004-SLLR-SLLR-2004-V-2-LIYANAGE-AND-OTHERS-v.-COMMISSIONER-LABOUR-AND-OTHERS.pdf
CA
Liyanage and others v Commissioner of Labour and others
(Amaratunaa. J.)
23
LIYANAGE AND OTHERSvCOMMISSIONER OF LABOUR AND OTHERSCOURT OF APPEALAMARATUNGA, J.
C.A. 1194/98AUGUST 5, 2003
Termination of Employment of Workmen (Special Provisions) Act, No. 4$ of1971, as amended by Act, No. 4 of 1976 and Act', No. 51 of 1988, sections11 (2) and 12 – Commissioner to hold inquiry – Delegation of powers – Duty togive reasons, – Computation of compensation.
The petitioners sought to quash the decision of the Commissioner of Labourgiven after an inquiry held under the Termination of Employment (SpecialProvisions) Act, awarding compensation challenging the basis on which com-pensation was awarded. The petitioners also challenged the order on the basisthat the inquiry was not held by the Commissioner and that no reasons weregiven in the order.
Held:
I) The Commissioner has the power to delegate the function of holding aninquiry to an Assistant Commissioner of Labour, as in terms of section11(2) the Commissioner is empowered to delegate any power function orduty imposed or conferred on him to any officer of the Labour Department.
There is no requirement under the Act for the Commissioner to give rea-sons for his decision, but the present judicial trend is that natural justicerequires him to give reasons.
If the report submitted to him by the officer who conducted the inquiry con-tains the reasons for the finding and the recommendation and if theCommissioner agrees with theiindings and conditions there is no necessi-ty for him to give separate reasons. He by his approval of the Report may“adopt” the reasons contained therein.
In computing the compensation payable, the Commissioner has taken intoaccount the reasons for the termination of services, the period of service ofeach petitioner, and the age, their present employment and the fact thatthey remained unemployed and computed the amount payable.
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APPLICATION for a writ of certiorari.
Geoffrey Alagaratnam with T. Dharmakeerthi for petitionersA. Gnanathansan, Deputy Solicitor-General for 1st and 2nd respondentsRomesh de Silva, P.C., with Hiran de Alwis for 3rd respondent.
Cur.adv.vult
August 5, 2003
GAMINI AMARATUNGA, J.This is an application for a mandate in the nature of a writ of cer- 01tiorari to quash the decision of the Commissioner of Labour givenafter an inquiry held under the Termination of Employment (SpecialProvisions) Act, No. 45 of 1971 as subsequently amended by Actsof No. 4 of 1976 and 51 of 1988 in respect of the termination of ser-vices of the petitioners by the 3rd respondent KLM Royal DutchAirlines (hereinafter referred to as KLM). The termination wassequel to the stoppage of the Airline’s flights via Colombo and theclosure of its branch office in Sri Lanka.
The petitioners challenge the basis on which compensation 10awarded to them was computed and the quantum of compensation.
The facts relevant to each petitioner is relevant in considering thedecision of the 1 st respondent Commissioner of Labour.
Petitioner Padma Liyanage
This petitioner has served in the KLM office in the Sultanateof Oman. The appointment was from March 1983. Theappointment was made on a specific letter of appointmentmarked 1A1. His services abroad has come to an end in1995. As final settlement for his service abroad he has beenpaid by KLM a sum of Oman Riyal 9850/-. With effect from 2026/4/1995 he has been appointed Station Manager KLMColombo by letter of appointment (1A2) which sets out histerms and conditions of service. This is a letter of appoint-ment to specific post. It is not a letter of transfer or a promo-tion. The petitioner’s employment which commenced with theletter of appointment 1A2 was terminated from 1/4/1997 due
CA
Liyanage and others v Commissioner of Labour and others
(Amaratunga. J.)
25
to the suspension of KLM Air Services to and from Colombo.Thus his service with KLM on the letter of appointment 1A2ended with the termination effected on 1/4/1997.
