Resolution of disputes under the Industrial Disputes Act

By V. Irwin Jayasuriya

This led to the enactment of the Industrial Disputes Act No. 43 of 1950 (IDA) which has already seen several amendments. These amendments were no doubt made by successive legislators to meet the demands of the new industrial world. The fact that the primary methods enumerated in the IDA for dispute resolution such as conciliation and arbitration - both voluntary and otherwise - show that the state has recognised that these are valid and effectual methods of dispute resolution suitable for the needs of our country.

Of course, it must be recognised that collective bargaining and collective agreements have been proved to be very effective methods in the settlement of industrial disputes because they have the primary advantage of preventing trade union action which can otherwise lead to a loss of production and strained feelings between the management and the workforce. It is an accepted norm that collective agreements play a vital role in promoting industrial peace since it is an instrument to which both parties - management and the workforce - have agreed.

The interpretation section 48 in the IDA defines both "industrial dispute" and "workman". Basically, the definition of an industrial dispute is centred round a dispute arising between workmen and employers, which include trade unions of both categories. This section defines "workman" as "any person who has entered into or works under a contract with an employer in any capacity, whether the contract is expressed or implied, oral or in writing". This section has been very clearly explained by Tennekoon J. in Carson Cumberbatch vs. Nandasena (77 NLR 73 at 84).

Part II of the IDA gives the methods the Commissioner of Labour can adopt in the settlement of industrial disputes he is made aware of. Let us therefore look at conciliation as a method of dispute resolution. Sections 11 to 14 of the IDA lay down the procedure to be adopted. If one looks at Section 11(1) of the IDA it is clear that it becomes a duty of the Commissioner of Labour to induce the parties to the dispute to come to a "fair and amicable settlement" after he conducts investigations as he may consider necessary of the matters in dispute. This shows therefore that the objective of conciliation is to settle disputes between parties in a harmonious and amicable way. The provisions in the IDA permits the Commissioner of Labour to refer the matter in dispute to an authorised officer, usually a Labour Officer. The term "authorised officer" here means any person authorised by the Commissioner of Labour in writing to settle any industrial dispute by conciliation.

Mr. S.R. de Silva, in his monograph titled, "Legal Framework of Industrial Relations" defines conciliation as "the intervention by a third party who attempts to compose differences or to mediate between the disputing parties". In effect, conciliation means that the two parties would get together to work out a solution to the matters in dispute and the third party is the Commissioner of Labour or his authorised officer who can intervene to help in the settlement of the dispute. This is the effective meaning of Section 3(1) (a) of the IDA, and this would be the easiest course of action since any settlement of a dispute requires the consent of the parties.

An industrial dispute can be referred to the Commissioner of Labour by either the workman or the employer. Thereafter, the Commissioner or his authorised officer acts not in a judicial capacity but in a purely administrative capacity. This means that the Commissioner or his authorised officer (who may now be referred to as the 'Conciliation Officer') will have the twin duties of persuading and inducing the parties to come to a settlement of the matters in dispute. Of course, as a matter of duty, the Conciliation Officer may conduct his own investigations to satisfy himself of the existence of the dispute, and he is also entitled to take all such steps as are necessary to induce and persuade the parties to arrive at an amicable settlement. In such circumstances, no writ of certiorari would lie to quash the findings/investigations of the Conciliation Officer.

In a recent example of conciliation, in a dispute concerning the enhancement of the service charge to be paid by the management of a resort hotel which had to be kept closed for refurbishment, the Conciliation Officer was able to successfully persuade the management of the hotel to consider the payment of a reasonable sum of money per employee in the way of service charge during the period of the closure and also persuade the relevant trade union negotiating on behalf of the employees to accept a reasonable sum of money whereas they were demanding a much higher amount. It must be emphasised that the Conciliation Officer in this example had gone to great lengths to collect details of service charge payments made by other hotels in the area in similar circumstances during the so called off seasons.

