Sri Lanka Insurance Corporation Ltd. v. Shanmugam and Another
Industrial Dispute – Employees Provident Fund – Sections 8, 46 and 47 of theEmployees Provident Fund Act, No. 15 of 1978 – Covered employment -Regulation 2(2)(c) made under the regulation making power of Minister – Is suchregulation ultra vires? – Liability of employer to pay E.P.F. to foreign nationalsemployed in Sri Lanka.
The petitioner (Coeme) claimed he was employed by Blanka Diamonds (Pvt) Ltd.,(4th respondent). The 4th respondent claimed petitioner was employed byVanden Eynde & Zenen of Antwerp, Belgium and was assigned to work asManaging Director in Sri Lanka. Petitioner had vacated or abandoned his post.
Contributions were made to a Social Security Scheme in Belgium. UnderRegulations 2(2)(c) made under Section 46 of the Employees Provident Fund Act,No. 15 of 1958 a person who is employed in a managerial, executive or technicalemployment and for whom superannuation benefits or benefits on termination ofemployment are provided for under any provident fund or pension scheme or anyother schemes established or administered outside Ceylon are not entitled to E.P.F.
The documents established that the petitioner was employed as ManagingDirector of Blanka Diamonds (Pvt) Ltd.
The powers vested on the Minister of Labour by Section 46 of the EmployeesProvident Fund Act, No. 15 of 1958 to make regulations are limited to makingregulations pertaining to the heads mentioned as ‘a’ to ‘q’ (covered employment).Covered employment is defined in section 47 as meaning an employmentdeclared by the regulations as a covered employment. Section 8 of the Actenvisages what is covered employment and the employees to whom the Actapplies and contributions.
In terms of Section 46(1) the powers of the Minister were limited to items (a) to(q> He has no unlimited discretionary powers. The interpretation Section 47defines the term ‘covered employment’. Section 8 defines the categories of thosethat come under the definition of covered employment and any regulations maybe made in terms of the provisions of that section but not to derogate from theintention of the specific provisions of Section 8. Section 8(4) empowers themaking of regulations complying with the intention of the Legislature as clearlystated by the statute and not in derogation thereof. Regulation 2(2)(c) is thereforeultra vires. Hence the petitioner was entitled to E.P.F.
APPLICATION for certiorari to quash orders of Labour Commissioners (Assistantand Deputy) disallowing petitioner’s claim for E.P.F.
E. D. Wickremanayake with V. Alagaratnam, S. Vimalarajah, R Vimalarajah andAnanda Cooray for petitioner.
Adrian Perera, S.C. for 1st and 2nd respondents.
Gomin Dayasiri for 4th respondent.
Cur. adv. vult.
This is an application filed by the petitioner to grant a mandate inthe nature of a Writ of Certiorari to quash the order of the 1strespondent dated 4.1.93 and the 2nd respondent dated 9.3.93 andof the 3rd respondent, for a declaration that regulation 2(2)(c) of theE.P.F. Regulations 1958 is ultra vires the Employees' Provident FundAct and to issue a Writ of Mandamus on the 3rd respondent torecover the E.P.F dues of the petitioner from the 4th respondent.
The relevant facts briefly are as follows: The petitioner wasemployed as Managing Director from 7.2.91 till his services wereterminated on 3.6.92 by Blanka Diamonds (Pvt) Ltd. by the 4threspondent. The petitioner made a written complaint to the 1strespondent on 13.8.92 stating that he was not paid E.P.F. during hisperiod of employment under the 4th respondent. He averred that the1st respondent conducted an inquiry on a number of days and thepetitioner too gave a statement and the contention of the 4threspondent was that the petitioner was not entitled to E.P.F in view ofcontributions made by the 4th respondent on behalf of the petitionerto a Social Security Scheme in Belgium.
It was the petitioner's position that the Belgian Social SecwityScheme has no relevance to his entitlement under the E.P.F Act. Hefurther averred that the Social Security Scheme in Belgium was avoluntary insurance cover for medical costs, loss of employment dueto sickness or due to becoming an invalid and life insurance to familymembers in the case of death of the employee. The voluntarycontribution to this scheme was a paltry sum of Rs. 5,200/- a monthagainst the sum of Rs. 33,785/- a month which would be due to E.P.F.contributions under the E.P.F. Law. The petitioner stated that hereceived a letter dated 4.4.93 stating that the petitioner was notentitled to the E.P.F benefits because the petitioner had admitted thata pension allowance was available when an employee reaches thepensionable age according to the Belgian Social Security Scheme.The petitioner protested by writing to the 3rd respondent with a copyto the respondent on 3.2.93 marked as P6. The petitioner averred thatthereafter he wrote a letter marked P8 a copy of the letter wasmarked P8 but he did not receive an acknowledgement from the 3rdrespondent. His position was that the decision of the 1st respondentwas ultra vires in that it was contrary to the purpose and the policy inrelation to the Employees Provident Fund Act, No. 15 of 1958 and itssubsequent amendments.
The regulations upon which the respondent's decision was basedwas ultra vires the E.P.F. Act for unreasonableness or ambiguity.
The regulations upon which the Commissioner of Labour reliedwere contrary to the E.P.F. law and neither necessary nor authorisedunder the E.P.F law.
The 1st, 2nd and 3rd respondents did not file any statement ofobjections.
The 4th respondent in his statement of objections averred that thepetitioner was employed by Vanden Eynde & Zenen situated inAntwerp, Belgium and was assigned to work as Managing Director inthe Sri Lankan operations and that the petitioner vacated orabandoned his post.
