SCSunil Sirilanka and Others v.
Ceylon Steel Corporation Ltd, and Others (Fernando, J.)59
It is common ground that the Government, through the 2ndrespondent, did offer all employees who did not wish to continue inemployment under the new management a compensation packagebased on length of service. 728 such employees were offeredcompensation on or about 26. 2. 97. They were later paid a totalof Rs. 292,864,972.46, which works out to an average of aboutRs. 402,000 each.
The petitioners' complaint is that the failure to .offer and pay themcompensation on the same basis – although they too did not wishto continue in service under the new management – was in violationof their fundamental rights under Article 12 (1).
It was out of the employees' objections to the privatization, therefusal of the majority to work under the new management, and thefears of retrenchment of others, that the compensation packageevolved. On 6. 12. 96 the 2nd respondent made the first offer; thedetails are not relevant, and it is enough to say that it was relatedto length of service, and was subject both to a minimum of ten months'salary as well as a maximum of Rs. 250,000; and the closing datefor applications was 20. 12. 96. Dissatisfaction among the employeescontinued. On 16. 12. 96 the 2nd respondent made his second offer:
5 years or less
5 to 9 years
9 to 13 years
13 to 17 years
Over 17 years
subject to a maximum of
12 months' salary25 months' salary35 months' salary45 months' salary50 months' salary,Rs. 260,000.
The closing date for applications was the same. The GeneralManager of the 1st respondent informed the workforce by a noticedated 17. 12. 96.
Industrial unrest continued. The 3rd respondent, the Commissionerof Labour, intervened in an attempt to bring about a settlement. Thetrade unions made a counter-offer on 26. 12. 96, suggesting
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compensation ranging from Rs. 100,000 (for less than one year'sservice) to Rs. 600,000 (for over 15 years' service). That was notaccepted.
On 27. 12. 96, the 3rd respondent wrote to the General Managerof the 1st respondent calling for information before 6. 1. 97:
"… I understand that some employees would opt to retire withthe compensation package offered to them.
I wish to know the names of those employees who opt to retireon account of the change of management with their last drawnsalary and the period of service … in order to ascertain the exactnumber of employees who will be retiring".
That letter was copied to the trade unions, who pointed out on
12. 96 that the first sentence appeared to be connected to thesecond and gave rise to an ambiguity. They asked that it be changed,so as to ascertain whether the employees consented to acceptcompensation as agreed between the trade unions, on the one hand,and the Minister and the 3rd respondent, on the other hand.Accordingly, on 1.1. 97, the 3rd respondent wrote again to the GeneralManager, asking for the list of employees who, while being unwillingto work under the new management after privatization, were willingto retire in terms of the compensation scheme to be agreed uponafter discussion by the Minister, the 3rd respondent and the tradeunions.
What is of vital importance is that 3rd respondent had wantedthe names of all those who wished to retire upon the change ofmanagement following privatization, and not only the names of thosewho agreed to compensation in terms of the second offer.
The respondents do not claim that a notice in terms of the 3rdrespondent's letter of 27. 12. 96 was issued to the employees. Further,the General Manager of the 1st respondent issued another notice on
12. 96. That reproduced a letter from the 2nd respondentpurporting to extend (to 6. 1. 97) the deadline set out in the letter
Sunil Sirilanka and Others v.
Ceylon Steel Corporation Ltd. and Others (Fernando, J.)
of 16. 12. 96 (ie the second offer), and did not ask employees toexercise their option to retire, in the manner stipulated by the 3rdrespondent on 27. 12. 96. There is no evidence that the GeneralManager made any change even after the 3rd respondent's letter of
1. 97. 727 employees – but not the petitioners – applied by6. 1. 97.
Negotiations continued, and at a discussion on 10. 1. 97 aboutthe compensation package for "workers who have opted to retire" -and not, let me stress, just for those who had opted for the secondoffer – the 3rd respondent suggested the following:
Under 5 years26months'salary
5 to [9J years52months'salary
9 to 13 years78months'salary
13 to 17 years:90 months' salary
over 17 years100 months' salary,
all subject to a maximum of Rs. 500,000, or the loss of salary
up to the time of retirement, whichever was less.
The trade unions accepted that offer. They did not accept on thebasis that it was only for those who had applied in response to thesecond offer; but, as is clear from the 3rd respondent's letter dated
2. 97 which I quote below, as being applicable to the workerswho opt to retire on or before 6. 1. 97. On 15. 1. 97 the trade unionsinformed the members of the 3rd respondent's offer.