It has to be understood that the Conciliation Officer cannot mediate in the conciliation of a dispute in the manner adopted by Courts. His task is essentially a process of mediation. The IDA gives the opportunity to the Conciliation Officer to decide on his own procedure in conducting investigations subject, of course, to any regulations made by the Minister of Labour in that regard. The IDA also specifies that every such investigation shall be concluded within one month of its commencement, with the proviso that the Commissioner of Labour may extend the period. This proviso, which is not mandatory, is in my experience very useful since such investigations cannot be concluded within one month due to various practical difficulties that come in the way.

Sections 12 to 15 of the IDA lay down the procedure to be followed where a settlement has been concluded, or in cases where the parties (or either of them) do not accept the settlement arrived at. In cases where the settlement arrived at is acceptable to both parties, a Memorandum setting out the terms of settlement is drawn up and signed by both parties or their representatives, and such Memorandum is transmitted with the least amount of delay to the Commissioner of Labour. Where the Commissioner is of the view that such settlement relates to a major issue, he is required by Section 12(6) of the IDA to cause such Memorandum of Settlement to be published in the Sri Lanka Government Gazette, and notice of such publication is sent to both parties. The Memorandum of Settlement so published comes into effect on the date of such publication, or on a date which may be specified in the Memorandum of Settlement. It is important to note that the legal effect of this procedure is that the settlement is binding on both parties, and any decisions recorded in the Memorandum of Settlement becomes part of the Contract of Employment between the parties bound by the settlement. In this context, I wish to emphasise the importance of two principles laid down by a Court of Appeal judgment (CA 86/86):

1) That the judiciary recognises a settlement duly entered into between the parties following conciliation proceedings; and 

2) That such a settlement arrived at between the parties who are fully aware of the terms of settlement cannot later be quashed by a writ of certiorari. 

Where the settlement recommended by the Memorandum is not accepted by the parties or one of them, but where the Commissioner is of the opinion that such Memorandum should be published, it will be published in the Sri Lanka Government Gazette with a statement that the settlement recommended has not been accepted nor deemed to have been accepted by either party or both or by their representatives.

What the is the procedure for repudiation of a settlement?

Section 15 of the IDA lays down the procedure. Section 15(1) specifically states that where repudiation or termination of a Memorandum of Settlement is envisaged, such party repudiating the settlement must send notice of repudiation in the prescribed form to the Commissioner of Labour and every other party bound by the settlement, though not individually. Regulation No. 3 made under the IDA published in the Government Gazette of 12 March 1959 in this respect states that such notice of repudiation must be on Form A set out in the First Schedule to the Regulations.

Thus it will be seen that any settlement to be repudiated by either party must follow the prescribed procedure. Once the Commissioner of Labour receives a notice of repudiation, he will cause such notice to be published in the Government Gazette, and the settlement will cease to be effective from the end of the month immediately preceding the month in which the notice is received. It must also be understood that the repudiation or termination of such a settlement will apply only to those parties who give such notice of repudiation or termination and not to others who have been parties to the settlement.

In my view the process of conciliation in the settlement of labour disputes is of the greatest importance, specially in today's context when the process of mediation is being resorted to solving larger problems, both legal and otherwise. However, it has often been pointed out by way of criticism that when a dispute is brought to the notice of the Commissioner of Labour, and when parties are invited to a discussion, that most often, the employer fails to appear before the Conciliation Officer by himself or through a representative.

Though this criticism has been put forward, I do not believe this is true in most cases. However, in my experience, I have found that the small time industrialists and businessmen often tend to ignore the request made by the Conciliation Officer to attend a discussion of this nature. I believe there are two reasons for this attitude. Firstly, the small time industrialist and businessman is not sufficiently educated in this area of activity to understand the importance of attending such a discussion with a view to arriving at some settlement to the dispute and secondly, because he is not aware that the Department of Labour has been empowered to step in and investigate grievances of an employee brought to its notice. In many instances, these employers tend to ignore a notice sent by the Commissioner or his authorised representative, the Labour Officer. Some feel that the employee should not have done what he has done and that they should not attend any meetings where they have to face the employee on an equal footing.

