053-SLLR-SLLR-2006-V-3-HIDDELARACHI-vs.-UNITED-MOTORS-LANKA-LTD-AND-OTHERS.pdf
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Hiddelarachi Vs. United Motors Lanka Ltd., and Others
411
HIDDELARACHI
VS.
UNITED MOTORS LANKA LTD., AND OTHERS
SUPREME COURT,
WEERASURIYA. J,
UDALAGAMA. J,
DISSANAYAKE.J,
SC 35/2004,
CA 1192/2001.
AUGUST 03, 2005.
SEPTEMBER 1, 15, 2005.
Termination of Services of Workmen (Special Provisions) Act, 41 of 1971as amended by Act, No. 4 of 1976 and Act, No. 51 of 1988 (TEW Act) -Sections 2 (1) (a) (b), Section 3, Section 4, Section 5, Section 6-No Jurisdiction if termination is on disciplinary grounds? – Conduct ofappellant – The purpose of the amending Act? – Difference.
The 4th respondent -appellant was the Chief Executive of thepetitioner-respondent company. His contract of employment wasterminated. The appellant sought an order, under Section 6 of the TEWAct, for reinstatement with back wages. On a preliminary objection raisedthat the Commissioner has no jurisdiction, the 2nd respondent inquirermade order directing that the respondent company should commenceleading evidence to establish that the termination was effected as apunishment on disciplinary grounds. The Court of Appeal up held thepreliminary objection raised, and held that, when the employer states thatthe termination has been on disciplinary grounds, the jurisdiction of theCommissioner is automatically ousted.
HELD:
Before the TEW (Special Provisions) Amendment Act, No. 51 of 1988
came into the statute book, where termination of a workman waseffected by informing the workmen by word of mouth or by an act ordeed indicating to him not to come for work and where a complaint,to that effect is made to the Commissioner of Labour and theemployer claims that the termination was on disciplinary grounds,the Commissioner had no alternative but to inqure into, as certainwhether the termination was effected as a punishment imposed byway of disciplinary action in terms of sub-section, (4) theCommissioner had no jurisdiction to hear the matter.
If the termination had been imposed as a punishment by way of
disciplinary action, the Commissioner had no jurisdiction to hearthe matter.
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(2006) 3 Sri L R.
However after coining into effect of the amending Act, No. 51of 1988 on 7.12.1988 the employer who terminates theemployment has to give reasons to the workmen within 2days of such termination; and if the termination had beeneffected by reason of punishment imposed by way ofdisciplinary action, the jurisdiction to entertain an applicationby the Commissioner made by the workman against suchtermination is ousted. The present position of the law is wherethere is such termination the employer is required within 2days to give his reasons for such termination, where suchtermination has been effected either by mutual consent orwith the prior written approval of the Commissioner as apunishment imposed by way of a disciplinary action, theCommissioner has no jurisdiction to hear and determine thesaid matter.
In the instant case, the appellants' services were terminatedon disciplinary grounds by letter P2 – which sets out thevarious acts of misconduct allegedly committed by thepetitioner. The jurisdiction of the Commissioner is ousted.
Per Nimal Dissanayake, J.
“Until the amendment came into effect the Commissioner of Labourhad to go on a voyage of discovery to ascertain whether the termination inissue came within his jurisdiction in terms of section 2 (1) read withSection 5 and Section 6.”.
APPEAL from the judgment of the Court of Appeal.
Cases referred to :
Latiff vs. Land Reform Commission – 1984-1 Sri LR118
Schmidt vs. Secretary of State for Home Affairs – 1969-2 Ch. 149at 170
Ridge vs. Baldwin – 1994 AC 40
Gunawardane and Wijesooriya vs. Minister of Local Government,Housing and Construction and Others-1999-2 Sri LR 26
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Hiddelarachi Vs. United Motors Lanka Ltd., and Others
(Nimal Dissanayake, J.)
413
S. L. Gunasekera with P. Jayawardane for 4th respondent-appellant.Romesh de Silva PC with Geoffrey Alagaratnam for Petitioner-respondent.
