THE CELYON TRANSPORT BOARD, Empolyer- Appellant, and A. H. WIJERATNE, Applicant-

085-NLR-NLR-V-77-THE-CELYON-TRANSPORT-BOARD-Empolyer-Appellant-and-A.-H.-WIJERATNE-Applicant-.pdf


Ceylon Transport Board V- Wijeratne
481
Present : Perera, J. and Vythialingam, J.
THE CEYLON TRANSPORT BOARD, Employer-Appellant, andA. H. WIJERATNE, Applicant-Respondent
S.C. 55/73—Labour Tribunal Case, 14/340/71
Industrial Disputes Act—Section 33 (5)—Compensation in lieu ofreinstatement—Basis of computation—Duty of the Tribunal.
Held : In making an order for the payment of compensation to aworkman in lieu of an order for reinstatement under section 33 (5)of the Industrial Disputes Act, a Labour Tribunal should take intoaccount such circumstances as the nature of the employer’s businessand his capacity to pay, the employee’s age, the nature of hisemployment, length of service, seniority, present salary, futureprospects, opportunities for obtaining similar alternative employ-ment, his past conduct, the circumstances and the manner of thedismissal including the nature of the charge levelled against theworkman, the extent to which the employee’s actions were blame-worthy and the effect of the dismissal on future pension rights.Account should also be taken of any sums paid or actually earnedor which should also have been earned since the dismissal tookplace.
“The amount however should not mechanically be calculatedon the basis of the salary he would have earned till he reachedthe age of superannuation and should seldom if not never exceeda maximum of three years’ salary
AppEAL from an order of a Labour Tribunal.
N.Satyendra with P. Suntheralingam for employer-appellant.
H. W. Jayawardena with H. L. *de Silva for applicant-
respondent.
Cur. adv. vult.
482
V YiHIAiiXKOAM, JCeylon Transport Board v. Wijeratne
February 12,. 1975. Vythialingam, J.—
THE applicant-respondent made an application dated 20th May,1971, alleging that the termination of his employment by therespondent-appellant with effect from 12.4.1971 was unlawful,unjustified, illegal, in violation of the basic principles of naturaljustice and contrary to the disciplinary rules of the CeylonTransport Board and prayed for reinstatement with all backwages or for compensation for wrongful termination of employ-ment and loss of career which he assessed at Rs. 242,500 forgratuity and other reliefs.
The respondent-appellant admitted that the applicant wasdismissed with effect from 12th April, 1971, as the applicantrespondent was reported to have been guilty of certain acts and/or conduct which was prejudicial to the interest or/and dan-gerous to the security of the lawfully established Government ofCeylon and of the Ceylon Transport Board. It was also averredthat the applicant was subsequently suspended in terms ofRegulation 1 (1) of the Regulations made under section 5 of thePublic Security Ordinance and that by virtue of Regulation1 (2) thereof the Labour Tribunal had no jurisdiction to inquireinto the merits of the application.
The preliminary question of the Tribunal’s jurisdiction wasdiscussed on 24.7.1971 and parties agreed to make written sub-missions on 1.9.1971. In the meantime the employer by letterdated 1.7.1971 purported to suspend the workman under the provi-sions of regulation 1 (1) already referred to. The workmanquestioned the right of the employer to suspend him as his‘services had already been terminated and asserted that theaction taken by the employer was mala fide with a view todepriving him of the remedies available to him in law. There-after by letter dated 12.8.1971 the employer purported to rein-state the workman but the latter refused to accept thereinstatement on the ground that the matter was before theTribunal, and any settlement should be before the Tribunalwhere he would have an opportunity of ensuring that the offerof reinstatement was bona fide.
Thereafter on 1.9.1971 the question of jurisdiction was arguedand after further written submissions had been made the Presi-dent ruled on 11.1.1972 that the Tribunal had jurisdiction to hearand determine the application, and the matter was fixed forinquiry. The employer obtained two dates to lead evidence of anInspector of Police apparently for the purpose of establishingits allegation that the termination of the workman’s services wasdue to the fact that he was reported to be guilty of acts of sub-version against the State and also of the Employer, the CeylonTransport Board. No such evidence however was led and on
V YTHIALINGAM, J.— Ceylon Transport Board v. Wijeratne
4s3
16.9.1972 the Counsel for the employer informed the Tribunalthat the workman had already been reinstated and that theTribunal could only make an order for compensation as analternative to reinstatement.
The workman then led evidence. His position was that theoffer of reinstatement was not bona fide but was only made toinveigle him back into service in order to take steps under theEmergency regulations and thereby deprive him of his rightsunder the law which he would have had if his services wereunjustifiably terminated before action under the regulationswere taken. After inquiry the President made order holding thatthe refusal of the applicant to accept reinstatement was forjustifiable cause and since the applicant did not wish to be rein-stated for reasons which the President had accepted he did “ notconsider it in the interests of both parties to reinstate the appli-cant back in his post ”. He accordingly made order for thepayment of compensation and gratuity. This will be noticedshortly.
On the evidence led before him the President could not havearrived at any other conclusion. On 1.9.1971 the Counsel for theemployer withdrew the allegations on which the employer reliedto justify the termination of the employment. No evidence wasled to justify the termination. On the contrary, the employer hadpurported to reinstate the workman thus impliedly admittingthat the termination was without just cause. The workman’sposition was that this offer of reinstatement was not bona fidebut made with jan ulterior motive. The termination of theemployment was on 12.4.1971. The Emergency regulations werepromulgated on 17th April, 1971 and even on 2nd June, 1971 theemployer reiterated the position that the termination was interms of his letter of appointment. But it was not till threemonths later that by letter dated 1.7.1971 that the employerdecided to alter the termination of the services to one of sus-pension under the regulations.