While is must be noted that such attitudes on the part of the employer is totally wrong, it must also be pointed out that certain officials of the Department of Labour, at most times, do not look upon the system of dispute resolution by conciliation in a friendly manner as a system of sorting out differences between the employer and employee. This attitude will certainly defeat the purpose of conciliation as a method of dispute resolution. There have been instances where authorised officers of the Commissioner of Labour have adopted an "all powerful" attitude before a conciliation sitting, and where some even go the extent of threatening the employer with "court action". This attitude, I must say, is totally wrong and not in the spirit in which the method of conciliation should be resorted to. On the other hand, the employee who appeals to the Commissioner of Labour on any matter affecting his employment should be made to feel that conciliation as a method of dispute resolution is very different from that of a Labour Tribunal or Industrial Court proceeding, where the Court is empowered to sit in judgment. While the method of conciliation as a means of dispute resolution is still resorted to it has been found that it is not entirely effective and satisfactory. Experience has shown that in many cases the employer seems to ignore the Memorandum of Settlement negotiated before the Commissioner of Labour. The employee remains helpless in such situations. This may perhaps be the reason why the Commissioner of Labour and his officials at times tend to be assertive, so much so as to inform the employer that if the settlement is ignored, it may be enforced through legal means.

However, the IDA provides for this situation. Where an industrial dispute cannot be settled by conciliation, the IDA provides for settlement by arbitration. In the first instance, any industrial dispute that cannot be settled by conciliation could be referred to an arbitrator by the Commissioner of Labour under Section 3(1)(d) of the IDA. Under the provisions of this section, such reference to arbitration could be made by the Commissioner of Labour where the parties or their representatives consent. This is known as "VOLUNTARY ARBITRATION". Where, however, the parties or their representatives do not agree to voluntary arbitration, and where the Commissioner of Labour has tried all other means as set out in sub-sections (a),(b),(c) and (d) of Section 3(1) of the IDA, the power of the Minister of Labour can be invoked in terms of Sections 4(1), 4(2) and 4A of the IDA. Where the minister takes action in terms of Section 4(1), the matter in dispute will be referred to an arbitrator appointed by the minister or to a Labour Tribunal (which, in this instance, acts in the capacity of the arbitrator) even though the parties or their representatives do not conÄUnt to such a step. This is known as "COMPULSORY ARBlTRATION".

Section 4(1) states that the minister "may, if he is of the opinion that an industrial dispute is a minor dispute" refer to it in writing for settlement by arbitration. This section does not define what a "major" dispute is, nor does it differentiate a "minor" dispute from a "major" dispute. What in fact happens is that the Commissioner of Labour, who under Section 3 apprehends a dispute, clarifies the nature of the dispute in his report to the minister. Generally, the more difficult disputes which threaten strike action or have already gone into such action are mostly referred to compulsory arbitration. Even a dispute which appears to be a minor dispute could escalate into a major dispute ending up in financial loss to the parties and even to the country at large. For example, a trade union controlling the majority or workers in an export-oriented garments factory demanded a flat wage increase of Rs.500/- to all the workers in the region of 1,000 employees. This company had two other factories and the fear was that this malady could spread. Attempts at conciliation failed in several rounds of discussions due mainly to the stubborn attitude of the particular trade union. From the point of view of the company, if they agreed to such a demand, the staff of the other two factories would also demand this increase. Besides, the other factories in the neighbourhood would also have demanded the same wage increase, throwing the industry into possible chaos. This was referred to compulsory arbitration when the trade union compelled its members to strike. Upon commencement of compulsory arbitration, the striking workers had to return to work. The compulsory arbitration, taking the form of a court where evidence is led and cross examination of witnesses takes place, spanned a period of three years, and the award of the arbitrator was only Rs.150/- per employee per month. By the time the award was given, the local leadership of the union had all left for other jobs, and the union was left to face the wrath of their rank and file. It is important to understand that once an industrial dispute is referred to compulsory arbitration, the parties to the dispute, the employer and the workmen represented by the trade union must maintain the status quo that prevailed prior to the dispute.

