PERERA v. MARIKAR BAWA LTD

029-SLLR-SLLR-1989-V-1-PERERA-v.-MARIKAR-BAWA-LTD.pdf


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Perera v. Marikar Bawa. Ltd. (Viknarajah. J.)347
-’ fi— — _
PERERA
y.MARIKAR BAWA LTD.
COURT OF APPEALC. A. NO. 502/80L. T. COLOMBO NO. 2/5638/73VIKNARAJAH. J.'.
MARCH 17. 1989.
Industrial Disputes — Industrial Dispute Act — Independent ■ Contractor —Contract of Service and Contract of Services — .Workman, — Test applicable— Termination.
The appellant was the Head Cutter of .the respondent Company. He Was provided .with a cubicle but employed his own yvorkmen and used his. own tools.'.The..
' Company passed on tailoring'orders, to him and on execution he was paid acommission from-the collections' for,[each month. The GpmRany,,collected thepayment from-the.customer and kept-the accounts. The’appellant did hot,sign'the attendance. register.,and.was..npt entitled to a bonus like other .employees.The question was Whether .appellant was ,a .workman within the meaning qfjth'eIndustrial Disputes Act. Was his a contract of service or contract for services-asan independent contractor.
Held
v ■i'■.•
The applicant's work was an integral part.of the respondents business and
he was part and parcel-of the organisation. The appellant did.not carry orv.hisbusiness of Head Cutter'as' a-’business belonging to him. It was a business'doneby the appellant for the respondent. Therefore he was a .'workman and anemployee Within the meaning of the Industrial Disputes Act.
. The'finding of the President of the Labour Tribunal that-there has been notermination bot -the applicant on his own stopped going to work is' amply:supported by'the evidence. In the absence oftermination by the respondent, the!appellant could not seek relief be.fo.re.the Labour Tribunal.
Cases referred to:
Times of Ceylon, v. Nidabas Karmika Saba .Velanda Sevaka VurthiyaSamithiya 63 NLR 126..
Stevens'on Jordon and Narrison Ltd', v. Macdonald and Evans. (1952)'
• T.L.R. 101 at 110. 111. ^
.'(3) Collinsv. Herts County Council [ 1 947] K. B. 598 at .61 5.
Cassidy v. Ministry of Health [19511 1 All E. R. 574 at 579
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Montreal Locomotive Works Ltd. v. Montreal and AG. for Canada (1"9^7) 1D.L.R. 161 ai P. 163.
Bank voor Handel en .Schespvaart N.V. v. Slatford (1952) 2 AH E.R. 966 at971. '
u.s. V. SHk( 1946) 331 U.S.704.
Market Investigations Ltd. v. Minister of Social Security [1968) 3 All E.R.732 at 737.
APPEAL from an order of the Labour Tribunal.
D. R; P. Goonetileke with Miss Shiranthi de Saram for Appellant.
A. J. I. Tilakawardena with Mrs. Dulani'Wimaladharma for Respondent.
Cur. adv. vult
May'1-2. 1989.
VIKNARAJAH, J.
This is an- appeal by the applicant from the order of thePresident ’ Labour Tribunal dismissing his application madeagainst the respondent Company Marikar Bawa Ltd. claimingrelief on the ground of unjustifiable termination of his services.
Two matters arise in this appeal for consideration.
whether the applicant is a workman within the meaningof the Industrial Disputes Act.
– – whether there was -a. termination by the respondent-■ Company or whether- the applicant left of- his own
accord,■ v –
..The applicant was appointee) as Head cutter in the TailoringDepartment of the respondent Company with effect from 1stFebruary 19.70:. According to the letter of appointment A1 theappointment will be purely on a contract and commission basis.A'‘'commission of 25% of the Tailoring charges will becomepayable to the respondent Company on all work executed 'byapplicant. The appointment will -be on a probation basis for aperiod of three months from date of commencement of work.During continuance oT employment under the respondentcompany the applicant should cease to do any private work. Thehours of attendance and work will be limited to the normalworking hours of the respondent company. During the course ofapplicant's employment-he will be solely responsible for the.work
CAPerera v. Mariiar BawaLtd. (Viknarajah. J.)349
undertaken by him.'The cutting fittings and alteration shall beattended under his personal supervision and guidance.
Further in terms of A1 the letter of appointment, any losses'arising out of garments that are found to be unsatisfactorilyexecuted will have'to be borne by applicant and the costthereof will be set off against payment to applicant.
Termination of services will be effective upon six monthsnotice being given by either party. Upon' termination of. services the respondent company shall pay the amount that isdue to applicant after deducting whatever amount is due tojhe,respondent-company. •.
