The Employers’ Federation of Ceylon (EFC), which marks 90 years in existence, was mooted in 1927, had a meeting of the interested parties in 1928 and finally the Interim Council met in January 1929. It was an off-shoot of the Chamber of Commerce (CCC) and created to further British interests. Many events, both local and [...]

Business Times

90 years on: EFC’s relevance to Sri Lanka’s economy and social landscape


The Employers’ Federation of Ceylon (EFC), which marks 90 years in existence, was mooted in 1927, had a meeting of the interested parties in 1928 and finally the Interim Council met in January 1929. It was an off-shoot of the Chamber of Commerce (CCC) and created to further British interests. Many events, both local and foreign, influenced their decision to set up the federation. In the UK, the Labour Party had displaced the Liberals as the second largest party while the creation of the International Labour Organisation (ILO) gave a voice to trade unions at the international level and in Sri Lanka. Here respected labour leader A.E. Gunasinghe provided leadership to workers in a nationally recognised trade union.

File picture of Ceylon Tea prepared for an auction. The EFC has played a key role in representing regional plantation companies in the collective agreement with workers.

At this time, the British business community felt it needed an organisation with specialist skills relative to labour matters and an ability to deal with trade unions to meet the challenges posed by the rise of the labour movement.

During the first half of the EFC’s existence, its preoccupation was with industrial relations, as is obvious from the fact that the British business community, which created the EFC, intended it to have a mandate quite different from that of the CCC. It was during the second half of its existence that the EFC’s uniqueness increased, thanks largely to its professional expertise in the Secretariat, which kept on growing to meet the member requirements.

EFC Survived

The Industrial Disputes Act of 1950 and the creation of labour tribunals in 1957 led to the EFC developing legal and representational services for business. What is of particular significance is why and how the EFC survived, evolved and developed into being the nationally recognised representative of the business community in its field of operations and gradually came to be recognised by the ILO as the best and most professional employers’ organisation in developing and economically emerging countries. It is this latter perception that led to all four of the above-named CEOs of the EFC being recruited to senior positions in the ILO.

In the pre-independence period, there was no problem of survival since the EFC had been created to serve the economic interests of the British business community.

Even in the 1950s, the EFC had considerable influence. This was reflected in the fact that its British CEO A.J. Mullins had a telephone line direct to Governor-General Sir Oliver Goonetilleke.

However, after the 1950s, several factors accounted for the development, stature and recognition of the EFC by successive governments as well as trade unions.

First, the EFC did not depend on political patronage (which is very different from having good relations with the government) for its survival. Secondly, it focused on enhancing its competencies in the field of employment relations to be able to provide professional services which were readily accessible and of the highest quality.

One consequence of this was that the member companies had little need to retain lawyers to obtain advice and representation in the field of labour law and relations.

Third, the EFC dealt with trade unions on the basis of equality and on industrial relations’ principles rather than political ones. It recognized that just as much as the EFC was registered as a trade union of employers (it was the first registered trade union under the Trade Unions Ordinance in 1935), the workers had a similar right to belong to trade unions to further their interests.

However, the EFC always maintained that the union’s right to negotiate depended on its acting in a disciplined manner. On one occasion when the union acted in a criminal and unlawful manner, the EFC repudiated a collective agreement. Thus, changes in governments had little impact on the EFC’s dealings with unions.

Fourthly, the relationship between the EFC and trade unions was viewed positively by the member firms as inuring to their benefit, as did the unions themselves who often sought dialogue with companies through the EFC to avoid conflict. The EFC promoted and practised the idea of dialogue and negotiation as a key means of avoiding or reducing disputes and harmonising conflicting interests.

It is significant that leading trade unionists such as L.W. Panditha, Batty Weerakoon, P. Shanmugathasan, Bala Tampoe and Saumyamurthy Thondaman in their own way enhanced the EFC’s credibility with its own members.

The July 1980 general strike was the last of such strikes that saw many workers lose their jobs. The EFC handled this issue on a basis quite differently from the government and made it possible for strikers to voluntarily return and resume employment subject to conditions which most of the unions considered fair. The cases which reached the Labour Tribunals were handled successfully by the EFC Secretariat against some of the leading lawyers in the country. The second JVP insurrection in the late 1980s adversely impacted the employee relations at workplaces but the members of the EFC had relatively fewer problems at their workplaces.

Industrial relations stability and the future of trade unions, which had been in existence for decades, were seriously threatened. The restoration of normalcy and the JVP entering the mainstream of politics as well as normal trade union activity through its Inter-Company Employees’ Union led to it understanding the apolitical professional approach of the EFC and what it stood for. The EFC can take a share of credit for this union’s entry into mainstream industrial relations activity, by maintaining that there were sacrosanct rules for industrial relations dealings which should be observed for the good of both parties.