Part III of the IDA sets out the procedure to be followed in settlement of industrial disputes by arbitration. Arbitration can be either by a single arbitrator or a body of arbitrators. The Commissioner has to prepare a statement of the matters which are within his knowledge in the matter of the dispute. The Commissioner also has to draft the terms of reference for the arbitrator or arbitrators to follow. The terms must clearly set out whether there is a denial of a right or privilege of the workmen concerned, whether such denial of right or privilege is justified, and if not, what relief could be granted to the affected workmen. Section 17(1) of the IDA empowers the arbitrator to make all such inquiries, hear all evidence led and thereafter make a "just and equitable" award. Where such a dispute is referred to a Labour Tribunal, such Tribunal shall give priority to the reference made to it for settlement.

In hearing and settling disputes of this nature, an arbitrator is not bound by the provisions of the Civil Procedure Code, the Arbitration Act nor the Evidence Ordinance. To this extent therefore, the arbitrator is free and unfettered to give a decision that is just and equitable. Once the arbitrator's award is made known, it is the duty of the Commissioner under the IDA to have the award published in the Sri Lanka Government Gazette, and the award of the arbitrator is binding on the parties, and the terms of the award will become implied terms in the contract of employment between the employer and the workmen.

The arbitrator so appointed derives his jurisdiction from the reference made to the arbitrator under Section 3(1)(d) by the commissioner or under Section 4(1) by the minister. The reference to arbitration is a lawful exercise of the powers vested in the minister under Section 4(1) of the IDA. Therefore, even if a proceeding on such a dispute is pending before a Labour Tribunal for example, a reference made by the minister does not amount to interference with the pending action before the Labour Tribunal. It must be noted that the Labour Tribunals also have powers of arbitration and adjudication. The Labour Tribunals derive their arbitrary powers from Section 3(1)(d) where a reference is made by the Commissioner of Labour and under Section 4(1) when the reference is by the Minister of Labour. The Labour Tribunals derive power of adjudication from Section 4A of the IDA when the Minister refers an industrial dispute to the Tribunal. 

The writer is an Attorney-at-Law and Visiting Lecturer in Industrial Engineering, University of Peradeniya.

News

Sri Lanka's Phoenix in new Bagels and other ventures

In a short address to a large and representative gathering of the apparel industry, suppliers, diplomats and the press, Ashroff Omar, Director, Phoenix Ventures, also announced that Martin Trust would be retiring from Mast Industries in August this year and this would be his last visit as the President of Mast Industries Inc.

Mast Industries set up by Martin Trust and his wife Dena in 1970, with $1,000, has grown to more than $1 billion in revenues and 14 offices worldwide. Martin Trust has been an investor without parallel in Sri Lanka and Mr. Trust has been responsible for transforming the landscape of the Apparel and Textile industry in this country. Today, joint ventures with Mast account for 15% of the country's exports and employ more than 25,000 people.

Mr. Trust in addressing the gathering stated that although he will be retiring from Mast he will still be associated with Sri Lanka and has many more joint ventures to set up. One of these is to introduce Bagels to Sri Lanka.

This joint venture between Ran Ovens, (owned by Mahinda Ranasinghe,) Phoenix Ventures and Finagle a Bagel is already underway. Ran Ovens was a partially mechanized bakery, that has made a name for itself in consistent quality in supplying buns to the Phoenix Venture factories. Finagle and Bagel is a USA company run by Laura Trust, meeting a demand of over 96,000 bagels a day. Bagels, a popular food item in the USA, is a doughnut shaped yeast-leavened roll that is a fast but nutritious snack which can be eaten with a variety of 'toppings'. The origin of the bagel is not known but it has been long regarded as a Jewish food item.

The state of the art production facility that is being set up by Finagle Lanka would be amongst the most technologically advanced in Sri Lanka if not the entire South Asian region. It will be fully automated ensuring an unsurpassed standard of hygiene.