The 4th respondent’s position was that the petitioner was notentitled to E.P.F. in view of the provisions in the regulations under theE.P.F. Act which states a person who is employed in a managerial,executive or technical employment and for whom superannuationbenefits or benefits on termination of employment are provided forunder any provident fund or pension scheme or any other schemesestablished or administered outside Ceylon was exempted and inany event the petitioner was an employee of Vanden Eynde & Zenenand not of the 4th respondent. The 4th respondent averred that thecontributions to the Social Security Scheme were administered inBelgium. The said Social Security Scheme was administered byBelgium as a public sector institution for the benefit of its overseasemployees. The 4th respondent produced a copy of the letter markedY1 letter dated 4th November, 1992 by the Consul of Belgium in SriLanka and Y2 as the Overseas Social Security Scheme and itscertified translation.
The 4th respondent's position was that P4 and P7 were accordingto law and prayed that the application be dismissed. It was anadmitted fact that the petitioner was employed by the 4th respondentand his document X filed with the counter objections confirms thisposition. The document X was issued on 5.2.91 by Patrick VandenEynde and states that the petitioner will be employed as ManagingDirector of Blanka Diamonds (Pvt) Ltd. commencing from 7.2.91 andalso confirmed by X1 dated 8.6.92.
The submission of the Learned Counsel for the petitioner was thatthe regulations made by the Minister of Labour by virtue of thepowers vested in him by Section 46 of the Employees Provident FundAct, No. 15 of 1958, the Minister could make regulations onlypertaining to the items mentioned in "a to q" and nothing more. Hefurther submitted in terms of the interpretation Section 47 "Coveredemployment” means an employment declared by regulations to be acovered employment.”
His submission was that Section 8 of the Act envisages what iscovered employment and employees to whom this Act applies andcontributions. Section 8(1) reads as follows “any employment,including any employment in the service of a corporation whosecapital or of whose capital is provided by the Government may bedeclared to be a covered employment.
2. Regulations may be made –
to treat as a covered employment any employment outsideSri Lanka which is for the purpose of a trade or businesscarried on in Sri Lanka and which be a coveredemployment if it were in Sri Lanka; and
“to treat as not being covered employment or to disregard –
(i) “employment of a person who employs less than aprescribed minimum number of employees.
Section 8(4) reads as follows –
"Any regulation declaring any employment may provide thatsuch persons only earn less than the prescribed amount in thatemployment or as are of a prescribed class or description andnot other persons in that employment, shall be employees towhom this Act applies."
His submission was considering the totality of the provisions ofSection 8, that there are no provisions to take away the rights of theemployee preserved by the Act. His submission was that regulationsmust flow from the E.P.F. Act. In terms of the provisions of Section 8regulations may be made to cover the provisions and for the easyadministration of the provisions of this Section 8 and its subsectionsbut not to deviate from the purpose for which the statute wasenacted.
The submission of the Learned Counsel for the petitioner was thatRegulation 2(2)(c) is ultra vires to the Act. His submission was thatthe regulations made under the E.P.F. Act could never be intended tooverride the specific provisions of the Act.
It was well known that the purpose of the regulations was toprovide for procedural matters which are definitely subsidiary to theprovisions of the Act. The critical question that the Court has toexamine is whether the Minister has acted within the limits ofdelegated power. In terms of subsection 46(1) the powers of theMinister were limited to “a to q”. He has no unlimited discretionarypowers. The interpretation Section 47 defines the term “Coveredemployment”. Section 8 defines the categories of those that comeunder the definition of “Covered employment” and any regulationmay be made in terms of the provisions of that Section and not toderogate from the intention of the specific provisions of Section 8.
It was the submission of the Learned Counsel for the 4threspondent that the regulation “2(2) were” any superannuationbenefits on termination of employment are provided under anyProvident Fund or Pension Scheme or any other Fund or Schemeestablished or administered outside Ceylon, are exempted from theprovisions of the Act. The learned Counsel for the 4th respondentrelied on the provisions of Section 8(4) of the Act. I am unable toaccept the interpretation of the Learned Counsel. In my view Section
empowers to make regulations to comply with the intention of thelegislation as clearly stated by the statute and not make regulations toderogate from the intention of the statute. I am therefore unable toagree with the submission of the learned Counsel for the respondentwhen he submitted that the regulations were intra vires. Even if onewere to examine Section 46 which empowers to make regulations hehas been limited by the subsections and it was confined to the limitedpowers of making regulations only to those matters specified in thatsection. His powers of making regulations are not discretionary.
I agree with the submission of the Learned Counsel for thepetitioner that regulation 2(2)(c) is ultra vires to the specific provisionsof the Act.
The regulations that were envisaged under Section 8 of the E.P.F.Act were to facilitate the administration of the employees who fallwithin the concept of "covered employment”. Any other regulationswere confined to the specific subsection (b)(i) and (ii). The Minister hasno discretion to make regulations to derogate from the specificprovisions of the statute nor could he intend to override the specificprovisions of the Act. The Act did not intend to exempt the contributionof the employers to the E.P.F. because there was pensionable reliefavailable elsewhere outside the country. The contributions to the Fundwere very large in view of the high salary paid to the petitioner. Thelegislature had no intention of depriving the employee the benefit thathe was legally entitled to under the Act. If the intention of the legislaturewas to do so this could have been covered by making provisions in theE.P.F. Act and by insertion of a relevant section.
In the circumstances I allow the application of the petitioner. I granta mandate in the nature of a writ of certiorari to quash the order of the1st respondent dated 4.1.93 and the 2nd respondent’s order dated9.3.93. I further grant the prayer (b) and prayer (c) of the petition. Iallow the application of the petitioner with costs fixed at Rs. 2,500/- tobe paid by the respondent.
Writ of certiorari issued.
COEME v. KULARATNE AND OTHERS