By that time the workman’s application was pending beforethe Tribunal. But regulation 1 (2) provided that the suspensionof the services of an employee of a Public Corporation underparagraph (1) shall not be challenged before any court or anyTribunal, and the regulation was to have effect notwithstandinganything in any other law. Thereafter on 17.7.1971 the employerfiled its answer taking up the position that by virtue of Regu-lation 1 (2) the Tribunal had no jurisdiction to inquire into themerits of the application. The object of altering the termina-tion of the services to one of suspension under the regulations isat once apparent.
484
VYTHI A-LITs GAM, J.— Ceylon Transport Board v. Wijeratne
On the 24th July, 1971 tnere was discussion of this matter be-fore the Tribunal and the inquiry was adjourned to enableparties to maKe written submissions. It must have been apparentby then to the employer and its advisers that as long as theearlier order of termination stood there was no question of sus-pending the workman’s services as he had already been dismissedand paid all terminal dues, including three months’ salary inlieu of notice, his Provident Fund dues and 17 days’ pay forannual leave not availed of. Hence by letter dated 8th August,1971 the workman was reinstated with back wages from the dateof his suspension.
The workman said that he feared that once the employer gothim back into service action would be taken against him underthe Emergency regulations and he would be bereft of his legalremedy. He gave evidence in regard to animosity between himand the Chairman of the Board and of certain other incidents.Mr. Satyendra submitted that this evidence does not bear ex-amination. The President has considered this along with the factthat no evidence was led by the employer to contradict thisevidence of the workman. There is, as I have pointed out, suffi-cient evidence in regard to the actions taken under theEmergency regulations by the employer to show that there wasjustification for the workman’s attitude. Besides, this is entirelya question of fact on which this Court cannot interfere.
The facts in this case are clearly distinguishable from the factsin the case of The Group Superintendent, Dalma Group, Halgran-oya Vs. Ceylon Estate Staffs Union (73 N.L.R. 575). In that casethe employer had tc close down a factory as an economy measureto meet the increasing expenditure on production. The work-man who was the Factory Officer in this factory was offered thepost of Senior Assistant Factory Officer of the employer’s otherfactory where the Factory Officer was junior to him becausethe concerned workman was not familiar with the typeof manufacture at this factory. He refused to accept this offerand was thereupon retrenched. The President held that thetermination of employment was lawful and that the workman’srefusal of alternative employment was not as in the instant casebecause of the fears of victimisation, but on grounds of prestige.He however ordered the ex gratia payment of Rs. 4,000 ascompensation for loss of career in view of his enforced retrench-ment. In appeal the order for the payment of ex gratia paymentwas set aside.
•
Moreover section 33 (5) provides that where the Tribunalconsiders that a workman should be reinstated, then, if the work-man so requests the tribunal may, in lieu of the order for re-instatement, make an order for the payment of compensation
VYTHIALXNGAM, J. —Ceylon Transport Board v. Wijeratne
485
to that workman. This is a discretion vested in the Tribunaland in all the circumstances of this case the Tribunalhas not exercised its discretion on any wrong basis, in directingthat compensation should be paid in lieu of reinstatement. Thequestion of that compensation now remains to be considered.
In his application the applicant claimed a sum of Rs. 242,500as compensation for wrongful terminal on and loss of career.In his evidence he gave a breakdown of the calculation of thisamount as follows : —-
1. Salary for 11 years, i.e. till date of retirement
at Rs. 1,200 p.m…..145,200
Loss of pension rights had he oontinued in
Government Service up to 65 years at
Rs. 250 p.m. for 180 months. .45,000
Donation from Kegalle Society. .20,000
Gratuity for 11 years… .14,200
Loss of P.S.M.P.A. donation ….6.000
Total ..229,400
He also said that he had lost Provident Fund Contributionsfor the balance period of service. But the evidence is not clearas to how much it was. Probably it accounted for the balancesum to make it up to Rs. 242,500 which he originally claimed.
In his order the Prescient has awarded the following sums : —
10 years’ salary less 3 months’ salary which
he had received in lieu of notice. .140,400
Gratuity for a period of 10 years’ at half
month’s salary for each year of service . .6,000
Total . .146,000
In the result he has made order for the payment of the grandtotal of Rs. 146,000. The reasons he has given for the order arethat the workman has lost his pension rights and other benefitswhich would have accrued to him had he continued in Govern-ment Service, his 11 years’ service under the employer and thathe was now 51 years old and was unable to obtain employmentelsewhere.
Hone of these reasons can stand the test of critical examina-tion. The first reason is the loss of pension and other rightswhile he was in Government Service. The workman joinedGovernment Service as a Depot Superintendent in the Rubber
486VYTHIALINGAM, J. —Ceylon Transport Board v. Wijeratne
Commissioner’s Department. Thereafter he joined the ClericalService and had put in 15 year’s service and was in Grade II ofthe Executive Clerical Service drawing a sum of about Rs. 400per mensem inclusive of all allowances, when on 10th October,1957 he was seconded for service to the Ceylon Transport Board,the respondent-appellant. On 1.2.1960 he was appointed to thepermanent service of the Board on a salary of Rs. 580. At thetime of the termination of his services on 124.1971 he wasdrawing a salary of Rs. 1,200 p.m. and he said that his promo-tion to the next grade was due- He said that in terms of section9 if the termination of his services was in the circumstancesmentioned in 9 (3) (b) that is to say on retirement, ill-health,by abolition of post or on grounds approved by the Minister ofFinance, he would have been able to get his pension for hisservice with the Government.