The applicant.accepjted the appointment on the above termsand conditions.
The applicant claimed that he wasp regular employee of therespondent from January '1970. His complaint was that hiswork.was stopped without justification on the„1 1th May 1.97-3.on the ground, that he refused to sign a letter drafted-by theCompany varying drastically the terms and conditions of,hisservices.. .
, The respondent Company den.ied that the applicant was a'workman' within the meaning of the Industrial Disputes Act inthat the applicant was employed as an ihdependant contractorOn a commission basis. Further the ..company's positionwasthat.it never stopped the work of the applicant but that theapplicant kept away from work on his own. ‘ ‘
• ' ' ' ■ • , . " &■
The learned President after inquiry held that the'applicant
was not a, workman within the meaning .of the IndustrialDisputes Act and also held that there was no'termination by•the respondent Company and dismissed the applicationTThepresent appeal is.fr.6m this order.-
The main contention pf the Counsel for the appellant at thehearing of the appeal is „that the learned President hasmisdirected,himself on the law when'he held that.the.applicanr
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appellant was an independant contractor. Counsel forappellant relied on the judgment of this Court in an unreportedcase in Appeal No. 23/75 L.T/1/1643/76 decided on4.9.81 where facts were almost identical and the respondenton that appeal was the same respondent in this appeal. Theappellant in that case was a ladies tailor employed by MarikarBawa Ltd. This Court held that the appellant (ladies tailor) wasan employee within the meaning of the Industrial Disputes Act.
The applicant prior to his being appointed as Head cutter inFebruary 1970 was employed as a tailor by Wilbert who wasemployed by the .respondent as a Head cutter. Wilbert paid thesalary of applicant. Wilbert was given a cubicle to dischargehis duties as Head cutter. In February 1 970 the applicant hadleft the services of Wilbert as he had obtained a cubicle also inthe premises of respondent Company and was an appointedHead cutter. After he was appointed Head cutter the applicanthired tailors to do his work. He had also brought his ownequipment like scissors, measuring equipments, thread etc. towork in the department. The applicant stated, in evidence thatafter he took over the department, he came to. enjoy the same'Status /and category as Wilbert, Samarasinghe and ArthurPerera. The applicant stated that he was called the 'cutter' andwas given full administration in the department. He said asfollows 'I was made the' Head of .the. Department .and maderesponsible for the' workibg of that department'". •
After-having obtained a cubicle the-applicant stated that
being the cutter be .took orders and gave directions tothe tailors under'him as to how they should do their
■ work. •,•
that he did not sign an attendance register like aregular employee Of the respondent,
that the respondent did not rhake any contribution to
; the E.P.F. in respect of him.
'(diy 'that" he -received , no bonus 'although. the regularemployees of the respondent are entitled to bonus.
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Perera v. Marikar Bawa Ltd: (Viknarajah. J.)
The applicant also stated that in 1973 the officers of theLabour Department visited the cubicle and requested him topay E.P.F. contribution in respect of his employees-..
On behalf of the respondent Bawa. the. Managing Director ofthe respondent firm gave evidence. He said he was working,director from 1973. He said that this firm was established in1869 by his grandfather. Bawa stated that that the firm vyasdoing business in selling textiles and. jewellery. He said thatthey did tailoring also: as part, of their business and they have(seen advertising themselves as tailors and also.advertising thenames of' thei.r expert cutters. He admitted that they' haveseveral tailoring departments in the establishment. In 1 973respondent had four ’. tailoring departments.' They had a.tailoring, department for ladies also. Bawa admitted thatapplicant made hiS'applic'dtion for the post of cutter'after thepost was advertised (vide R5j.-Bawa stated in evidence that norent was paid by-the head cutters for the cubicle's occupied bythem. The cubicles belong’to the respondent company- .- .
■"■^According’to.-AT the-applicant had to/pay a commission torespondent out of the tailoring charges. But Bawa stated inevidence that the firm colleets-this money from customers onbehalf of the tailors and accounts are maintained .by"the, firmand, are entered^ by the .office staff. The tailors only take themeasurement and give the particulars to the salesman whorecorded it in. the. book.. Bawa admitted that-the^ accountsrelating.to the tailoring.that-is the charges collected-etc. aremaintained .by the firm. It is the firm that collects the tailoringcharges and out of-that pays the.commission that is du.e to.thetailors. ,:, .
The appellant was a Head Cutter and possessed of specialskill and experience and the respondent could naturally havehad.no control,over the manner of. the performance of hisservices:
.it.'