Petitioner Piyatillaka
She has stated that from September 1982 to September1995 she was in the service of the KLM on a formal letter ofappointment issued by the Carsons Cumberbatch Companyand later by the Carsons Airline Services Limited which func-tioned as the General Sales Agent for the KLM in Sri Lanka.Business carried on by Carson Cumberbatch Company wastransferred to Carsons Airline Services Limited in 1993 andthe joint letter issued by the said two companies to this peti-tioner, dated 10/11/1993, (2A2) states that, she is transferredfrom the former company to the new company which will offeremployment to her on the same terms and conditions andthat the new company would recognize her past services withthe former company. The petitioner has accepted employ-ment under the new company on the terms and conditionsset out in 2A2. Thereafter KLM has offered employment tothis petitioner as customer service supervisor from 1/10/1995on the terms and conditions set out in letter of appointmentmarked 2A5. The petitioner has accepted the offer of employ-ment made by the KLM. This petitioner has tendered her res-ignation from the post she held at Carsons Airlines ServicesLimited (2A6). Her services were terminated by the KLMfrom1/5/1997.
Petitioner Abeywardana
Her case is similar to the case of petitioner Piyatillaka.Abeywardana has served the Carson Company from23/1/1989. In October 1995 she has accepted employmentunder the KLM. Her letter of appointment issued by the KLMis marked 3A5. Her services were terminated with effect from1/5/1997 due to the suspension of KLM flights to and fromColombo.
Petitioner Kurtiudini Fernando
She has joined the Carsons Company in July 1988. In heraffidavit she has stated that in 1995 when Carson Airline
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Services Limited attempted to terminate her services, shemade an application to the Labour Tribunal for relief and theKLM and Carsons company paid Rs. 100,000/- to her in set-tlement of this case. Document 4A5 indicates that in additionto this payment the KLM offered employment to her and shehas accepted employment under the KLM with effect from18th March 1995 on the terms and conditions setout in theletter of appointment 4A6. Her services had been terminatedwith effect from 1/5/1997 due to the suspension of KLM AirServices to Colombo.
Petitioner Maussawa
He was employed by the Carsons Company from September1984. His case is similar to the cases of the others and hehas accepted employment under the KLM with effect from1/10/1995. His services were terminated with effect from5/1/1997 for the same reason given in the case of the others.
Petitioner Harold Fernando
He has accepted employment under the KLM with effect from20.3.1996. Unlike the others he had no connections with theCarsons Company prior to his appointment to the service ofthe KLM. His services too were terminated with effect from’ 1/5/1997 due to the suspension of KLM Air Services to andfrom Colombo.
Against the termination of his services, petitioner Liyanage hascomplained to the Commissioner .of Labour and the others havealso made separate complaints. Their complaints were inquiredinto together by the Assistant Commissioner of Labour,Saranatissa, the 2nd respondent and his report to theCommissioner of Labour has been marked and produced in theseproceedings as 1R3 by the 1 st respondent. According to the rec-ommendations made by the 2nd respondent he has proceeded onthe basis that the petitioners’ services with the KLM has com-menced from the dates specified in the letters of appointment. Hehas made recommendations for the payment of compensation hav-ing taken into account whether they have subsequently foundemployment or not. The Commissioner of Labour having consid-ered the report of the recommendations has approved the 2ndrespondent’s recommendations and made his order accordingly.
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Liyanage and others v Commissioner of Labour and others
(Amaratunaa. J.)
27
One of the complaints of the petitioners is that the decision ofthe 1st respondent violates the principle that ‘he who decides musthear’. In this case the full report of the 2nd respondent to the 1strespondent has been produced before this Court. In his report the2nd respondent has dealt with the arguments made on behalf of thepetitioners that their services with the ‘formal’ appointments issuedby the Carsons Company was also a period of service in the ser-vice of the KLM, the 3rd respondent. Under section 12 of theTermination of Employment of Workmen Act (Termination Act) theCommissioner has the power to hold an inquiry necessary for thepurposes of the Act. Termination of employment contrary to the pro-visions of the Act is one matter in respect of which theCommissioner is empowered to hold an inquiry. In terms of section11 (2) of the Act, the Commissioner is empowered to delegate anypower, function or duty imposed or conferred on him to any officerof the Labour Department. Thus he has the power to delegate thefunction of holding an inquiry to an Assistant Commissioner ofLabour. The petitioners have, without any objection participated inthe inquiry held by the 2nd respondent.
