Court ruling to retain workers’ rights in the Colombo Port City
In a recent Appeal Court ruling, the government of Sri Lanka has been ordered to revoke the gazette notification issued on four local companies established in the Colombo Port City, which deemed the country’s ‘Employment Act’ will not be applicable to employees working within the port city borders.
Four companies operating in the Port City were exempted from certain taxes and the termination of employment laws through new gazettes issued on July 14 this year, signed by President Anura Kumara Dissanayake in his capacity as Minister of Finance, Economic Stabilisation, and National Development. The court rules changes this.
The main concern on the court ruling is the exemption from the ‘Termination of Employment Act’ (that has been continuing since 1971), which protects workers from unilateral terminations by employers.
Historically, similar issues arose in 1978 when the government tried to exempt labour laws within the Free Trade Zone (FTZ), but the Supreme Court then ruled that a country cannot have two different laws simultaneously. Despite this, the government introduced the current gazette, prompting a challenge by six trade unions, namely Ceylon Bank Employees Union, Free Trade Zone and General Services Employees Union, The Ceylon Mercantile Industrial General Workers’ Union, The Ceylon Estates Staff Union, National Union of Seafarers Sri Lanka and Ceylon Trade Union Congress.
Last Wednesday, during a media briefing held in Colombo, FTZ and General Services Employees Union Leader, Anton Marcus explained, “The six unions filed a petition, and the case was heard in court. During proceedings, the lawyer for the Attorney General accepted that these gazettes are also legal instruments. It was argued in courts that these gazettes could restrict the powers of the Commissioner General of Labour and influence the application of the termination law.”
The court’s ruling, influenced by the argument, was to clarify that the ‘Termination of Employment Act’ remains applicable to the four institutions operating within the Port City, despite the gazettes. Subsequently, the Attorney General agreed to revoke these gazettes, and this agreement was documented in court. This revocation means the gazettes are no longer legally valid, although the government may attempt to introduce new ones in the future, he added.
The four companies identified in question in the Port City are Clothespin Management and Development (Pvt) Ltd, IFC Colombo 1 (Pvt) Ltd, ICC Port City (Pvt) Ltd and Ceylon Real Estate Holdings (Pvt) Ltd. Mr. Marcus also mentioned, although these companies are mainly located in the Port City, some operate outside, raising concerns about the scope of exemptions if applied beyond Port City.
The revocation of the gazettes implies that the ‘Termination of Employment Act’ will apply to the four companies again. The case highlights the tension between economic development initiatives and workers’ legal protections. The legal challenge emphasises the judiciary’s stance on maintaining uniform laws across the country. This situation underscores the importance of legal consistency and the potential impact of government policies on worker rights and business operations, he noted.
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