A 'workman' is defined in section 48 .of the. IndustrialDisputes Act. According to that definition a ,person who ,is anindependent contractor falls outside, the category of
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workman'. It is therefore necessary to determine whether theappellant was an employee or servant of the respondentcompany as distinguished from an independent contractor. Adistinction between the two classes has been broadly stated tobe that while in the case of the former there is a contract ofservice in the case of the latter, what comes into existence is acontract for services. Times of Ceylon v. Nidahas Karmika SabaVelanda Sevaka Vurthiya'Samithiya^ ).
In Stevenson Jordon and Narrison Ltd. v. Macdonald andEvans (2) it was held that some work done by an accountantwas within a contract of service and some work done by him-was outside. Denning L.J. stated at pages 110. 111.
"The. test usually applied is-whether the employer has theright to control the manner of doing the work. Thus inCollins v. Herts County Council (3) Mr. Justice Hilberysaid The distinction between a contract for services and a. contract of services can be summarised in this way: In theone case the master can order or require what is to bedone, while in the, other case he can not only order orrequire what is to be done but how it shall be done'. Butin Cassidy v. Ministry of. Health ^ Lord JusticeSomerwell pointed out that the test is not universallycorrect. There are many contracts of service where themaster cannot control the manner in which the work is tobe done, as in the case of a captain of a ship. Lord JusticeSomerwell went on to-say: "one perhaps cannot get muchbeyond this” Was the contract a contract of service withinthe meaning which an ordinary person would give to thewords?".- I respectfully agree. As (Sir Raymond Evershed-'M. R.) has said, it is almost impossible to give a precisedefinition of the distinction. It is often easy to recognise acontract of service when you see' it. but difficult to saywherein the difference lies. A ship's master, a chauffeurand' a reporter on the staff of a newspaper are all^employed under a contract of service: but a ship's pilot a•ta*iman and a newspaper contributor are employed undera-contract.for services".
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Then Denning L. J. goes to the test which he indicates atpage 111.
"One features which, seems to run through the instancesis that .under-a contract* of service, a man is employed aspart of the business and his work is', done as an integralpart of the business' whe'reas under a contract for .rservices. his work', although done for the business, is notintegrated into, it but is only accessory to it'.
In Montreal’ Locomotive Works Ltd. v. Montreal and A. G. for •CanadaWright said thus:
"In earlier cases a single test, such as the' presence orabsence of control was often' relied on to determinewhethe.r the case was one of master and servant, rpostlyin order to decide issues of tortious liability on the part,ofthe master or superior. In the more complex condition's of, modern industry"'more, complicated tests have often to beapplied. It has .been suggested that a.fourfold test, wouldin some cases be more appropriate, a complex involving(i) control (ii) ownership of the tools (iii) chance of profit
risk of loss. Control in .itself is not always conclusive’Thus the-master of a chartered vessel is. generally theemployee: of the shipowner though .the. charterer candirect the. employment of the vessel. Again the.law often’limits the employer's right to interfere with the employee's .conduct, as also do trade .union .regulations, in manycases the question can only-be settled by examining thewhole of the various elements which constitute therelationship.between the parties. In this way it is in some-.cases possible to decide the issue by raising as thecrucial question whose business is it. or in .other vyords byasking whether- the party is carrying on the business in-the sense.of carrying it on-for himself, or .on his own.behalf and not merely for a superior".
In Bank vdorHandel en Schespvaart N. V. v. Slatford ^Denning said. ‘•/; ..,
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. . the test of being a servant does not rest nowadays onsubmissions to orders. It depends on whether the personis part and parcel of the organisation”.
In the American case of U. S. v. Silk (?) Silk sold coal byretail, using the services of two classes of workers, unloadersand truck drivers. The unloaders moved the coal from railwayvans into bins. They came to the yard when they wished andwere given a wagon to unload and a place to put the coal.They provided their own tools and were paid so much per tonfor the coal they shifted. The question was whether certainmen were 'employees' within the meaning of that word in.theSocial-Security Act 1 9'35. The judges of the Supreme Courtdecid.ed.that the test to be applied was not "power of control,whether exercised or not. over the manner of performingservices' to the .undertaking but whether the men wereemployees 'as a matter of. economic realty'. All nine Judgesheld that these men were employees.
In Market Investigations Ltd. v. Minister of Social Security(8) it was held that a part time interviewer engaged by a marketresearch Company was under a contract of service. Cooke J.observed at page 737.
"The observation of Lord Wright, of Denning L. J. and of• the Judges of the Supreme Court in the U.S.A. suggestthat the fundamental-test to be applied is this 'Is the- person who has engaged himself to perform theseservices performing them as a person in business on hisown account?' If the answer to that question is 'yes' then'■ the contract is a contract for services. If the answer is 'no'■ -'then the contract is a contract of service".
