Government Response to

1 Government Response to The Petition filed by AFL-CIO to Remove Sri Lanka From the List of Eligible Beneficiary Developing Countries Pursuant to 19USC 2246(d) of the Generalized Systems of Preferences Ministry of Labour Relations and Manpower 15 th November 2009

2 The Petition of the AFL-CIO has several Components. A Observations made by the ILO on the applications of ILO conventions C 87 on Freedom of Association and Right to Organize, and, C 98 Right to Organize and Collective Bargaining. 1. Trade Union Ordinance 1.1 Article 15 of the Trade Union Ordinance- An administrative decision to dissolve a union should not take effect until after a final decision is handed down. This has been clearly explained in the government reply to the ILO. The trade unions has the right to appeal against an administrative decision, and no action would be taken until the final judicial decision is received. 1.2 Article 20 of the trade Union Ordinance Denial of Right of Freedom of Association to Judicial Officers, members of the Armed forces, police officers, prison officers, members of the Agricultural corps. Exemption of Armed force and police officers is a matter accepted by the ILO.(ILO Digest on Freedom of Association and Collective Bargaining) Agricultural corps are not functioning for the last several decades. The Judicial officers and prison officers have their own associations but do not function as trade unions. 1.3 Restrictions on Public Officers trade unions. As at 31 st December 2008, there were 1933 Registered trade unions. Out of this 1130 trade unions are of public officers trade ` unions representing around 1.2 million officers. These trade unions are debarred from forming trade unions out side one Department or one service, and also amalgamating, and federating with other unions in the public service or private sector. However, an ILO study has found that there are around nine Federations of public service trade unions who directly deal with the Ministry of Public Administration relating to the rights and the terms and conditions for employment of public officers. This matter, however, is being further discussed with the Minister of Public Administration and Home Affairs.

3 2. Industrial Disputes Act 2.1 Reference of Minor Industrial Disputes for Compulsory Arbitration by the Minister in terms of Section 4(1) of the Industrial Disputes Act. The ILO s view is that a dispute should only be referred for compulsory arbitration in terms of Section 4(1) only at the request of both parties to the dispute. Section 3(1)(d) of the Industrial Disputes Act provides for reference of an industrial dispute for arbitration for when both parties agree. Section 4(1) provides for a situation where there is no agreement of the parties to the dispute to refer for voluntary arbitration under in terms of Section 3(1)(d). When there is no such agreement the Commissioner recommends to Minister for reference of the dispute for compulsory arbitration. 2.2 Forty (40) per cent threshold for a trade union to be recognized for the purpose of collective bargaining- Section 32(A)(g) of the Industrial Disputes Act. The ILO s observation is that the 40 per cent threshold is high. However, this has been the practice of many employer and worker organizations of the country even before enacting this law in 1999. The intention of this section is to provide the employers to identify clearly the bargaining agents of the workers relating to the issues of the entire workforce of the workplace. However, there is no restriction for the smaller trade unions to negotiate or intervene in matters relating to their members or relating to individual cases. This issue has been taken up several times at the National Labour Advisory Council (NLAC) and the Labour Law Reform Committee appointed by the NLAC to propose amendments to the existing labour law framework. However, in both these forums there was no consensus amongst the trade unions themselves. This has been reported to the ILO. 2.3 Section 32(2) of the Industrial Disputes Act- Restrictions on the Right to Strike. Section 32(2) of the Industrial Disputes Act provides for that No workman shall commence, continue or participate in any act in furtherance of, any strike in connection with any industrial dispute in any essential industry, unless written notice of intention to commence the strike had, at least twenty one days before the date of the commencement of the strike been given in the prescribed manner..

4 In terms of Section 48, an essential industry means any industry which is declared, by Order made by the Minister and published in the Gazette, to be an industry essential to the life of the community. However, the Minister has not declared any industry as an essential industry in terms of Section 32(1) or Section 32(2). 2.4 Section 43(1) on the Fine for Unfair Labour Practices In terms of Section 43(1) the fine for unfair labour practices should be a fine not exceeding Rs.20,000. On the recommendations of the Labour Law Reform Committee action has been taken to increase the fine to Rs. 100,000 ( One hundred thousand ) five times the present fine. The Legal Draftsman has already drafted the amendment, and it would be presented in the Parliament soon for adoption. 2.5 Action for Resorting to Unfair Labour Practices by the Employers The Department of Labour has already filed action against employers for resorting to unfair labour practices. As already explained in the previous report, before filing action the Department has to be satisfied the availability of prima facie evidence. The difficulties of collection of material and statements of workers have been the hindrances for successful prosecutions. Still the Ministry is examining the possibility of giving powers to the trade unions to file action. In giving the trade unions the right, the Ministry has to look into the demands of the employers to declare the unfair labour practices by the employees and, consequently, granting them the same right to file action. 3. Factories Ordinance 3.1 Maximum hours of work for males. As stated in the petition there is no limit for overtime work of males in the Factories Ordinance. However, those adult workers are generally governed by the Shop and Office Employees Act and the Wages Boards Ordinance. 3.2 Section 68 of the Factories Ordinance - Given the demands of the industry, in consultation with the employers and worker organizations, the Factories Ordinance was amended