The copy of the report submitted by the 2nd respondent to theCommissioner contains the 2nd respondents recommendation withhis reasons for such recommendations. The endorsements madeby the Commissioner in the report in respect of the case of eachpetitioner indicates that he has addressed his mind to the facts,reasons and recommendations set out in the report. It is not arequirement that the Commissioner should himself conduct aninquiry under the Act. He is competent to delegate that task to anofficer of the Labour Department. In fact considering the number ofcomplaints that may be received by the Commissioner under theAct at any particular time it may not be possible for theCommissioner to hold an inquiry in respect of each complaint. It istherefore competent for him to get one of his officers to inquiry intothe matter. What is important is that in making his order he shouldconsider the report presented by such officer.
There is no requirement under the Act for the Commissioner togive reasons for his decision. But the present judicial trend is thatnatural justice requires him to give reasons. Karunadasav UniqueGem Stones Limited and others (1997) 1 LR 256. If the report sub-mitted to him by the officer who conducted the inquiry contains the
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reasons for the findings and the recommendation and if theCommissioner agrees with the findings and recommendationsthere is no necessity for him to give separate reasons. He, by hisapproval of the report, may ‘adopt’ the reasons contained therein.
It is sufficient compliance with the duty to give reasons. In this casethe Commissioner has placed before Court the report of the 2ndrespondent. His order has been made on the acceptance of thefindings of the 2nd respondent. Therefore his order cannot beassailed on the basis that ‘he who decides must hear’.
In this application the cases of the 1st petitioner Liyanage and isothe 6th petitioner Harold Fernando are different from the cases ofthe other petitioners. 1 st petitioner’s first appointment was by theKLM in 1983 at Oman. That was a time during which the KLM didnot have a branch in Sri Lanka. Thus it was a contract with a for-eign company in a foreign country. The Commissioner has rightlystated that the 1 st petitioner’s contract of employment for KLM inOman is like any other contract of a local employee abroad for ser-vices abroad which was duly terminated in that country with thepayment of terminal benefits. Therefore his employment in Omancannot be treated as employment in Sri Lanka for the purposes of 160the Termination Act. His employment in Sri Lanka cannot be treat-ed as a continuation of his employment commenced in Oman. Hisappointment (1A2) is a separate appointment and for the purposesof the Termination Act, his employment in Sri Lanka has com-' menced only in April 1995. Having taken into consideration that hehas obtained employment after the termination of his services bythe KLM the Commissioner has awarded as compensation fourmonths salary to him for his service of one year and eleven monthswith the KLM.
The 6th petitioner’s employment with the KLM has commenced 170only in March 1996. The Commissioner, having taken into accountthat the 6th petitioner has obtained employment in 1996 has award-ed him three months salary as compensation for his 13 months ser-vice.
The cases of the other petitioners were that though their initialappointments were under ‘formal’ letters of appointment issued byCarsons Company, they were in fact the employees of the KLM. Insupport of this contention they have urged the following grounds.
CA
Liyanage and others v Commissioner of Labour and others
:(Amaratunaa. J.)
29
The KLM issuing its identity cards to them when they werein the service of the Carson Company.
Training given to them by the KLM and the certificatesissued for satisfactory services.
Bonus payments to them by the KLM.
Certificates issued to them on the basis that they have beenin the service of the KLM for the periods set out in those cer-tificates.
The letters of appointment very clearly indicate that the 2nd to5th petitioners have been employed by the Carsons companies.Their salaries were paid by those companies. The petitioners weremembers of the Carsons Administrative Officers Provident FundScheme. Employers contribution to the Provident Fund was paid bythose companies. On this material it is clear that the power to ter-minate the services of the petitioners was also with those compa-nies. Thus the Carsons Cumberbatch Company in the first stageand Carsons Airline Services Limited at a later stage was theemployer of the petitioners (2-6)in fact and in law.
