LANKA MULTI MOULDS PVT LTD
v.COMMISSIONER OF LABOUR
COURT OF APPEAL
J. A. N. DE SILVA, J. (P/CA)
C.A. 20/96JANUARY 23, 2001MARCH 7, 2001MAY 2, 2001
Termination of Employment of Workmen (Special Provisions) Act 45 of1971 – S.2(l), 2(1 )(b), 2(4), S.3. S.6, S.19 – Cessation of Employment -Prior consent in writing – Termination Illegal – Discretion ofCommissioner to order re-instatement – "May" – is it directory?
The second Respondent is a British National who joined the employmentof the Petitioner Company in 1992 Initially for a period of 3 years. ThePetitioner Company merged with another company resulting in the formationof a New Company. The Petitioner Company thereafter informed the 2ndRespondent that he could not be effectively integrated Into the new CorporateStructure and offered him a benefit package. The 2"d Respondentcomplained to the 1st Respondent who ordered re-instatement with effectfrom 22. 11. 96 and payment of backwages.
It was conteded on behalf of the Petitioner, that there was no terminationbut cessation of employment by mutual consent, and further as the contractof employment was for a period of 3 years, the Commissioner cannotextend the duration of 2nd Respondent's contract of employment.
The Commissioner had effectively and unlawfully extended theduration of the 2nd Respondent's contract of employment indefinitelyand beyond the fixed term period of 3 years which had already expiredon 30. 07. 95.
Under Section 6 the Commissioner is vested with a discretion togrant alternate relief in lieu of re-instatement or to even refrain fromgranting any relief if the circumstances of the case so warrants.
As no steps have been taken to produce the reasons of theCommissioner the Court has to come to the conclusion that he has nodefensible reasons to give.
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APPLICATION for a Writ of Certiorari.
Case referred to :
1. S.C. 884/75 – SCM 29. 03. 1976
Falz Mustapa PC., for Petitioner.
N. Malalasekare for 2nd Respondent.
A. Gnanathasan DSG for 1st 3rd Respondent.
Cur. adv. vult.
May 02. 2001.
J. A. N. DE SILVA. J. (P/CA)
The petitioner company is seeking a writ of Certiorari fromthis Court to set aside and quash the order dated 22. 11. 95made by the Commissioner of Labour who is the first respondent.
The petitioner is a private limited liability Companyincorporated in terms of the provisions of the Company Law ofSri Lanka and is engaged primarily in the business ofmanufacturing steel injection moulds used by the plastic, rubberand glass industries. This company is an approved companyby the Board of Investments (BOI) of Sri Lanka.
The second respondent above named is a British Nationalwho joined the employment of the petitioner company on orabout 01. 09. 1992 in the capacity of Technical Manager of itsfactory situated in the export promotion zone.
The terms and conditions of employment of the 2ntlrespondent were governed by the provisions of the formalcontract of employment which was entered into by both partieson 30. 07. 1992. According to the contract the 2nd respondent’sappointment initially was for a period of three years and wasscheduled to come to an end on 31. 08. 1995. However bothparties in term of clause 2(b) reserved to themselves the right toterminate the contract upon the furnishing of three monthsnotice to the other party of the intention to terminate thecontract.
Lanka Multi Moulds pvt Ltd v. Commissioner of Labour
(J. A. N. De Silva, J. PICA)
In 1994 the petitioner company negotiated a joint ventureagreement with a German Organization which provided amongstother beneficial aspects the transfer of advanced technologythrough German experts and engineers. In pursuance of thisagreement a merger was effected and the resulting position wasthe incorporation of a new company called and known as"Boehmin Leckner Multy Moulds Ltd." The petitioner companyinformed the 2nd respondent that he could not be effectivelyintegrated into the new corporate structure and the petitionercompany offered him the following benefits.
His salary of 7500 Pounds Sterling in lieu of notice.
Air passage from Colombo to London to his family and him.
Gratuity of 2500 Pound Sterling.
The facility of a car, telephone, free accommodation until heand his family left the shores of Sri Lanka.
Release from the obligation on his part of the Contract.
Initially the 2nd respondent did not agree to this and showedhis dissatisfaction by letter dated 22. 01. 1994 (P8). However itseems that later he had reluctantly accepted the above offer.
Thereafter the 2nd respondent by his letter dated 19.06.1994complained to the Commissioner of Labour that his services asthe Technicle Manager with Lanka Multi Moulds (Pvt) Limited,the petitioner, had been terminated with effect from 30.07. 1994in contravention of the provisions of the Termination ofWorkman (Special Provisions) Act No 45 of 1971 as amended.
After an inquiry the Commissioner of Labour by his orderdated 22. 11. 1995 (P26) ordered the reinstatement of the 2ndrespondent with effect from 15. 01. 1996 and the payment ofback wages amounting to Rs. 3,543,750/=.
The petitioner thereafter filed an application in this Courtfor a mandate in the nature of a writ of Certiorari. This Court
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on 28. 02. 1998 dismissed the petitioners application on thebasis of non-production of a certified copy of the memorandumprepared by the 3rt respondent. Thereafter the petitioner soughtspecial leave to appeal from the Supreme Court and SupremeCourt directed that the matter be argued de novo before thisCourt.
At the hearing of this application the learned Counsel forthe petitioner submitted that no terminal situation as contemplatedby Termination of Employment of Workman (Special Provisions)has arisen and therefore the Commissioner had no jurisdictionto hold an inquiry. It was the contention of the counsel that bymutual agreement there was a "cessation" of employment andthe 2nd respondent had rendered his purported application inanticipation of an event to which he himself had agreed.