His position was that in the letter terminating his servicesao grounds were stated for such termination, and that noapproval had been made by the Minister of Finance in termsof section 9 (3) (b) and as such he had lost his pension rights.In cross-examination it was suggested to him that he had losthis pension rights because he had refused to accept reinstate-ment. It is not clear as to what section 9 and section 9 (3) (b)are. The President has not referred to these sections or theeffect of their provisions.
Assuming, however, that the position has been correctly setout by the workman it is quite clear that the workman has notlost his pension rights if any. The employer himself has with-drawn the charges and offered reinstatement; thus indicatingwithout any doubt that the termination of his services was notdue to any fault on the part of the workman which would havedisentitled him to his pension. This has been strengthened bya definite finding by the Labour Tribunal and now affirmed bythis Court that the termination of his service was unjustifiedand that his refusal to accept the offer of reinstatement wasjustified.
In the circumstances the termination must be held to comewithin the words “ retirement ”in section 9 (3)(b). In any
event it is difficult to conceive of the Hon. Minister of Financenot giving his approval in terms of the section in view of theconcurrent findings of the Labour Tribunal and of this Court.The only ground for the .termination of his services was thealleged reports of his involvement in subversive activities.He was not taken into custody by the authorities, nor evenquestioned by the Police or anyone else in regard to these allegedreports. In any event, no evidence was led to show that an
VYTHIALINGAM, J. —Ceylon Transport Board o. W ijeratne487
applicat.on to the Hon. Minister of Finance for the payment ofpension Was made or that it was turned down. As Gratien, J.pointed out at page 485 in The Attorney-General Vs. Sabaratnam,(57 N.L.R. 481 at 485) “ Courts of Justice have always assumedso far without disillusionment, that their declaratory decreesagainst the Crown will be respected.” The workman has there-fore failed to show that his pension rights have been lost andthe President could not and should not have taken this intoaccount in the assessment of the compensation payable to theworkman.
The workman also said that he had lost some benefits fromthe Kegalle Society and that had he continued to be a memberof the Society he would have been able to withdraw a donation,of Rs. 20.000. There was no evidence led to show that this wasso or as to what the society was or why he had ceased to be •a member. Nor was there any evidence in regard to the lossof a donation of Rs. 5,000 from the P S.M.P.A- Nor was thereanything to show that the loss of these benefits was directlyattributable to the termination of his services by the employer.The President himself has not singled out these benefits he issaid to have lost and given any consideration to them.
The President also said that the workman was 51 years oldand that he had not been able to obtain employment elsewhere.At the time that he gave evidence the workman said he wasfifty-one years old. But nowhere in his evidence did he saythat he was unemployed or that he had not been able to secureemployment elsewhere. He did not produce any evidence thathe had tried to obtain alternative employment and was un-successful or that having regard to his qualifications, his aptitudeand his special suitability for any particular type of work itwas not possible to him to secure alternative employment. Hedid not even say so. So that the President’s statement in regardto this matter is based on pure conjecture and is based on noevidence at all. Except for the bald statements the Presidenthas also given no reasons for the acceptance of the workman’sposition that he has lost his pension rights and other benefitsand the President has also based his findings that the workmanhas not been able to secure employment elsewhere on noevidence at all. There was no warrant therefore to awardcompensation on the basis that he would continue to beunemployed for the rest of his life.
As Weeramantry, J. pointed out in the case The CeylonTransport Board Vs. Gunasinghe (72 N. L. R. 76) at page 83,
“ Proper findings of fact are a necessary basis for the exercise byLabour Tribunals of that wide jurisdiction given to them by
488
VYTHXALLN'GAM, J. —Ceylon Transport Board v. Wijeratne
statute of making such orders as they consider to be just andequitable. Where there is no such proper finding of fact tfie orderthat ensues would not be one which is just and equitable uponthe evidence placed before the Tribunal, for justice and equitycannot be administered in a particular case apart from its ownparticular facts. ”
In regard to the giving of reasons for its findings Siva Supra-maniam, J. said in the Court of Appeal in the case of BrookeBond (Ceylon) Ltd. Vs. Tea, Rubber, Coconut and GeneralProduce Workers’ Union (77 N. L. R. 6) at page 9 “ Where anappeal lies from the order of a Tribunal to a higher Court, thoughthe appeal may be on a question of law, it is the duty of thetribunal to set down its findings on all disputed questions of factand to give reasons for its order. Questions of law must neces-sarily be considered in relation to the facts and it would beimpossible for a Court of Appeal to discharge its functions pro-perly unless it has before it the findings of the original tribunalon the facts as well as its reasons for the order it has made ”.
The mere fact that the evidence in regard to the loss of pensionrights and of other benefits was not contradicted by any evidenceled on behalf of the employer does not absolve the Tribunal fromcritically examining it and testing its veracity. Indeed in termsof section 31 (c) (1) it is the duty of the Tribunal to make allsuch inquiries into the application and hear all such evidence asit may deem necessary untrammelled by the rules of evidenceand after adopting such procedure suoject to the rules made bythe Minister as it may deem necessary and thereafter make suchorder as may appear to the Tribunal to be just and equitable.
As Tennekoon, J. as he then was, pointed out “ The tribunalmust decide all questions of fact, ‘ solely on the facts of the parti-cular case, solely on the evidence before him and apart from anyextraneous considerations ’. In short, in his approach to theevidence he must act judicially. It is only after he has so ascer-tained the facts that he enters upon the next stage of his func-tions which is to make an order that is fair and equitable, havingregard to the facts so found. ” Ceylon Transport Board Vs. CeylonTransport Workers’ Union—71 N. L. R. 158 at 163, 164.