After the deadline most of the petitioners appear to have appliedfor compensation, giving various excuses for the delay. Thoseapplications have not been produced, but it must be presumed thatit was for compensation in terms of the 2nd respondent's second offerbecause there is no evidence that they were asked to opt on anyother basis. The fact that they applied, even after the deadline,shows that they did not wish to continue in service under the newmanagement.
On the basis of information provided to the 3rd respondent on29. 1. 97, he wrote to the 2nd respondent on 11. 2. 97 as follows:
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[1999] 1 Sri LR.
. .The trade union representatives finally agreed to thefollowing package of compensation in the event the workers optto retire on or before 6th January 1997 . .
Having repeated the terms of the package proposed on 10. 1. 97.he added:
"The option for retirement was opened till 6th January 1997 as(at) that date 727 (have) applied for compensation. One who hasopted to retire had died later and his name (is) also included (in)the schedule. Another person who (is) said to have committedsuicide is also (included) purely on humanitarian grounds. Hencethe total figure is 728.”
It is clear, therefore, that the foundation of the package, when itwas first suggested and when it was agreed upon, was that it appliedto those who had opted to retire on or before 6. 1. 97. The 3rdrespondent's letter dated 11. 2. 97 makes reference to “727 (who have)applied for compensation”: I think that what he had in mind were thosewho had exercised "the option for retirement”. In any event, it wasnot open to him at that stage to alter the basis which had been agreedupon earlier.
The employees were never given an opportunity to opt on the basisstipulated by the 3rd respondent; and were forced, instead, to decidewhether or not to accept the second offer.
In my view, the 3rd respondent had been misled into thinking thatthe 727 who applied for compensation in terms of the second offerwere persons who had been given, and exercised, the option he hadstipulated on 27. 12. 96. It is unfortunate that he does not seem tohave realised this at least when he submitted his affidavit in theseproceedings.
On 26. 2. 97 the 2nd respondent sought to implement that package,but only in relation to those 728 employees; they were paid andthereupon deemed to have retired. The petitioners were not offeredcompensation on the same basis or even on the basis of the secondoffer.
SCSunil Siritanka and Others v.
Ceylon Steel Corporation Ud. and Others (Fernando, J.)63
The principal basis on which learned State Counsel, appearing forthe 2nd, 3rd and 5 respondent, sought to justify the failure to paycompensation to the petitioners was that they had not applied forcompensation by the stipulated deadline of 6. 1. 97, while the othershad. He also submitted that the final package was binding becauseit was a settlement negotiated by the Commissioner of Labour.
Although learned counsel for the petitioners as well as learnedState Counsel argued this matter as if only employees who had optedfor the second offer were entitled to the benefit of the 3rd respondent’spackage, I hold that all employees who had exercised their optionto retire before 6. 1. 97 were entitled, and that the 1st, 2nd and3rd respondents had failed to ensure that the petitioners were giventhe opportunity to exercise that option. The evidence before us suggeststhat if they had been given that option, they would have opted toretire. They must therefore be treated on that footing.
But I must add that the final package could not have been madeconditional on acceptance of the second offer by 6. 1. 97. On26. 2. 97 the petitioners were in the same class as the other 728,insofar as they did not wish to continue in service under the newmanagement. The fact that the petitioners had not accepted thesecond offer was certainly a factor which differentiated them fromothers; but not for all purposes. If the issue had been whether itwas proper to give the others, and to refuse only them, benefits onthe basis of the 2nd respondent's second offer, clearly the answerwould have been in the affirmative. If an offer is made to all of thesame class, and some accept while the rest do not, it is perfectlyproper to treat those who accept differently – ie by giving them thebenefit of the offer which they accepted, while refusing to the othersthat same benefit which they declined. But any such acceptance orrefusal is of no relevance to a subsequent, and indeed very different,offer. One employee, who had long years of service, might well havesaid "I will not leave for Rs. 260,000, but I will for Rs. 500,000", whileanother might have agreed to leave for Rs. 260,000. That can neverbe a rational basis for a refusal to pay the former Rs. 500,000, whilepaying the latter Rs. 500,000, to his colleague who would have beenquite satisfied with Rs. 260,000.
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I must also refer to the factual background. First, what was involvedwas the cessation of employment, and not just a minor or incidentalbenefit; employees, and particularly those within ten years of retire-ment, might have foreseen difficulties in getting other employment;and the compensation package might thus have had to provide forthem and for their families for some years. Second, they were givenonly a short time to take a decision of such vital importance to them.Third, the final package was not just a marginal amendment of theoriginal, but was almost twice as good, and so it cannot be treatedas if it were just a mere variation of the original.