Anil Gooneratne for 1-3 respondent-respondents.
cur. adv. vult.
May, 3.2006
NIMAL DISSANAYAKE, J.
The facts of this case are briefly as follows :-
The 4th respondent-appellant (who shall be hereinafter referred toas the appellant) was employed as the Chief Executive and ManagingDirector of the petitioner-respondent Company. Upon the appellant reachingthe age of 60, the respondent-respondent continued to employ him asChief Executive Officer and Managing Director of the said company on afixed term contract for a further period of three years which was due toexpire, on 31st March, 2002.
By letter dated 21 st September 2000 (P2 annexed to X1) the contractof employment of the appellant was terminated on disciplinary and othergrounds. The acts of misconduct allegedly committed by the appellanthave been enumerated in the said letter. He had been paid three monthssalary amounting to Rs. 744,000/-, in lieu of notice. Other terminal benefitshave also been paid to him at his request.
At the time of terminatiori the appellant’s monthly salary had beenRs. 247,500/- and he was in receipt of the following monthly allowances
entertainmentallowance – Rs. 25,000/-
reimbursement of club membershipsubscription upto a maximum of – Rs. 25,000/-
reimbursement of electricity, gas water bills and for maintenanceof his residence upto a maximum of – Rs. 25,000/-.
Thereafter the appellant by letters dated 30.10.2000 (P5 in X1) and2nd January 2001 (P17 annexed to X1) addressed to the 2nd Respondent- respondent complained about the termination of his employment soughtan order under section 6 of the Termination of Services of Workmen (Special
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(2006) 3 Sri LR.
Provisions) Act No. 45 of 1971 as amended as by Law No. 4 of 1976 andAct, No. 51 of 1988. He sought reinstatement in employment with backwages and the monetary value of all employment benefits of which hehad been deprived of. (P18 annexed to X1).
By letter dated 2nd January 2001, the appellant made an applicationfor relief to the Labour Tribunal claiming, only compensation. He did notseek reinstatement.
At the inquiry before the 2nd respondent a preliminary objectionwas taken on behalf of the petitioner-respondent to the effect that theletter of termination P2 sets out disciplinary grounds for the said terminationand therefore the 1 st and 2nd respondent-respondents had no jurisdictionto hear and determine the said application by operation of section 2(4) ofthe Termination of Employment of Workmen (Special Provisions Act).
The 2nd respondent-respondent communicated his order dated
(P23 a in annexure X1). He held that he had jurisdiction toinquire into the matter. He fixed the main matter for inquiry on 29.05.2001.
The Petitioner-respondent sought to canvass the said order of the2nd respondent-respondent (P23A) before the Court of Appeal in applicationNo. CA 718/2001. However it had been later withdrawn by the petitioner-respondent reserving their right to invoke the jurisdiction of the Court ofAppeal at the appropriate stage.
The inquiry before the 2nd respondent-respondent had been resumedand despite objections in respect of jurisdiction of the 2nd respondent-respondent to hear the same, being taken by the petitioner-respondent,the 2nd respondent-respondent by his order dated 29th May, 2001 (P26(a) in annexure X1) had made order directing that the petitioner-respondentshould commence leading of evidence to establish that the terminationwas effected as a punishment on disciplinary grounds.
The petitioner-respondent by his application to the Court of Appealsought a Writ of Certiorari and/or order setting aside/quashing the decisionof 1 st and 2nd respondents-respondents as communicated to the petitionerin terms of the order dated 29.05.2001, for a Wirt of Certiorari and/or an
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Hiddelarachi Vs. United Motors Lanka Ltd., and Others
(Nimal Dissanayake, J.)
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order setting aside/quashing the order of the 1 st and 2nd Respondentscommunicated to the Petitioner on 09.11.2001, and a writ of prohibition,restraining the 1 st and 2nd respondents-respondents from inquiring furtherinto the petitioner’s complaint dated 02.01.2001 made to the 2ndrespondent-respondent
The Court of Appeal by it’s judgment dated 15.08.2002 had upheldthe preliminary objections of the petitioner-respondent The Court of Appealhad held that when the employer had stated that the termination hasbeen on disciplinary grounds the jurisdiction of the Commissioner isautomatically ousted.