5 providing for an increase in the overtime limit to 60 hours per month in respect of women and children over the age of 16 years. If there is violation of limit as suggested in the petition, the workers could brought it to the notice of the Department of Labour for suitable action. D Injunctions issued against strikes 1. Port Strike Enjoined. As reported in the previous report, the ILO case No 2519 was concluded in June 2008. The ILO Freedom of Association Committee in its conclusion states that the Committee notes with interest that the dispute underlying the matter raised in the present case has been resolved. The complainant organizations have concluded a collective agreement with the Sri Lanka Ports Authority, and the JAAF s Application to withdraw its action has been granted by the Supreme Court in its 3 December 2007 decision. ( ILO Committee of Freedom of Association Committee Report para 206) The intervention of the Supreme Court and the District Court was to grant relief to the affected employers and employees for many reasons including Certain employees engaged in a go slow in the guise of strike. Go Slow is illegal in Sri Lanka. ( This is even illegal in many countries in the Asian Region) The workers who resorted to strike action prevented their fellow workers entering into premises and thereby workers rights to right to work ( which is also the basic right of the workers ) have been denied. Intimidation of non-strikers by the strikers. Exercising freedom of association not peacefully, but violently. E.Trade Union Leaders Threatened As already reported in the previous report, the allegation of abduction of trade union leaders and interrogating them on suspicion on collaboration with the LTTE are matters that need to get clarified by the Ministry of Defence. Hence the Ministry is Labour is unable to comment. However, we should reiterate the fact that if any person irrespective of a worker or not has alleged to have engaged in an unlawful act, the authorities concerned have the right to interrogate, and when there is sufficient evidence to prosecute them. If such authorities have violated the law and taken law into their hand, the affected persons

6 could resort to legal action against such authority. That again is provided in our constitution.(article 126) F. Labour Violations Outside the Export Processing Zones 1. Blue Diamond Ltd. With regard to non payment of Employees Provident fund contributions for the period 1984 to 2000 a case has been filed at the High Court- case no. SC (SP 1)LA-13/2009 ( CA-32/98) to recover arrears. In view of the current economic situation the company has made arrangements to down size their workforce. Accordingly, the company has taken measures to lay off the excess employees and offered a Voluntary Retirement Scheme to the workers. At the request of the trade union the Department of Labour has advised to pay compensation taking into account the salary computed for the purpose of payment of Employees Provident Fund and the number of years service. The employees who have agreed to leave the company have left the company after obtaining their compensation through the intervention of the Department of Labour, but 25 employees have refused to accept compensation package. Since the employees who refused to accept the compensation package could continue to work in the factory, the Department cannot intervene. However currently, 36 employees have sought redress under the Termination of Employment of Workmen Act, and the inquiries are pending. The company has now amalgamated with Rosy Blue Diamond Ltd. Of India. 2. Harepark S.P. The Department of Labour has taken action to recover the dues. G. Labour Violations in the EPZs 1. Smart Shirt Lanka Limited. The Free Trade Zone and General Services Union (FTZ-GSU) has requested the Department of Labour to prosecute the employer for unfair labour practices for action taken by the management in respect of the following three workers.

7 a). R.I. Priyadarshana - Termination of Services b) M. Dinesh - Termination of Services c) D.D.S.Senevirathne Transfer to another factory The reasons for terminating the services of the first two were appropriation of money, while the transfer of the third persons was on a management decision. Incidentally, all these three persons were office bearers of the trade union. Out of these three workers, R.I.Priyadarshana had made an application to the Labour Tribunal for wrongful dismissal. However, the case had been dismissed as he had failed to appear for the hearings. The Department of Labour does not have sufficient evidence to file action against the employer for resorting to unfair labour practices. 2. Brandix Finishing The workers have sought redress on the ground of wrongful dismissal. Cases relating to 26 workers were dismissed as they had not appeared for the hearings. The other 14 cases are being heard in the labour tribunal The complaint by the AFL-CIO is with regard to the procedure of the Labour Tribunal. 3 &4 The Petition says that these were sufficiently resolved. 5. New Design Manufacturing The arbitrator has concluded hearing and made the award. Since the employers has left the country, so far, the order could not be executed. Now action is being taken to execute the order through the company Secretaries. 6. GP Garments (Pvt) Ltd. The factory was closed in November 2008.