It thus appears from the-above cases that-the greater theskill required for arr employee's work, the less significant iscontrol in determining whether the employee is under acontract of service. Control is – j u st one of many factors whoseinfluence varies according to circumstances. The test whichemerged from the -authorities; seems to me,- as Denning L. J.•said, whether on the one hand the employee is employed as
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Perera v. Marikar Bawa Ltd. (Viknarajah. J.j355
part of the business and his work is an integral part Of the. business or whether his work is not-integrated. on to the-business.but is only accessory to it or as Cooke J. expressed it,-the work-is done by him in business on his own account.
■ It would appear .from the evidence of Bawa the ManagingDirector’of' the respondent company, that the respondent wascarrying, on a tailoring business for many years and had atailoring department.. All accounts are kept by the staff, ofrespondent company. All payments by customers are collectedby the staff of the respondent, company-and every month, theamount due to the applicant is calculated and paid. The modeof calculation was-different in that a certain percentage of thecollection is paid to the applicant.' It i'Si-abu.ndanti.y clear fromthe"evidence of the Managing Director'that .the applicant'swork was' an integral part of the-respondent's business. It waspart and parcel,of the organisation.•'•.
The applicantdid not carry on. his business of head cutter asa business belonging to him. It .was a business, done- by the■ appellant for the respondent., : ■ * ■■
– The applicant was not on par with the other staff-of therespondent because the mode of payment.was different but hestill .remained part and parcel of the organisation.
I hold that the appellant was an employee within themeaning, of industrial Disputes Act and entitled to maintainthis application before the Labour Tribunal as, workman': ThePresident misdirected himself on the law in coming, to thefinding that the appellant was an. independent contractor.
The other-matter which arises for decision in this .appeal iswhethehthere-'was-termination, by the, respondent. Company.:brwhether.the appellant'left-of his own-accord:- ,.
ihe.appellant's evidence was that .the respondent Companystopped the work of the appellant and terminated his servicesfrom;. 1.1 th May 1 973. According .to appellant on 8th May1973 Hussein Marikar Bawa called him and asked-him to give
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in writing if he wanted higher payment for the work done as hehad to place it before the Board. On the following dayappellant gave the letter AT dated 9.5.73 in which he-alleged.that Marikar Bawa threatened him. According to appellantthereafter Marikar Bawa had called all the salesmen andinstructed them not to give work to appellant. He thereafter■sent the letter A3 dated 1 5.5.73 addressed to all the Directorswherein appellant alleges that his work has been stopped fromil .5.73. The respondent Company .replied by the letter R6dated 26.5.73 wherein the respondent Company denieshaving stopped work, and requesting appellant to come on30.5.73.
' On 7.6.73 the applicant-appellant made his application tothe Labour Tribunal for relief alleging unjustifiable termination.Appellant did not go and meet the Director on 30:5.73 asrequested in the letter R6. This letter was produced by theDirector when he gave evidence in cross-examination beforethe Labour Tribunal.
The appellant admitted ^evidence that he did. not receiveany letter of termination nor did anybody say that his serviceswere.terminated. Although appellant's position was that hiswork was stopped, on 11th May 1.973 he stated that hecontinued to work till 25th May in respondent's premises, in. ord.er to complete his work.
The Managing Director Bawa stated in evidence that he didnot stop the work of appellant from 1 1th May. He stated thatafter he sent the letter A3 dated 1 5.5.73. the appellant cameand asked: his pardon and asked for an advance of Rs. 2000/-to.go on a pilgrimage to Kataragama. This money was given toappeM.anf and he promised to come back within two weeks andstart- work again, instead of which appellant filed' -theapplication in the Labour Tribunal on;;7.6:.;7’3.;
Appellant admitted in evidence that he’received' Rs. 2000/-from Bawa on 28.5.73 forwhich he signed a receipt but atfirst he-tried to make out that it was part of the moneys due tohim but later admitted that-it was an advancer The appellant at
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first denied that he went to Kataragama but later admitted thatafter he returned from Kataragama he filed his application inthe Labour Tribunal.
It would appear from appellant's evidence that after he sentthe letter A2 on 9.5.73 he stopped going to work and foliowed.it with letter A3 dated 1 5.5.73 and made out a case to file anapplication before the Labour Tribunal.
The President’s finding on the evidence is that there hasbeen no termination by the respondent but that the appellanton his own stopped going to work. I do not see any reason tointerfere with this finding, which is amply supported by theevidence,-,.
, As there' has- been no termination by the respondent theappellant cannot maintain , his. application, before the LabourTribunal.

' The appeal is dismissed without costs.
Appeal dismissed.