Section 2(1) of the said Act deals with the manner in whichthe employment of any workman may be lawfully terminated.Section 2(1) is as follows "no employer shall terminate thescheduled employment of any workman without,
the prior consent in writing of the workman or
the prior written approval of the Commissioner."
Section 2(1 )(b) does not arise for consideration. Thepetitioner in paragraph 15 states that "the cessation of the 2ndrespondent's employment had been brought about in pursuanceof a consensus reached between the petitioner and the 2ndrespondent." And again at paragraph 31 of the petition referencehas been made to the fact that the "2nd respondent admittedthat he had not on any occasion objected in writing to theproposal in respect of the cessation of employment." It is to benoted that these contentions would not help the petitioner forthey cannot be substituted for the statutory requirement of "theprior consent in writing of the workman." The petitioner hadfailed to show "prior consent in writing of the workman and interms of Section 5 of Act the termination shall be" illegal, nulland void and accordingly shall be of no effect whatsoever."
Lanka Multi Moulds pvt Ltd v. Commissioner of Labour
(J. A. N. De Silva, J. P/CA)
In terms of Section 2(4) of the Act, the "ScheduledEmployment" of the workman should be terminated by hisEmployer "otherwise than by reason of punishment imposedby way of disciplinary action." In terms of the definition of"Schedule Employment" of Section 19 of the Act the workmanwas in "Schedule Employment" and it is common ground thatthe non employment of the workman was not by reason ofpunishment imposed by way of disciplinary action."
Similarly Section 3 of the Act lists the circumstances underwhich the provisions of the* Act will not apply; none of thecircumstances apply to the workman in the instant case. Section3 is to the following effect "The provisions of this Act other thanthis Section shall not apply to the termination of any workmanwho has been employed by an employer when such terminationwas effected by way of retirement in accordance with theprovisions of…..
Any contract of employment wherein the age of retirement
of such workman is expressly stipulated or . . .
Therefore it is clear that according to the provisions of thesaid Act the 2nd respondent was entitled to submit an applicationto the 1st respondent and the 1st respondent was equally entitledto hold an inquiry.
Mr. Musthapha the learned Presidents Counsel furthersubmitted that the contract of employment between the partieswas for a period of three years. As such the lsl respondent bydirecting the re-instatement of the 2nd respondent together withback wages had failed to exercise his discretion reasonably andhad also failed to take cognizance of the employer's perspectivein so doing. According to clause 1(b) of the contract "theappointment is for an initial period of three years."
Mr. Musthapha submitted that the Commissioner actedultra vires in awarding re-instatement in as much as the 2nd
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respondent had not sought the relief of re-instatement in hisapplication which had initiated the proceedings and which had"purportedly" vested the 1st respondent with jurisdiction tolaunch an inquiry. However it is to be noted that when the 2ndrespondent gave evidence he asked for re-instatement.
Learned Counsel for the 2nd respondent submitted that tohold that the contract is for three years would be to disregardthe word "initial" and would amount to re-writing the contract.He further contended that no legal consequences flow whetherthe contract is a fixed terms contract or not in the context of theprovisions of the Termination of Workman (Special Provisions)Act. His submission was that where the Commissioner findsthat there is wrongful termination, Commissioner has no optionbut to order re-instatement of the Employee.
I hold the view that both parties by agreeing to use the word"initial" in the contract reserved their rights to re – negotiate andenter into a fresh contract at the expiration of the stipulatedtime period viz three years.
It is observed that once the Commissioner comes to afinding, as he did in this case, that the termination was illegalCommissioner can take action in terms of section 6 which readsthus "where an employee terminates the scheduled employmentof a workman in contravention of the provisions of this Act theCommissioner may order such employer to continue to employthe Workman with effect from a date specified in such order inthe same capacity in which the Workman was employed priorto such termination and to pay the Workman his wages and allother benefits which the Workman would otherwise havereceived if his services had not been terminated and it shall bethe duty of the employer to comply with such order."
The power of the Commissioner under Section 6 of theTermination Act was examined by the Supreme Court1" byChief Justice Tennakoon, Justice Sharvananda and JusticeWanasundara and the Court held "The words in the section are
Lanka Multi Moulds put Ltd u. Commissioner of Labour
(J. A, N. De Silva, J. PICA)
"may order" and not "shall order". The legislature obviously didnot contemplate that in every case of termination of employmentwithout permission of the Commissioner to order re-instatementor continuance of employment upon a complaint being madeto him under Section 6." Therefore it is clear that theCommissioner is vested with a discretion to grant alternate reliefin lieu of re-instatement or to even refrain from granting anyrelief if the circumstances of the case so warrant.
It is obvious from the order P26 that the Commissionerhas not given his mind at all to the question that the contractwas "initially" for three years. In directing that the 2nd respondentbe reinstated with effect from 15. 01. 1996 the Commissionerhad effectively and unlawfully extended the duration of the 2ndrespondent's contract of employment with the petitioner,indefinitely and beyond the fixed term period of three years whichhad already expired on 30. 07. 1995. As such the Commissionerhad purported to undermine the contractual violation of thecontracting parties and exceeded the jurisdiction vested in himby Statute.
It is to be noted that no proper reasons had been adducedin support of the Commissioner's impugned order and thereforerelevant adverse inference will have to be drawn against theorder. No steps were taken to even produce the reasons beforethis Court and the Court has to come to the conclusion that hehas no defensible reasons to give.
In all the foregoing circumstances and in view of the factthat Commissioner has held that the termination is illegal andwrongful I permit only part of the order to stand. I quash thepart of the order dealing with reinstatement. On the question ofback wages the petitioner is entitled only to get wages for thebalance period of his three year contract viz for 13 months.Subject to the above the application is allowed with costs fixedat Rs. 5000/=.
Application partly allowed.