In these circumstances it is competent for this Court to inter-fere with the findings of the Tribunal in regard to the assessmentof the compensation payable to the workman in the facts andcircumstances of this calfie. For, as Lord Normond pointed out inthe case of Inland Revenue Vs. Fraser (1942) Tax cases 498 at501 : “ In cases where it is competent for a tribunal to makefindings of fact which are excluded from review, the Appeal
VYTHIALINGAM, J. —Ceylon Transport Board v. Wijeratne
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Court has always jurisdiction to intervene if it appears… thatthe tribunal has made a finding for which there is no evidenceor which is inconsistent with the evidence or contradictory of it. ”In the instant case the order of the Tribunal suffers from all thedefects mentioned by Lord Normond on which this Court has thepower to interfere.
The President in assessing the compensation payable in thiscase has awarded full salary for the balance wcrkspan of theworkman till he reaches the age of superannuation. Judging bythe cases that have come up in appeal in recent months thisappears to be a commonly accepted standard among Presidentsof Labour Tribunals and very large sums have been awarded toworkmen by way of compensation on this basis. In a recent casea Superintendent of an estate whose services were held to havebeen unjustifiably terminated was awarded compensation in asum of Rs. 240,000 odd. In another case an Accountant-Secre-tary in a Mercantile establishment was similarly awarded a sumof Rs. 166,000 odd and in the instant case the compensation hasbeen assessed at Rs. 146,500. In the circumstances it is neces-sary and desirable to consider the nature of the compensationpayable for unjustified termination of employment and the basisof its computation.
But before doing so it would be useful to examine the basis onwhich compensation has been awarded in some of the recentcases in order to ascertain if any definite principles emerge fromsuch decisions. In the case of The Highland Tea Co. of CeylonLtd. and another Vs. The National Union of Workers (70 N. L. R.161) the President held that the termination of the employmentof an estate labourer was unjustified. But he did not order rein-statement and, instead, taking into consideration the period ofservice of the labourer which was about five years, ordered theemployer to pay her Rs. 300 as compensation. Alles, J. however,set aside that part of the order holding the dismissal to be wrong-ful but did not interfere with the order for payment of compen-sation as “the President had not erred in law in making theorder of compensation in this case which is an order which hewas entitled to make under the provisions of the law. ”
But it is clear that this was not an order for the payment ofcompensation but for payment of gratuity because it has beenrepeatedly held that no compensation can be ordered where thedismissal is justified—T. B D. Ramblan Vs. The Ceylon PressWorkers5 Union (75 N. L. R. 575). Allts J. himself explained thisin a later case where he said, “ In the Highland Tea Co. ofCeylon Ltd. Vs. The National Union of Workers, I have notinterfered with the order of the President who granted to the
!*•*—A 14764 (6/75)
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VYTHIAJLENGAM, J. —Ceylon Transport Board v. If ijeralne
innocent spouse one month’s wages for every year of service ascompensation…. This ‘compensation’ must not be considered asa recompense for the lawful termination of the services of theinnocent spouse for to so hold would, in the words of T. S.Fernando, J. in the High Forest Case (66 N. L. R. 14) amount to‘ lawfully making an order the effect of which is to sanction thebreach of the law of this land ’. This payment is more in thenature of some kind of compensation for past services in keepingwith the spirit of labour practice prevailing today. ” The CeylonWorkers’ Congress Vs. The Superintendent of Roebery Estate(70 N. L. R. 211 at 213).
The same is true also of the case of Uplands Tea Estates Ltd.Vs. The Ceylon Workers’ Congress (72 N. L. R. 68). In that casethe Union did not ask fcr reinstatement at the inquiry but leftthe question of payment of compensation in the hands of thePresident who awarded compensation on the basis of their pastservices. Alles, J. in dismissing the appeal said that the paymentin this case was more akin to the payment of gratuity thancompensation.
In the case of Nanayakara Vs. Hetliaratchi (74 N. L. R. 185)the workman was awarded a sum of Rs. 3,255 as compensationon the ground that his services were unjustifiably terminated andas the President considered his reinstatement inappropriate,apparently because the workman held a position of trust andconfidence. At the time of the termination of his services theworkman was drawing a monthly salary of Rs. 465 and thecompensation awarded works out to seven months’ salaryalthough the workman had put in nine years’ service with theemployer.
In appeal Wijayatilake, J. quoting a passage from the Indiancase of S. S. Shetty Vs. Bharatha Nidhi Ltd. which will be dis-cussed later, said that the President had not set out any of thematters referred to in the passage. Applying the principles setout in the Indian case and apparently taking into considerationthe age of the workman, the number of years of service, the as-sistance he had rendered to the employer in his business andotherwise and the ability of the employer to pay he increasedthe amount to Rs. 4,255.
In the case of United Industrial Local Government and GeneralWorkers’ Union Vs. The Tndenendeyit Newspapers Ltd (75
N.L. R. 529) the Tribunal held that the termination of employ-ment was unjustified and ordered the payment of a sum of
V¥TBIAX.rNGAM, J. —Ceylon Transport Board v. Wijeratne
491
Rs. 1,500 as back wages. In appeal the Supreme Court allowedan option to the employer to pay an additional sum of Rs. 1,000as compensation in lieu of reinstatement. The Court of Appealheld that it had power to do so. The basis on which this amountwas calculated was not set out.
