Based on an article by Dr. Wickrema Weerasooriya, under the heading “Highlights of Labour Tribunals and efficacy of changing contractual terms during employment in the Labour Tribunal Journal 2012 published by Labour Tribunal Presidents’ association.

The importance of Labour Tribunals

Labour Tribunals, hereafter indicated as LT,  have been in existence since May 1959. There have been several judgments of the LT that have reached the appellate courts and those final decisions constitute “binding precedents”. Without the LT Presidents who heard the evidence and delivered the original judgment, the appellate Courts would not been able to develop this branch of the law.

 Importance of Labour Tribunals:

      I.    Employees go to these widely known courts for relief when their services have been unlawfully terminated.

      II.     LTs have given a forum for afflicted employees who were previously able to get relief only from the normal civil courts or by referral for Arbitration through the Minister or Commissioner of Labour. LTs have the single power of granting reinstatement to workers which is not exercised by any other court.

    III.     They have jurisdiction with regard to termination of employment of workmen in the private sector and also in relation to semi-governmental institutions as well, ie. State sponsored Banks, Corporations, Boards etc. Workers of Public Corporations can go to a LT is a privilege and a double advantage because such workers can also obtain relief by Fundamental rights applications. Private sector workers do not have this luxury.

    IV.     There is no procedure laid down for inquires before a LT which is not the case in normal Civil Litigation which is governed by the Civil Procedure Code.

      V.    According to the Industrial Disputes Act, section 36 (4), provisions of the Evidence Ordinance shall not apply to proceedings before a LT.  However it is better to follow the guidelines set out in the Evidence Ordinance in LT proceedings according to several judicial pronouncements. As a result of non-application of the provisions of the Evidence Ordinance, confession is admissible in proceeding before a LT.

    VI.     Since there is no Civil Procedure Code available in proceedings before LTs, issues with regard to amendment of caption, pleadings, amendment of pleadings, substitution of parties, dissolution of companies, legal standing of unincorporated bodies, ex parte inquiries are there. However some of these issues are provided with solutions from the judicial pronouncements been made by the Appellate Courts.

  VII.      Employers are discourages from appealing against LT orders since they have to deposit the amount awarded by the LT before lodging the appeal. This is not found in other civil appeals.

 

On what grounds can Contracts of Service be changed?

Simply said, can an employer change the terms and conditions of the original contract of service? If so what must the employer do? Can he do so partially? Is the employee bound by such changes and if so under what conditions?

To find answers to above, let’s look at the importance played by the common law principles in developing labour law. The labour law originated from the law of master and servant, from the law applicable to domestic or household servants. Then came to “Independent Contractors” and lawyers and judges talked of the difference between “contracts of service and “contracts for services”.

Since the original article did not verify the difference between the contracts of service and Contracts for Services, I tried to find the major difference between them. According to literature available, the fundamental difference between contract of service and contracts for services is that:

• An employee-employer contract is a contract of service
• A contractor-client contract is a contract for services

Discontent, lawyers and judges employed the well-known “the control test”, the “integration test”, the “economic reality test” and even the “multiple” or dominant impression” test. With the continuous development of workplace practices, the legal debate will also continue.

 The current trend of employment is outsourcing. While outsourcing of “janitorial”, “canteen” and “security” are most popular, areas such as “transport” and even “clerical” out sourcing will follow. All the above issues are finally linked with the “contract of employment”. Even the definition of “workman” in the Industrial Disputes Act gives the “contract”. According to the Industrial Disputes Act “workman” is:-

“ Any person who has entered in to or works under a contract with an employer in any capacity, whether the contract is expressed or implied, oral or in writing , and whether it is a contract of service or of apprenticeship, or a contract personally to execute any work or labour, and included any person ordinarily employer under any such contract whether such person is or is not in employment at any particular time, and includes any person whose services have been terminated”

Above shows that the existence of a contract with one’s employer is the prerequisite for identifying a workman.

 

Though the contract of employment can be verbal or implied, for purposes of discussion let’s look at a normal written letter of appointment which is the contract.  Many employees have never studied or read the document. Employees do not remember the terms and conditions in them.

 

General Terms and Conditions found in a letter of appointment

The normal two to three page letter of appointment carries requisites by both parties but principally by the employee.

Almost all of the “terms”, “words” and “expressions” in the letter of appointment have been judicially explained and have been the subject of case law. When a dispute arises case-law comes in to act. 

 

Changes to the contractual terms must be just and equitable

Many employers now inserts a specific clause in to the employee’s letter of appointment about changes to terms of the employment.  An example of such a clause is:

 The Employer reserves the right to make reasonable changes to any of your terms of employment from time to time; such changes may be made by way of a general notice applicable to all employees or by way of specific notice to you. Any such changes shall take effect immediately.

At least one month’s written notice will be given to you of any significant changes which may be given by way of an individual notice or a general notice to all employees.

It is the author’s view that any unreasonable changes to terms and conditions of employment which are implied by the employer, without the written consent of the employee, can be rejected by a LT as not being “just and equitable”. A employer of a group of companies gets a transfer to another company within the group.  This transfer must be agreed to by the employee as well. The employee’s period of service at his prior company should be taken in to consideration in the current company when calculating gratuity.

While the author of this article highlights the importance of applying developed common law principle in deciding labour law issues, it must be noted that the contract of employment is also crucial.

One must also recognize that this contract of employment is different to the other contracts such as a contract for the purchasing of a laptop, a DVD player. In the later type of contract one has only to look at the document itself and understand and apply the terms set out in the contract.

However the LT president has to take in to consideration that behind the letter of contract is a living human being the employee. While by tradition LTs are expected to be sympathetic toward the employee, our appellate courts have said that LTs must still observe “a level playing field”. Simply said they must consider the issue before them keeping in mind the employers interests as well.