Equally important were the views that different governments held of the EFC. During the dark days of the private sector in the 1970s (incidentally the EFC was along with the Estate Employers’ Federation and the Planters’ Association dispossessed of their offices without proper notice and any justifiable cause), the government comprising the SLFP, the LSSP and the Communist Party, was not in favour of the private sector.


However, some leading politicians – Dr. Colvin R. de Silva, Dr. N.M. Perera and T.B. Subasinghe – summoned the EFC for a discussion at which they appreciated the fact that the EFC had contributed substantially to maintaining industrial peace. They wished to obtain the views of the EFC on the practicality of a law to compel companies employing a minimum number of employees to be members of the EFC, perhaps in the hope that this would stabilise industrial relations in the country.

The EFC managed to convince them not to pursue the idea as it could have serious implications both for the government and the EFC. This was undoubtedly a vote of confidence by a government, which was essentially hostile to the private sector, in the ability of the EFC to be a reliable ‘social partner’.

When the EFC celebrated its 50th anniversary soon after the political and economic changes in 1977, the then Labour Minister stated: “As Minister of Labour, I commend to all employers in this country to follow the example set by the Federation in the fields of collective bargaining and employment relations. Such measures of cooperation by employers, I am sure, will go a long way in helping the government to establish a just and free society.”

Similar support was received from Chandrika Kumaratunge, who when she was the President, persuaded the Ceylon Workers’ Congress to negotiate wages without reference to the cost of living, which she said was the government’s responsibility to address.

The EFC received recognition and appreciation from governments from both sides of the political divide. It may also be mentioned that until the 1980s there was some concern on the part of the EFC about admitting state institutions into its membership as the organisation wished to ensure that its role should not be compromised by any political pressures and state institutions which have joined, have done so in the knowledge that they would have to abide by policies of the EFC.

With the change of government in 1994, trade unions posed a new challenge. They assumed there would be a reversal of the open economy and a return to a regime where industry is controlled by the state and privatised institutions re-nationalized. There was a fresh call for a ‘Workers Charter’, which had been first proposed during the ULF government. The main issue here was that the unions had not been able to form unions in the free trade zones.

The unions also felt that if they could pressurise the government to take back privatised ventures they would have greater power. The charter demanded what they considered proper implementation of the state’s undertakings under specific Conventions of the ILO. What some employers outside the EFC did not appreciate was that there were global pressures which were very much on the lines of what the unions were demanding and that audit standards being applied by foreign buyers made it essential to have some compromises in place so that the country could benefit from globalisation.

The private sector was divided. On one side were the enlightened employers who saw the need to deal with unions if they were sufficiently representative and on the other were those who felt that the Workers’ Charter was a means for unions to disrupt the private sector. The EFC found that many of the provisions of the charter only highlighted obligations which the country had been undertaken by ratifying International Conventions of the ILO and which had been already included in legislation but were not in the view of the unions being effectively implemented. It was a situation where the EFC was required to assume leadership and exhibit its expertise as the premier employers’ organisation.

In its relations with the CCC, in view of the situation created by the Workers’ Charter, the chambers and the EFC forged a common bond for consultation and synergy. The EFC was reorganized in the mid-1990s to accommodate a special Group of Employers called the ‘Affiliated Employers’ Group’, which gave permanent representation to the interests of national organisations such as chambers and trade associations on the Council of the EFC. As a reciprocal measure, a representative of the EFC sits in the CCC Committee. An agreement was entered into on matters pertaining to employment where the EFC would be the spokesperson for the business community.

Able to Change

The organisation’s continued relevance was also due to its ability to change to accommodate the requirements of its members and other stakeholders. It has been able to adapt and re-engineer itself and emerge stronger to meet the challenges they were confronted with. While initially the EFC was more concerned with general initiatives with an industry relations flavour, it later become proactive in relation to developing processes and competencies in order to enhance productivity. The EFC set up a training wing for this purpose and also spearheaded the formation of the Skills Development Fund, which was originally sponsored by the World Bank as a public-private partnership to contribute to national productivity.

The EFC ‘Employers Network for the Disabled’ offers programmes for ‘differently abled’ persons in employability skills, followed by initiatives for their placement in member companies. In this same overall context, the EFC also took the lead in facilitating enterprise level initiatives for handling workplace-related issues such as “Sexual Harassment”.

The gradual increase in the membership and staff of the EFC over the years to 668 members and 33 professional staff, speaks for its continued relevance and value.

(These are the personal views of the four writers who have covered their periods of employment with the EFC to provide a composite picture).

Former CEOs
This article has been jointly authored by four of the EFC’s former CEOs. They are Sriyan de Silva (December 1964 to December 1989), Franklyn Amerasinghe (May 1974 to September 2000), Gotabaya Dasanayaka (October 1979 to December 2006) and Ravi Peiris (May 1992 to July 2015). The period of service of the four co-authors stretches over 51 years of the 90 years of the EFC’s existence (1964 to 2015). In fact, the EFC had its own CEO only from 1946, having shared the services of the Ceylon Chamber CEO before that.

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