It is from the aforesaid judgment that the appellant sought leave toappeal and this Court granted leave on the following questions
Whether the Court of Appeal has erred in holding that when theemployer stated that the termination had been on disciplinarygrounds, the jurisdiction of the Commissioner was automaticallyousted.
Whether the Court of Appeal has erred in holding that theCommissioner of Labour was not empowered to inquire intoand determine the question as to whether an impugnedtermination before him was on disciplinary grounds or not interms of section 2(4) of the Termination of Employment ofWorkmen (Special Provisions) Act No. 45 of 1971 where theemployer contends that such termination was on such grounds.
(Further questions submitted by Romesh de Silva PC)
Whether in the circumstances of this case the petitionerhas a right and/or jurisdiction to pursue an equitableremedy before the Commissioner of Labour.
In any event, on the facts of this case was the petitionerentitled to the writs prayed for in the Court of Appeal.
Learned counsel appearing for the appellant contended that in termsof the Termination of Employment of Workmen (Special Provisions) Act,
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(2006) 3 Sri LR.
a mere statement by an employer in a purported letter of termination thattermination was effected on disciplinary grounds was not sufficient tooust the jurisdiction of the Commissioner of Labour. It was his contentionthat the Commissioner had the jurisdiction to inquire into the questionwhether the termination in question was in fact a disciplinary terminationor a non disciplinary termination.
On the other hand learned President’s Counsel appearing for thepetitioner-respondent contended that in terms of the Amending Act No.51 of 1988, the employer is required to state, by way of reasons withintwo days of termination, whether the termination had been on disciplinarygrounds or not. Therefore he contended that the intention of the legislaturewas that, where the employer states that termination was on disciplinarygrounds the Commissioner was precluded from inquiring into the matterfurther.
I shall now examine the correctness or otherwise of the aforesaidtwo positions.
Section 2(1) and 2(4) of the Termination of Employment of WorkmenAct, No. 45 of 1971 (Special Provisions) Act as amended, read asfollows:-
2(1) No employer shall terminate the scheduled employment of anyworkman without-
prior consent in writing of the workman; or
the prior written approval of the Commissioner.
2(4) For the purposes of this Act, the scheduled employment of aworkman shall be deemed to be terminated by his employer if for anyreason whatsoever otherwise than by reason of a punishment imposedby way disciplinary action.
The services of such workman in such employment are terminated byhis employer and such termination shall be deemed to include,
(a) non employment of the workman in such employment by hisemployer, whether temporarily or permanently, or
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Hlddelarachi Vs. United Motors Lanka Ltd., and Others
(Nlmal Dissanayaka, J.)
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(b)
Thus in terms of section 2(1) of the Termination of Employment ofWorkmen (Special Provisions) Act, services of a workman could beterminated only with
the prior consent in writing of the workman; or
the prior written approval of the Commissioner of Labour.
Section 2(4) has defined that terminations other than those imposedas punishment for disciplinary grounds by the employer amount totermination of employment of workmen.
Section 5 provides that any termination of employment of a workmanby an employer in contravention of this Act shall be null and void and haveno effect. In terms of section 6 of the said Act the Commissioner is vestedwith power to annul termination of employment effected in contraventionof the said Act and give appropriate orders.
It is to be observed that, before Termination of Employment of Workmen(Special Provisions) Amending Act, No. 51 of 1988 came into the statutebook, where termination of a workman was effected by informing theworkman by word of mouth or by act or deed indicating to him to not tocome for work and where a complaint to that effect is made to theCommissioner of Labour and the employer claims before theCommissioner that the termination was on disciplinary grounds, theCommissioner had no alternative but to inquire into it to ascertain whetherthe termination was effected as a punishment imposed by way ofdisciplinary action, in terms of sub section (4).
If the termination has been imposed as a punishment by way ofdisciplinary action, the Commissioner had no jurisdiction to hear thematter.
