim of theworkmen to an enhanced amount as gratuity, when the amounts thathave been paid were in accordance with the terms and conditionswhich the workmen elected to accept.
The other decision relied upon is that of the Divisional Bench of theSupreme Court in the case of National Union of Workers v. TheScottish Ceylon Tea Co., Ltd. (supra). In this case the Supreme Courtheld that gratuities contemplated in section 31B(1)(b) are only retiringgratuities and that they must be legally due. In a dissenting judgmentSharvananda, J. held that the payment of a gratuity is not restricted toa retiral situation but extends to resignation and premature retirementprovided the workman has rendered faithful service for aconsiderable period.
None of the judgments delivered in that case supports theproposition advanced by learned Counsel for the respondent that aworkman who has accepted the terms of retirement offered by theemployer is entitled to make a claim for further payments to theLabour Tribunal. Such an issue never came up for consideration inthat case for the simple reason that no gratuity whatever was paid tothe workman concerned. It was the case of the employer that theywere not entitled to a gratuity since the payment of gratuity was notprovided for in the collective agreement. However, the followingobservation of Tennekoon, C.J. with regard to schemes that havebeen operated on by the employer is relevant to this case(page 150):
“An individual application under section 31B is not an occasionfor revising schemes which have been accepted and are beingoperated on by the employer without any industrial disputearising thereon. That kind of operation should be left to be dealtwith by Collective Agreements and by awards which seeksettlement of industrial disputes. It seems to me that a LabourTribunal in dealing with individual applications under section31B(1)(b) would be acting unreasonably if it seeks to departfrom contractual or settled schemes of gratuity paymentswithout compelling reasons to do so. To act otherwise would
result in Labour Tribunals creating or promoting industrialdisputes where none existed”.
The observations of Tennekoon, C.J. relate to a general scheme forthe payment of gratuity, in operation. With regard to such schemes itwas observed that Labour Tribunals should not depart from themwithout “compelling reasons to do so”. In this case circular R3 doesnot constitute a general scheme operated by the employer. It was aparticular scheme evolved after discussions had with the tradeunions on the basis of a decision of the Cabinet. The decision of theCabinet was to permit retirement only to workmen over 50 years ofage. By R3 the management extended this facility to every workmanirrespective of age. Therefore, in my view the arrangement evolved inthis case by circular R3 and the election of the workmen to acceptthat arrangement has a greater binding effect than a general schemeas discussed by Tennekoon, C.J. Such an arrangement could not bedeparted from after the workmen have obtained benefits under it.
Thus it is seen that both judgments relied upon by LearnedCounsel for the Respondent do not support the proposition advancedby him. I have to now deal with the provisions of Section 31B(4) reliedupon by Learned Counsel for the Respondent. This section reads asfollows:
"(4) Any relief or redress may be granted by a labour tribunal toa workman upon an application made under subsection (1)notwithstanding anything to the contrary in any contract ofservice between him and his employer".
The purpose of this section is to empower a Labour Tribunal togrant relief or redress notwithstanding anything to the contrary in thecontract of service. This provision is necessary considering thatordinarily contracts of service provide for termination, upon notice, byan employer. In this case, the parties are not concerned with thecontract of service. Their concern is focussed on the arrangement forretirement as contained in circular R3. Therefore I am of the view thatSection 31 B(4) has no application to the facts of this case.
On the facts, Learned Counsel for the Respondent submitted thatthe trade union now representing the workmen was not a party to thediscussion held on 19.04.1978. It appears that the workmen weremembers of another union at that time. This matter has not beenurged in the Labour Tribunal. In any event, it is to be seen thatcircular R3 is addressed directly to the workmen and not to any tradeunion. The workmen individually responded to the circular by lettersR6 to R69. In the circumstances the absence of the Respondentunion at the discussion is irrelevant in view of the conduct of theworkmen themselves. For the reasons stated above I see no merit inthe submissions made by Learned Counsel for the Respondent withregard to the main matter that has to be decided.
Assuming that the workmen had a right to make an application tothe Labour Tribunal with regard to the matter of gratuity, it wasincumbent on the President of:the Labour Tribunal to considerwhether the arrangement to pay gratuity and other amounts ascontained in circular R3 is just and equitable. In considering thisquestion the following matters are relevant:
the scheme of retirement, the method of computing gratuityand the payment of other amounts, was evolved afterdiscussion with all the representatives of trade unions;
the workmen had a right to accept the scheme or in thealternative to continue in employment;
the workmen individually elected to accept the scheme ofretirement and the payments under it;
the workmen in fact received the said payments prior tomaking their application to the Labour Tribunal.
Learned President has failed to examine these matters in decidingwhether the gratuity paid and other benefits given are just andequitable. He has been merely guided by the fact that certainperiods of service rendered by the workmen to the R.V.D.B. prior to1958 have not been taken into account in computing the gratuitypayable. This matter was well known to the workmen when theyelected to retire in terms of the circular. Therefore, I am inclined toagree with the submission of Learned President’s Counsel.that thePresident of the Labour Tribunal made his order ignoring relevant andsignificant matters with regard to the question of gratuity and otherbenefits. Hence in any event there is an error of law in the order of thePresident of the Labour Tribunal in awarding further gratuity to theworkmen concerned. Accordingly I allow the appeal and set asidethe order dated 11.09.1981 made by learned President of the LabourTribunal. The applications made by the workmen to the LabourTribunal are dismissed. The Respondent will pay a sum of Rs. 1750/-as costs to the Appellant.