Coming to more recent cases in the case of The Riverside EstateCo. Ltd. Vs. The Ceylon Workers’ Congress, S.C. 147/72, S.C.Minutes 10.10.1974 an estate labourer was awarded a “small exgratia payment of Rs. 1,000.00 ” in lieu of reinstatement. ThisCourt did not interfere with the order. There was however noindication of the basis on which the compensation was calculated.In the case of Bellagama Vs The Co-operative Wholesale Estab-lishment, S.C. 64 and 73/71, S.C. Minutes 4.12.74 one year's salarywas awarded having regard to the age of the workman, thecharges against him, his capability, his terminal salary and thecapacity of the employer to pay.
In the case of Glaxo Allenbury Ceylon Ltd. Vs. P. De La SalleFernando, S.C. 250/71, S.C. Minutes 22nd October, 1974 the appli-cant who was in receipt of a salary of Rs. 396 claimed a sum ofRs. 86,000 as compensation calculated on the basis of the less ofsalary for the rest of his workspan. Rajaratnam, J. said “ In ourview this claim is fantastic. We find it difficult to hold that a justand equitable order can contain such a harsh order against anemployer to pay the employee for the rest of his workspan afterhe has forfeited his employer’s confidence. Again if this is reason-able it follows that a workman who forfeits the confidence of hisemployer by his own acts is in a more fortunate position than aworkman who continues to work for his employer retaining hisconfidence. The former need not work for the rest of his work-span for his salary and nothing will prevent him from securinganother employment while the latter will have to sweat for hisemployer and face all the hazards of an employment such asretrenchment and a breakdown of the business. ” The workmanwas accordingly awarded an amount equivalent to three years’salary.
Perhaps the only case in which this Court affirmed an order ofa Labour Tribunal to pay compensation calculted on the basis&f the salary the workman would have earned up to the date ofretirement is in the case No. S.C. 142/73—S.C. Minutes 5.11.70.But Rajaratnam, J. made it quite clear that it was not to be takenas authorising the calculation of compensation on that basis mevery case. The judgment must be limited to the facts andcircumstances of the particular case. The workman concerned' was a staff assistant in a firm and had only five years to go before retirement. The possibility of his securing suitablealternative employment was also remote.
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VYTHIAX.INGAM, J. —Ceylon Transport Board v. W ijeratne
Two other cases in which Wijayatilake, J. awarded compara-tively large amounts may now be noticed. The first is the caseof Wijaya Textiles Ltd. Vs. General Secretary, National Emplo-yees’ Union (73 N. L. R. 405) in which the compensation wasfixed by Wijayatilake, J. at two weeks wages for every monthat the rate of Rs. 167 per month from the date of dismissal27.4.1964 till 31.1.1970, the judgment of the Supreme Court havingbeen delivered on 27th January, 1970. The other is the case ofThe Superintendent, Weoya Group, Yaliyantota Vs. The CeylonEstates Staffs’ Union (74 N. L. R. 189) in which compensationwas awarded in a sum calculated on the basis of Rs. 250 permonth from the date of termination (1.11.1965) till the end ofFebruary, 1971, the month in which the judgment of theSupreme Court was delivered.
It will be seen that in none of these cases was compensationawarded based on the balance workspan of the workman con-cerned. How then did the present tendency among Presidents ofLabour Tribunals arise ? Probably this is due to a misunder-standing of the case of Raymond Vs. Ponnusamy. In that case anestate Superintendent drawing a salary of Rs. 1,500 claimedRs. 40,000 as compensation for the wrongful termination of hisservices. He was 56 years old at that time and was awardedRs. 6,500 by the President. In enhancing this amount, Sirimane,
J.said, “ The learned President has granted Rs. 6,500 as compen-sation without stating any basis on which he reached that figure.On the actual salary which the appellant received, he would haveearned at least a sum of Rs. 72,000 before he reached his retiringage. It would have been exceedingly difficult to obtain employ-ment as Superintendent after his dismissal particularly in viewof the age of the appellant. I think that a sum of Rs. 40.000which the appellant has claimed is reasonable. ”
The reference in the judgment to the amount the workmanwould have earned had he continued in service till the age ofretirement has probably been misconstrued by Presidents ofLabour Tribunals as sanctioning calculation of compensation onthat basis in all cases of unjustified termination. The judgmenthowever must be confined to the facts and circumstances of thfeparticular case. The workman was 56 years old and had only afew years left before retirement. Considering his age and thetype of work he was engaged in. it would, as Sirimane. J. pointedout “ have been exceedingly difficult to obtain employment as aSunerintenient after his dismissal So that, that case is noauthority for the proposition that compensation should be calcu-lated on the basis of the balance workspan left of the workmanconcerned.
V YTBIALINGAM, J. —Ceylon Transport Board v. Wijeratne
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While it is true to say that a workman can normally expectthat his employment will be continued to the time of his reach-ing the age of superannuation yet as pointed out in Shetty’s casehe cannot claim this as a right. He may die. His services may beterminated for misconduct or on account of retrenchment. Thebusiness may cease to exist or close down. So that this is onlya mere expectation and it would not be just or equitable to com-pensate him on the basis that he would necessarily havecontinued in employment till he retired. Besides, he may besuccessful in obtaining alternative employment on anequivalent basis.
Even in India I am not aware of, and no such case has beencited to us, where the Indian Courts have awarded compensationbased on the salary which a workman would have earned if he‘had continued in service till the age of retirement, although ithas been held that this is a fact which should be taken intoaccount. In the case S. S. Shetty Vs. Bharat Ndihi Ltd. 1958A. I. R. S. C. 12 the workman claimed a sum of Rs. 32,388 ascompensation being the sum he could have earned if he hadcontinued in service till the age of retirement. He had about nineand half years of service left. The Supreme Court assessed thecompensation at Rs. 12,500 which works out to about three and ahalf years’ salary. It was held that compensation was not to becomputed on the basis of breach of contract or of tort committedby the employer in not implementing the direction for rein-statement.