However after coming into effect of the Amending Act No. 51 of 1988 on7th December, 1988, new subsection (5) was inserted immediately aftersub section (4) of Section 2, which reads as follows:-
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“(5) Where any employer terminates the scheduled employment of anyworkman by reason of punishment imposed by way of disciplinary action,the employer shall notify such workman in writing die reasons for thetermination of employment before the expiry of the second working dateof such termination"
Until the aforesaid amendment came into effect, the Commissioner ofLabour to whom an application under the aforesaid Act was referred to,had to go on a voyage of discovery to ascertain whether the termination inissue came within his jurisdiction in terms of section 2(1) read with section5 and 6 of the said Act.
It is to be observed that in terms of the aforesaid amendment, theemployer who terminates the employment has to give reasons to theworkman within 2 days ofsuch termination. And if the termination hasbeen effected by reason of punishment imposed by way of disciplinaryaction the jurisdiction to entertain an application by the Commissionermade by the workman against such termination was ousted. Thereforethe present position of the law is where there is a termination of employmentthe employer was required, within 2 days to give his reason for suchtermination. Where such termination has been effected either by mutualconsent or with the prior written approval of the Commissioner of Labouras a punishment imposed by way of disciplinary action, the Commissionerhas no jurisdiction to hear and determine the said matter.
In such circumstances the remedy that lies for the workman is tomake an application to the Labour Tribunal under section 318(1 )(a) of theIndustrial Disputes Act challenging such termination and seekreinstatement or compensation for wrongful termination.
In the instant case the appellant’s services were terminated ondisciplinary grounds by letter dated 21.09.2000 (P2 in X1). Letter P2 setsout the various acts of misconduct allegedly committed by the Petitioner.
Therefore it appears that the jurisdiction of the Commissioner toentertain such an application was ousted.
This position appears to be very clear on an examination of sections2(1 )(a)(b), 2(4), 2(5), 3 and 6 of the Termination of Employment of Workmen(Special Provisions) Act as amended.
SCHiddelarachi Vs. United Motors Lanka Ltd., and Others419
(Nimal Dlssanayake, J.)
Thus it can be concluded that in terms of the Termination of Employmentof Workmen (Special Provisions Act) the Commissioner of Labour is vestedwith power to hold that terminations other than those under section2(1 )(a),(b), 2(4) and sub section 5, are null and void and have no effect inlaw.
Has the appellant by his conduct accepted that his services havebeen terminated ?
The services of the appellantwere terminated by letter dated 21.09.2000(P2 in X1). Within a few weeks of such termination by letter dated05.10.2000 (P4 in X1) the appellant requested the Petitioner-Respondentto make statutory payments that were due to him such as EmployeesProvident Fund, Employees Trust Fund, gratuity and allowance forunavailed leave. He did not protest to the petitioner-respondent regardinghis termination. He did not refute the allegation of the termination asbeing a punishment made on disciplinary grounds. Further the 2ndrespondent-respondent too in seeking enforcement of the aforesaid terminalbenefits, has himself accepted the due termination of the Petitioner. Theappellant's complaint to the 2nd respondent-respondent was made byletter dated 30.11.2000 (P2 in X1) after a period of more than 5 weeksafter termination. The appellant has also invoked the jurisdiction ofthe Labour Tribunal too against the termination of his employment.
The aforesaid conduct of the appellant is also consistent with hisacceptance that the termination of his employment was being imposedas punishment by way of disciplinary grounds.
Thus I am of the view that the appellant was not empowered to gobefore the Commissioner of Labour in so far, that the letter of termination(P2) has stated in no uncertain terms that his services were terminatedas punishment on disciplinary grounds.
Thus the petitioner-respondent has a right to seek writs of certiorariand prohibition before the Court of Appeal. The Court of Appeal had rightlydecided that the decision of the 2nd respondent-respondent to carry onwith the inquiry, when it has been alleged that such termination has beenon disciplinary grounds, was flawed.
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(2006) 3 Sri L R.
For the aforesaid reasons, I answer the following questions of lawas follows:
No.
No.
No.
No.
I dismiss this appeal with costs fixed at Rs. 25,000/-WEERASURIYA. J. – / agreeUDALAGAMA. J. – / agree
Appeal dismissed.