EFC rejects doubts over Collective Agreement with Plantation Cos

The Employers' Federation of Ceylon (EFC) has sent the following response to the article headlined “Serious issues about validity of agreement” appearing in The Sunday Times FT of January 6 which dealt with doubts about the status of the Collective Agreement between plantation unions and companies:

“One matter that has been raised in the article is that the Agreement refers to the parties having mutually agreed to ‘amend the remuneration package applicable to the employees’.

The Collective Agreement does not make any reference to the word ‘amend’ as stated in the article. The Agreement refers to the parties having agreed to review the remuneration package incorporated in the Collective Agreement No.37 of 2006.

In this regard, quite apart from there being no stipulation with regard to an ‘amendment’, it is also important to state that there is no impediment for parties to ‘amend’ provisions in a Collective Agreement by mutual agreement. Section 5 of the Industrial Disputes Act clearly defines a Collective Agreement as being one between an employer or employers and workmen or trade union / |trade unions, consisting of workmen relating to terms and conditions of employment. Such an Agreement which contains terms and conditions can always be reviewed and changed by mutual agreement by the parties.

In the circumstances, there is no necessity for the law to provide for parties to amend an Agreement when the definition of the Collective Agreement is clear and wide to allow parties to replace an Agreement by another by mutual agreement. It is also important to place on record that the Plantation Wage Collective Agreement of 2007 has already been gazetted by Commissioner General of Labour (Collective Agreement 37 of 2007) by gazette notification No.1524/6 of 20th November 2007. This once again confirms the legality of the Agreement.

It is incorrect to state that the rationale underlying the exclusion of workers covered by Collective Agreements in the Budgetary Relief Allowance of Workers Act (BRAWA) is ‘based on the principle that workers covered by such agreements are entitled to a cost of living allowance under these Agreements’. As already set out above, the definition of the Collective Agreement clearly shows that the terms and conditions set out therein are matters agreed between parties. There are no pre-determined or mandatory terms which need to be included in Collective Agreements. Such a condition would be totally inconsistent with the fundamental principles relating to voluntary collective bargaining. There are numerous Collective Agreements reached between employers and trade unions which do not make any provision for cost of living allowances. Therefore such a rationale cannot be maintained in relation to the BRAWA Act.

It is also regrettable to note that the article seems to allege that the plantation worker is ‘in a disadvantaged position under the Agreement of 2007’. The wage Collective Agreement of 2007 which was revised much before the agreed period of operation set out in the previous agreement, granted an increase of Rs.30 per day, which raised the total wage package of the plantation worker to Rs.290 per day.

Therefore, on the basis of guaranteed 25 days work a month, the plantation worker has the ability to earn Rs.7,250 per month as opposed to what the article seems to subscribe, which is a wage package of Rs.6000 p.m. There also appears to be a total misunderstanding of the Collective Agreements applicable to the plantation workers from what is set out in the article. The Collective Agreement No.13 of 2003 is a separate Collective Agreement which does not cover wages. It is still in operation and therefore it is factually incorrect to state that the Agreement is ‘no more in force’. In this regard, it would have been desirable if the distinction between a terminated Collective Agreement and a terminable Collective Agreement was properly understood.

The article also refers to the offer of six days work per week to plantation workers. This aspect is adequately covered under the main Collective Agreement No.13 of 2003 which guarantees 25 days of work in a month. In any event, an attendance incentive cannot be tied up with a legal provision such as the estate labour Indian ordinance, as the attendance incentive is a non statutory benefit which is granted in terms of the Collective Agreement, consequent to negotiations between parties.

Another very important matter that is often ignored is that any person or organization genuinely promoting the interest of workers should also be equally concerned about the viability of the industry. The cost of production has increased very rapidly due to escalation of cost of fuel, fertilizer and electricity etc. Every rupee increase in wages increases the cost of production by 52 cents per kilo of made tea. There are 58 million man days a year and every rupee increase in wages amount to Rs.58 million. The cost of production in Sri Lanka is 35% higher than Kenya and 40% higher than India and the cost of plucking is double that of South India.

Quite apart from the wage package, there are so may other benefits that a plantation worker enjoys. Annual attendance bonus, holiday pay, funeral aid, additional payments for exceeding the norms are some of the direct monetary benefits granted. In addition, free housing, medical facilities, crèche facilities and various other non financial benefits add to the total package of a plantation worker.

Improvement of the quality of life in the plantations is a challenge to all stakeholders. Above all, there is an urgent need to protect and enrich this industry which has and continues to be the life blood of our economy. The government, trade unions, media and the public – all have a role to play. There must be clear appreciation of the fact that the current wage package of a plantation worker, in comparison with a worker in any other manufacturing industry is attractive in view of what has been set out above.”