Bhagwati, J. in the course of his judgment indicated thefactors which the Tribunal has to take into consideration in com-puting the money value of the benefit of reinstatement. He saidat page 17, “ The Industrial Tribunal would have to take intoaccount the terms and conditions of employment, the tenure ofservice, the possibility of termination of the employment, at theinstance of either party, the possibility of retrenchment by theemployer or resignation or retirement by the workman and evenof the employer himself ceasing to exist or of the workmanbeing awarded various benefits including reinstatement underthe terms of future awards by Industrial Tribunals in the eventT>f industrial disputes arising between the parties in the future. ”This passage was quoted with approval and applied by Wijaya-tilake, J. in Nanayakkara’s case (supra).
Bhagwati, J. continued at page 19, “ In computing the moneyvalue of the benefit of reinstatement the Industrial Tribunalwould also have to take into account the present value of what hissalary, benefits etc. would be till hfe attained the age of super-annuation and the value of such benefits would have to be com-puted as from the date when such reinstatement was ordered
494
VYTHIALI.NG.AM, J. —Ceylon Transport Board v. Wijeralnt
under the terms of the award. “ It is to be noted that this has tobe taken into account as Sirimane, J. did in Raymond’s case(supra) and not that the compensation must be the amount sodetermined. For Bhagwati, J. said further, “ Having regard tothe consideration detailed above it is impossible to compute themoney value of this benefit of reinstatement awarded to theappellant with mathematical exactitude and the best that anytribunal or Court would do under the circumstances would be tomake as correct an estimate as is possible bearing of course inmind all the relevant factors pro and con. ” The sum awardedwas about one third of what the workman concerned could haveearned in the balance period.
In the case of Assam Oil Co. Ltd. Vs. Its Workman 1960,A. I. R. S. C. 1264 the workman was previously employed inanother company and was taken over by the employer which had'a small office in Delhi. Her services were terminated after shehad been in employment for two years. Taking into considerationthe fact that she was two years in service and had previouslybeen in employment which she gave up to join the presentemployer and the payment of certain sums to her by the employerand of her own earnings in alternate employments the Courtheld “ that it would be fair and just to direct the appellant topay a substantial amount of compensation to her, ” and directedthe employer to pay her Rs. 12,500 which represented about twoyears’ salary.
In a similar case of a stenographer who, had been in employ-ment for about a year and taking into consideration that he hadnot been induced to give up any other job and that it was nottoo difficult for competent stenographers to obtain suitableemployment compensation in a sum equivalent to one year’ssalary was awarded—Ruby General Insurance Co. Vs. Chopra1970 1 L. L. J. 63. The case of Uttakal Machinery Ltd. Vs. ShantiPatnaik 1966, A. I. R. S. C. 1051 was also a case of a lady secretarywho had been in employment for only five months anddistinguishing the facts from the facts in the Assam Oil Co.case and also taking into consideration the unusual manner ofher appointment which was at the instance of the Chief Ministerof the Province, she was awarded a sum of Rs. 4,800 which wasequal to one year’s salary. The Tribunal had awarded hercompensation equal to two year’s salary.
In the case Workman of Charottar Gramodhar ShakkariMandal Ltd. Vs. Charottar Gramodhar Sakkari Mandal Ltd.referred to in Chopra’s case C. A. Vaidialingam, J. affirmed inthe Supreme Court an order of Tribunal awarding the workman7J months’ salary as compensation in lieu of reinstatement.Finally in the case of Hindustan Steels Ltd. Rowrkela 1970, 1
L. J. 223 the workman was awarded compensation in a sum
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equal to two years’ salary. It will thus be seen that the com-pensation has generally been the equivalent of two years' salaryand has seldom exceeded three years’ salary.
In England The Royal Commission on Trade Unions Employers’Associations reported at page 149 para 554 “ while we do notfavour a scale of compensation, we think it desirable forpractical reasons to fix a ceiling to the amount of compensationwhich can be awarded. This will make it easier for employersto insure against the risk of being obliged to pay compensationwhich can be awarded. It would, in our view, be reasonable toprovide that the maximum should be an amout equal to theemployees’ wages or salary for two years ; and that, as in thecase of compensation under the Redundancy Payments Act, inthe compensation of this amount there should be ignored wagesor salary in excess of £ 40 a week. ” Command Paper No. 3623June 1968.
This has been carried into effect in The Industrial RelationsAct 1971 which provides in section 116 and 118 (1) that “ theamount…. shall.. be.. such…. as the…. tribunal considersjust and equitable in all the circumstances, having regard tothe loss sustained by the aggrieved party. …” up to a maximumlimit of £.4,160 or two years’ pay whichever is the less—section118 (1). These provisions were explained in the case of NortonTool Company Ltd. Vs. Tewson 1973, 1 All E.R. 183. Sir JohnDonaldson said in the National Industrial Relations Court “ TheCourt or Tribunal is enjoined to assess compensation in anamount which is just and equitable, in all the circumstances,and there is neither justice nor equity in a failure to act inaccordance with principle. The principles to be adopted emergefrom the section. First the object is to compensate, and com-pensate^ fully, but not to award a bonus… .Second the amountto be awarded is that which is just and equitable in all thecircumstances having regard to the loss sustained by thecomplainant. “ Loss ” in the context of the section does notinclude injury to pride or feelings. The discretionary element^is introduced by the words having regard to the loss. This doesnot mean that the Court or Tribunal can have regard to othermatters but rather that the amount of the compensation, is notprecisely and arithmetically related to the proved loss. Theloss sustained by the workman was considered under the follow-ing heads : Immediate loss of wages, the manner of dismissal,future loss of wages, and loss of protection in respect of unfairdismissal or dismissal by reason ot redundancy.