Further, if the option to accept the second offer is treated as theproper basis of differentiation, the 728 employees received a windfall- twice what they applied for – while the petitioners received nothing.Such a result makes it seem as if it were a lottery or a game ofchance that was taking place, rather than a serious negotiation aboutmatters of paramount importance to the employees. The employeesshould have been told clearly, completely, accurately, and in goodfaith, what they were being offered, and allowed reasonable time forconsideration. Here the 3rd respondent wanted them to exercise anoption, but putting their trust in the trade unions, the Minister, andhimself as to the financial terms – and even that has been deniedto them.
Thus on any view of the matter. I hold that the petitioners' refusalto accept the 2nd respondent's second offer (ie their failure to applybefore the deadline) did not afford a rational basis for refusing themthe benefit of a substantially different subsequent offer made to theircolleagues.
As for learned State Counsel's second contention, the fact that thefinal package was the result of intervention, conciliation or negotiationby the 3rd respondent, as Commissioner of Labour makes no differ-ence. If the terms of a compensation package infringe Article 12 -as for instance by conferring benefits on employees of one race (orreligion or sex) which are denied to employees of another race (orreligion or sex) although they are otherwise similarly circumstanced,the latter are entitled to relief under Article .126, despite the sanction
SCSunil Sirilanka and Others v.
Ceylon Steel Corporation Ltd, and Others (Fernando, J.)65
of the Commissioner of Labour. Here the terms of the packagedeny equal treatment to the petitioners, and therefore infringeArticle 12 (1),
I must add that it was not contended that the 3rd respondent’sintervention resulted in an order, award or settlement binding on theemployees under and in terms of the Industrial Disputes Act, and soI do not have to decide whether such an order, award or settlementwould preclude relief under Article 126 – although it seems to methat that would make no difference. And what is more, the packagein question did not involve a matter between employer and employee:because the 2nd respondent, acting on behalf of the Government,was no more than a shareholder of the employer, and I doubt whetherthe 3rd respondent's jurisdiction under that Act extends to personsother than employers.
I therefore hold that the 2nd respondent, acting on behalf of theState, has infringed he petitioners' fundamental rights under Article12 (1). I direct the state to pay each of the petitioners on or before1. 7. 98 (a) compensation in terms of the package set out in the3rd respondent's letter dated 11.2. 97, together with interest at therate of 12% p.a. from 1. 3. 97 up to the date of payment, upon theterms that the recipient will be deemed to have retired on the dateof such payment (as well as any other benefits due under thatpackage), and (b) a sum of Rs. 1,000 as costs.
I am constrained to comment on the pleadings in these cases.
The Ceylon Heavy Industries & Construction Company Ltd, the 6th(added) respondent, filed a motion dated 5. 9. 97 alleging that :
“That 1st respondent, namely Ceylon Steel Corporation (sic).
. . is no more in existence as 90% of its shares had been soldto HANJUNG COMPANY of Korea. Consequent to the said SalesAgreement in place of Ceylon Steel Corporation (sic) there nowstands Ceylon Heavy Industries & Construction Company Limitedas a different entity. In view of above, petitioner may have to effectsubstitution in the room of the Ceylon Steel Corporation (sic) assame is non-existent."
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It is not clear from the journal entry of 24. 9. 97 whether thatcompany was substituted in place of the 1st respondent, or added.It filed no statement of objections or affidavit or documents, but onlywritten submissions in which it described itself as the 6th addedrespondent, and submitted that it was a private company “owned byHanjung Company of Korea”. Neither the motion nor the writtensubmissions explain how or why the 1st respondent ceased to existwhen 90% of its shares were sold, or how or why the 6th respondentbecame its successor; nor the relationship between the 4th respondentand the “Hanjung Company of Korea”; nor how the latter company'salleged ownership of the 6th respondent gives the latter any right orinterest in this matter. Such vague, disjointed and slipshod pleadingsserve no purpose except to cloud the issues and to delay theproceedings.
The petition in SC No. 283/97 contains an averment that thepetitioner had handed over his application in terms of the earlierpackage on 6.1. 97; but this is contradicted, by the very next avermentthat later he explained the circumstances regarding his failure to handit over on 6. 1. 97. Indeed, it was admitted at the hearing, that noneof the petitioners had handed over such applications on or before6. 1. 97. Those averments have been blindly copied in almost all theother petitions. I have not regarded this as vitiating the petitioners'case because it is clearly a careless mistake. Further, in almost allthe cases, the supporting affidavit consists of a photocopy of thepetition; and on the third page of those affidavits – which page containsthe averments I have referred to – there are over twenty handwritteninterpolations and alterations. Some of the affidavits, copying others,refer to an annexed document, without actually annexing one. It isonly because these careless pleadings did not actually cause anyprejudice to the other parties, that I have refrained from depriving thepetitioners of their costs.
GUNAWARDANA, J. – I agree.
Relief granted.