Mr. Omar also introduced Chintan Parikh, Chairman, Ashima Group as a new partner in yet another Phoenix Venture. Announcing the move, he said that the Sri Lanka Apparel Exporters' Association has been aggressively looking for methods of ensuring survival after 2005. A part of the strategy of remaining competitive would be to merge the Indian Fabric base with the sophisticated apparel industry in Sri Lanka. It was towards this end that Phoenix Venture has set up a Joint Venture with Ashima - one of India's foremost and prestigious cotton manufacturers. Introducing his company Mr. Chintan Parikh said that every second, somewhere in the world, more than one garment is stitched from Ashima's fabric. Ashima is a composite mill manufacturing denim, yarn dyed shirtings, twill and knitted fabric. Ashima will be involved from the initial stages of fabric development to ensure the delivery of the full range of fabrics in the shortest possible time.

Leo Burnett brings Jim Aitchison to Sri Lanka

To celebrate the second anniversary of Leo Burnett Solutions Inc's operation in Sri Lanka, in what is likely to be the first in a series of highly respected and accomplished professionals, Jim Aitchison, one of Asia-Pacific's foremost Mar-Com gurus will be here in Sri Lanka in early June to conduct an off-site residential workshop and a public lecture on how to achieve cutting edge creative standards.

The initial two-day residential workshop (June 2nd & 3rd) will be for senior executives involved in all disciplines in the advertising field with a focus on creative personnel. 

Leo Burnett has decided to share this opportunity with the Sri Lankan industry and has offered the opportunity to senior creative personnel from other agencies and some of their principal clients. 

The public lecture (June 6th) will be for their clients and partners.

Jim Aitchison an Australian, was a former creative director of Singapore's legendary Ball Partnership and Batey Ads. His private creative training sessions have been conducted for such major organisations such as Singapore Press Holdings, ABN Amro Bank, Leo Burnett, Procter & Gamble and Batey Ads.

Leo Burnett Solutions Inc., the local representative of Leo Burnett Worldwide was established in Sri Lanka in June 1999 and is headed by Ranil de Silva. 

The agency which employs 35 of the country's best professionals on its team has already made its impact in the local communication industry.

Dialog GSM awarded ISO 9001

The award of ISO 9001 follows two years after the company achieved ISO 9002 certification in February 1999. The Company has the distinction on both occasions of being the first telecommunications operator in South Asia to obtain certification at 9002 and 9001 levels.

Dr. Hans Wijayasuriya the company's Chief Executive stressed on the fact that Dialog GSM is deeply committed to innovating for Sri Lankan consumers with the objective of ensuring that the local industry would not be second to its counterparts in developed countries.

"Today we offer a range of state of the art services - most of them developed by Sri Lankan talent for Sri Lankan consumers. In many respects we are ahead of other countries in the region - especially in the areas of interactive services such as evolution, banking and finance services and WAP-based mobile internet services. 

The achievement of ISO 9001 is simply our promise to keep innovating and delivering products and services based on international quality standards, to our customers," he said. The achievement of ISO 9001 for its product development process, places Dialog GSM among some of the world's operators with respect to continuous innovation based on international quality standards. 

While few telecommunication operators in Asia have achieved the milestone of ISO 9001, internationally leading operators such as British Telecom, NTT (Japan), Orange (UK), AT&T, MCI World Com (US) and Europolitan (Sweden) have led the way in emphasising quality assurance for innovation in products and services for telecommunication subscribers.

Dialog leads the mobile market as a pioneer in digital GSM technology in Sri Lanka and has played a leading role in elevating the standard of products and services enjoyed by consumers of mobile telecommunications in Sri Lanka. With a loyal customer base of over 160,000 subscribers the company stressed that the achievement of ISO 9001 would pave the way for the introduction of several state of the art enhancements to its service portfolio in the near future.

Dialog GSM is a fully owned subsidiary of Telecom Malaysia Bhd. Telecom Malaysia is a regional telecommunications giant with subsidiaries in 11 countries. Dialog GSM recently commissioned its 150th base station at Nawalapitiya. In addition to the introduction of state of the art services the company takes pride in being the fastest growing cellular network in the country with digital GSM services now being available in most cities in Sri Lanka.

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