Statutory provision in regard to the assessment of compensa-tion in lieu of reinstatement varies with different countries. Asurvey conducted by the International Labour Office in 1974
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noted that “ Where compensation is awarded either in lieu ofreinstatement or as the principal remedy the legislation in somecases leaves the calculation of the amount of compensation tothe entire discretion of the competent body ; in other cases,while it leaves this calculation to the discretion of the competentbody it indicates certain factors which must be taken into accountin the compensation, specifies a minimum amount of compensa-tion or lays down a maximum amount of compensation ” whichhowever in no case extends to the balance workspan. Thefactors which have to be taken into consideration are inter aliawages, length of service, loss of career prospects, circumstancesof dismissal, age, nature of the work and custom—Report III(Part 4B to the 59th Session 1974 page 50 para 97. The Industrial _Relations Act 1971 has now been repealed and replaced by theTrade Union and Labour Relations Act 1974 which has raisedthe maximum compensation payable to £ 5,200.
What then is the basis on which compensation is to becomputed which can be gathered from a consideration of thesecases ? Although our Industrial Disputes Act provides for thepayment of compensation in lieu of reinstatement it does notlay down the basis on which it is to be computed. In thisconnection it is important to remember that where this is somuch a matter for the exercise of the Tribunal’s discretion anddepends on the peculiar facts and circumstances of eachindividual case it is undesirable to confine that discretionwithin' too narrow and rigid limits.
For, as Gajendragadkar, J. pointed out in the Indian SupremeCourt in Diwan Badri Das Vs. Industrial Tribunal, Punjab et al(1963) A. I. R. S. C. 630 at page 634, “ If industrial adjudicationpurports to lay down broad general principles it is likely tomake its approach in future cases inflexible and that mustalways be avoided. In order that industrial adjudication shouldbe completely free from the tyranny of dogmas or thesubconscious pressure of preconceived notions, it is of utmostimportance that the temptation to lay down broad principlesshould be avoided. In these matters there are no absolutes and.no formula can be evoked which would invariably give ananswer to different problems which may be posed in differentcases on different facts. ”
It is true that Viscount Dilhorne said at page 296 inDevanayagam’s case “ In each case the award has to be onewhich appears to the arbitrator, the Labour Tribunal, or theIndustrial Court just and equitable. No other criterion is laiddown. They give an unfettered discretion to do what they thinkis right and fair. ” But as pomved out by H. N. G. Fernando, C.J.,in th ecase of Municipal Council Colombo Vs. Munasinghe, 71
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N.L. R. 223 at 225 “ When the Industrial Disputes Act conferson an arbitrator the discretion to make an award which is justand equitable the legislature did not intend to confer on anArbitrator the freedom of a wild horse. An award must be justand equitable as between the parties to the dispute. ”
Referring to the passage in the judgment of Lord Dilhome inDewanayagam's case quoted above Siva Supramaniam, J. saidin the Brooke Bond case (supra) at page 11 “ The use of thephrase ‘ unfettered discretion ’ has unfortunately given rise tomuch misunderstanding and Labour Tribunals have sometimesacted as if the phrase meant an arbitrary exercise of discretion.As pointed out by Weeramantry, J. in the Ceylon TransportBoard Vs. Gunasinghe (supra) ‘ The decision in United•Engineering Workers’ Union Vs. Devanayagam does not freeLabour Tribunals from the duty of acting judicially ’. Further,considerations of justice and equity must necessarily act asfetters on the exercise of that discretion. ”
In the case of Ward Vs. James 1965, 1 All E.R. 564 dealingwith the question of laying down principles for the exercise ofdiscretion Lord Denning, M.R. said at page 571, “ The cases allshow that, when a statute gives a discretion, the courts mustnot fetter it by rigid rules from which a judge is never atliberty to depart. Nevertheless the courts can lay down theconsiderations which should be borne in mind in exercisingthe discretion and point out those considerations which shouldbe ignored. This will normally determine the way in which thediscretion is exercised and thus ensure some measure ofuniformity of decision. From time to time the considerationsmay change as public policy changes, and so the pattern ofdecision may change. This is all part of the evolutionaryprocess. ”
In view of the uncertainty which seems to prevail in regardto this matter it is desirable to state what the factors are whichought to be taken into consideration when assessing the amountof compensation payable. Under the ordinary law of master andservant the master who wrongfully dismisses hfs servant isliable to pay such damages as will compensate him for the wrongthat he has sustained. “ They are to be assessed by reference tothe amount earned in the service wrongfully terminated and t’netime likely to elapse before the servant obtains another post forwhich he is fitted. If the contract expressly provides that it isterminable upon e.g. a month’s notice the damages will ordinarilybe a month’s wages No compensation can be claimed in res-
pect of the injury done to the servant’s feelings by the circum-stances of his dismissal, nor in respect of extra difficulty of
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finding work resulting from those circumstances. A servant whohas been wrongfully dismissed must use diligence to seekanother employment, and the fact that he has been offered asuitable post may be taken into account in assessing thedamages. ” (Chitty on Contracts, 21st Edition, Vol. 2, page 559para 1040.)
If however the contract of employment is for a specific term,the servant would in that event be entitled to damages theamount of which would be measured prima facie and subject tothe rule of mitigation, in the salary of which the master haddeprived him. Vide Collier Vs. Sunday Refree Publishing Co.Ltd. (1940, 4 All E.R. 234.) He would then have been entitledto the full salary and of all the benefits which would haveaccrued to him had he continued in the employment for the full,term contracted for.