8 The hearing of the case referred for Arbitration for terminating services of 518 workers has been suspended until the case at the Appeal Court ( Case No 1528/07) is concluded. Meanwhile 37 employees have been indicted by the Attorney General under the Penal Code for wrongful confinement of the General Manager ( A Belgian National) of the Company and another Belgian national. The case is pending at the Magistrate Court, Gampaha 7. Workwear Lanka Ltd There was a case before the Commissioner of Labour under the Termination of Employment of Workmen Act. However, when the Commissioner was about to make the order, the trade union withdrew the complaint, and filed cases at the labour tribunal. Now the cases are to be heard afresh. 8. Ceynergy Electronic (Pvt) Ltd. The Company has submitted an application under the Termination of Employment Act requesting permission to retrench 138 workers. The Trade union has made a complaint to relating 106. An order has been given as follows. Arrears of payment from 2005 May to July 2006 Rs 6,098,400 Compensation Rs. 2,334,750 Total Rs. 8,433,150 Since the company failed to pay this amount, action has been taken to recover through courts. 9. Sofia Lanka Ltd. Sofia Lanka ( Pvt ) Ltd set up a factory under the name Unichella(Pvt) Ltd. The FTZ-GSCU has written to the Commissioner of Labour requesting to hold a referendum stating that they have a membership in the company. The company has requested to submit a list of the members, but the trade union has refused. The commissioner has convened a meeting between the trade union and the management of the company. However, since the union is unable to prove that it has a membership in the company, the Department is unable to take further action.

9 10. Sinotex Ltd. The Malaysian management of the company has closed down its business and has left the country. Before the closure the management has paid all the statutory dues and terminal benefits in the presence of the Commissioner and signed a Memorandum of Settlement under the Industrial Disputes Act. The Trade Union has now filed a case at the Court of Appeal to declare the Memorandum of Settlement null and void. At the same time, the trade union has made a complaint to the Human Rights Commission. The Court of Appeal case is not concluded yet. 11. Wheel Park ( Pvt ) Ltd. This company has a workforce of 220. The FTZ-GSU has claimed that they have 40 per cent of the work. The investigations have found that the trade does not have 40 per cent of the workforce. Hence, there is no sufficient evidence to prosecute under unfair labour practices. C. Uncompensated Overtime Uncompensated The Employers Federation of Ceylon and other Employer Organizations requested the Ministry of Labour to implement a five day week providing two weekly holidays to the employees. However, they need the workers to work extra one hour during the week days without additional payment to cover up the work of Saturday. The unions welcome the proposal but insisted on payment of overtime for the additional hour of work. This matter was discussed at the National Labour Advisory Council, and since there was no consensus no decision was taken.

10 The Petition by the AFL CIO broadly has three components. 1. Observations by the ILO Supervisory Body 2. Incidents of threats to trade Union Action 3, Individual cases 1. Observations of the ILO Sri Lanka has ratified ILO eight core conventions. two out of four priority Conventions and another 32 conventions/. If there are serious violations of application of conventions ratified by Sri Lanka, the International Labour Standards Committee of the International Labour conference will list such cases and hold separate investigations and inquiries. Sri Lanka was not listed for violation of freedom of association and collective bargaining at the international labour standards committee. For the last 10 years Sri Lanka was listed once on Application of ILO convention 81 on Labour Inspection. When you look at the petition, you can see that there is one of issue concerning the principle of Freedom of Association and Right to collective bargaining. That right to federation of public officers and certain restrictions on the Public Officers trade Union However, look at the statistics. In Sri Lanka at 31 st December 2008 there were 1854 registered trade unions. Out of that 1089 trade unions are public officers trade unions representing around 1.2 million workers. Although there are restrictions on federation of public sector trade unions, currently there are 9 federations identified in an ILO study who work closely the Ministry of Public Administration on the rights and terms and conditions of employment. Also, when dealing with the public officers trade unions, we need to keep in mind the fact, the difference between the management of a corporate and public administration.