There is no doubt that the 2nd to 5th petitioners have been per-forming the services connected to the airline services of the KLM.They have performed those duties as employees of the GeneralSales Agent for the KLM. They have been given training by theKLM as they were handling the work connected with the air ser-vices of the KLM. Therefore the certificates and other testimonialsissued by the KLM are not items of evidence which indicate that thepetitioners were employed by the KLM. The bonus payment toocannot be regarded as payments made in the discharge of anemployer’s obligation to its employees. A bonus is an ex gratiapayment. As already stated the petitioners as employees of theKLM’s General Sales Agent have performed duties connected withthe KLM Airline Services, a bonus payment in appreciation of theservices of the petitioners cannot be regarded as a payment madein terms of a contractual obligation.
The KLM has issued their identity cards to the petitioners whilethey were the employees of Carsons companies. It is true that usu-ally an identity card is issued by the employer. In this instance allother evidence indicate that the petitioners were the employees of
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the Carson companies. The petitioners, being persons handlingmatters relating to airline services necessarily have to have deal-ings with airports which are usually restricted areas. The posses-sion of an identity cards issued by the KLM is an indication that theyare persons engaged in the services connected to the KLM. 220Therefore the identity card is a means of identifying them with theservices of the KLM. Thus the documentary evidence such as theletters of appointment issued by Carsons Gumberbatch Limited andCarsons Air Services Limited, payment of salaries and the employ-ers contributions to the provident fund Unmistakably point to thefact the petitioners were the employees of those companies.Letters of resignation tendered to the Carsons Air Lines Services(such as 2A6) before the petitioners joined the KLM very clearlyindicate that before they joined the KLM in 1995, they themselvesaccepted the position that they were the employees of the Carsons 230companies. According to the evidence placed before the InquiryOfficer the 2nd to 5th petitioners have become employees of theKLM only from 1995 and the KLM became their employer within themeaning of the Termination Act only after it issued the letters ofappointment to them in 1995.
In deciding whether a particular person is an employer within themeaning of the Termination Act, the Commissioner of Labour isbound by the contract of employment. The Act contains a statutorylimitation of the employer’s right to terminate the services of theemployee. In view of the special restrictions imposed by the Act 240with regard to the termination of services, an employer’s right to ter-minate the services in accordance with the terms of the contract ofemployment is statutorily modified to that extent. Whatever may bethe contractual terms with regard to the termination of services, theCommissioner of Labour has the power to grant relief if the termi-nation is in violation of the provisions of the Termination Act. But inother respects such as for example for the determination whether aperson is an employer within the meaning of the Termination Actthe Commissioner of Labour is bound by the terms of the contractof employment. His power to grant relief notwithstanding anything 250to the contrary in any agreement is limited to situations where ter-mination has been effected contrary to the provisions of the Actalthough such termination is within the power available to anemployer under the contract of employment.
CA
Ran Banda and others v The People's Bank
(Amaratunaa. J.)
31
In this instance, the Commissioner has acted within his powers,has taken all relevant matters into consideration and has come tothe correct conclusion that for the purposes of the Termination Act,the 3rd respondent KLM became the employer of the petitionersonly after the KLM directly employed them on letters of appoint-ment issued in 1995 (in the case of the 6th petitioner from 1996).260
In computing the compensation payable to the petitioners, theCommissioner has taken into account the reason for the termina-tion of services, the period of service of each petitioner and theage, their present employment or the fact that they remained unem-ployed and computed the amount payable to each petitioner ascompensation. The petitioners have not established any reason tointerfere with the conclusions and recommendations given by the2nd respondent and the decision of the Commissioner. AccordinglyI dismiss the application of the petitioners. In view of the unfortu-nate situations in which the petitioners were placed due to reasons 270beyond their control I make no order for costs.
Application dismissed.