In the field of industrial relations it is today generally acceptedthat the worker should be given greater protection against unfairdismissal. As the Royal Commission on Trade Unions and Emplo-yers’ Association pointed out “ Ideally the remedy availableto an employee who is found to have been unfairly dis-missed is reinstatement in his old job. ” Command paper No. 3623,June 1968, page 148 para 551. However, there may be circum-stances in which reinstatement may be undesirable and our Actrecognises this and provides for the payment of compensation, inlieu of reinstatement.
The Labour Tribunal should normally be concerned tccompensate the employee for the damages he has suffered in theloss of his employment and legitimate expectations for the futurein that employment, in the injury caused to his reputation in theprejudicing of further employment opportunities. Punitive con-siderations should not enter into its assessment except perhaps inthose rare cases where very serious acts of discrimination areclearly proved. Account should be taken of such circumstances asthe nature of the employer’s business and his capacity to pay, theemployee’s age, the nature of his employmnt, length of service,seniority, present salary, future prospects, opportunities fqrobtaining similar alternative employment, his past conduct, thecircumstances and the manner of the dismissal including thenature of the charge levelled against the workman, the extent towhich the employee’s actions were blameworthy and the effect ofthe dismissal on future pension rights and any other relevantconsiderations. Account should also be taken of any sums paid oractually earned or which should also have been earned since thedismissal took place. The amount however should not mechani-cally be calculated on the basis of the salary he would have
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earned till he reached the age of superannuation and shouldseldom if not never exceed a maximum of three years’ salary.
Applying these principles to the instant case the workman wassummarily dismissed with three months’ salary in lieu of noticewithout any charges being framed against him and without anyinquiry whatever. Nor was he given an opportunity of meetingthese charges or explaining his conduct. In the answer filed bythe employer before the Labour Tribunal it was stated that thedismissal was due to reports having been received that he wasguilty of acts and conduct prejudicial to the interests and dange-rous to the security of the lawfully established government ofCeylon and to the employer which is a government corporationhaving a monopoly of bus transport throughout the island.
It is common knowledge that commencing from 5th April, 1971,there was an armed uprising which a Criminal Justice Commi-ssion- has now held to be a conspiracy to overthrow the layfullyestablished government of the country. H. N. G. Fernando,
J.described this uprising as follows : “ This Court cannot ignorethe fact that there had been early this year an actual armedinsurrection in Ceylon in an attempt to wrest power by force,that this attempt was put into action in numerous areas, that ithad to be resisted by the Armed Forces of the State with foreignassistance and that many lives were lost during these operations ”—Hirdramani Vs. Ratnavale (75 N. L. R. 67 at page 84.)
Referring to this uprising Alles, J. said “ I think it would be noexaggeration to state that never before in the history of thiscountry, in recent times, had there been such a serious state ofcivil disturbances as that which occurred in the dark days ofApril last year ” Gunasekera Vs. Ratnavale (76 N. h. R. 316 at.319). The charge was obviously one of involvement in thisuprising and was the most serious charge that could have beenlevelled against an individual. Yet the employer made no attemptto establish the charge and did not even produce the reportswhich were alleged to have been received to establish its bonafides. Although some 14,000 odd persons were taken into custodyaijd many were questioned in connection with this uprising theworkman concerned was not taken into custody nor evenquestioned. The fact that such a charge was levelled against himeven though not proved is bound to affect his futureemployment prospects.
The workman has completed 11 years’ service with theemployer and starting with an initial salary of Rs. 580 at the timeof the termination of his services he was on receipt of a monthlysalary of Rs. 1,200. He has apparently no academic or professionalqualifications. He was employed in an administrative capacity.Having regard to these factors and his age it is unlikely that he
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will be able to secure suitable alternative employment on thesame salary and with the same prospects. He had also given upservice with the Government where he had put in sixteen years’service to take up appointment with the Board.
The question now is whether to send the case back to theLabour Tribunal to compute the amount of compensation payableon the basis indicated in this judgment or whether we shouldourselves make the order. As Shellat, J. pointed out in the Hin-dustan Steels Case (supra) at page 235 “ If the case is remandedand the tribunal on such remand passes an order of compensa-tion and fixed the amount such a course would mean further,proceedings and a possible appeal. That would mean prolongingthe dispute which would hardly be fair to or conducive to theinterests of the parties. In these circumstances we decided thatit would be more proper that we ourselves should determine theamount of compensation which would meet the ends of justice. ”
In the Independent Newspapers Ltd. Case (supra) where theSupreme Court itself assessed the amount of compensationpayable the Court of Appeal held that. “ In making that order,therefore, the Supreme Court cannot be said to have acted inexcess of its jurisdiction. ” In the Vijaya Textiles case Wijaya-tilake, J. said, “ I have given anxious consideration as to whetherI should send this case back to the Labour Tribunal to fix thecompensation but I think to avoid further delay it would besatisfactory if I fix the quantum to be paid for the period ofthis dismissal, ” and he proceeded to do so. So also in the caseof the Ceylon Estate Staffs Union (supra). In Nanayakara’s casethe compensation awarded by the Tribunal was increased whilein Shanthi Patanak’s case the Indian Supreme Court halved it.
While in some cases the Court remitted the cases to the LabourTribunal for the assessment of compensation, nevertheless thereis ample precedent for this Court itself to asses the amount ofcompensation payable. Taking into consideration all the factorsI have already mentioned I consider it just and equitable thatthe employer should pay a sum equal to three years’ salary atRs. 1,200 per mensem or Rs. 44,200. Subject to this variation theorders made by the President are affirmed. In all the circumstan-ces of this case each party will bear its own costs of appeal.
Malcolm Perera, J.—I agree.