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Labour reforms


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For decades the private sector has called for labour law reforms in Sri Lanka as the current regulations are archaic, inflexible and do not meet modern workplace requirements. The Labour Ministry has kicked off discussions to bring as many as 40 different laws and regulations under done framework that would simplify implementation and increase economic competitiveness. But this endeavour has to also be linked to provide worker rights across the spectrum of traditional and non-traditional workers.     

Over the past few decades the nature of the typical employment relationship itself has transformed. New forms of employment like fixed-term contracts, part-time jobs, temporary jobs, manpower jobs and freelance jobs do not fall within the ambit of the existing labour regime which is based on the concept of permanent, fixed hours work under one employer until retirement. While there are sometimes genuine needs to use fixed term contracts and outsource labour, a closer look into many of these new atypical jobs will also reveal that employers use these forms to digress from standard employment contract regulations to circumvent the law entirely. 

According to data compiled by the World Bank, Sri Lanka’s private sector has a large component of contract and informal workers, which reduces access to social safety nets such as insurance, maternity and sick leave as well as EPF and ETF payments. This sense of vulnerability also drives up demand for public sector jobs that are seen as more stable. Clearly, labour laws need to address this disparity and promote and protect rights of workers through reforms and this is a critical need to get stakeholder buy in.    

Another crucial aspect of labour reforms is relations with trade unions. Sri Lankan industrial relations have been inundated with labour laws and there has been a tendency on the part of decision-makers to introduce legislation whenever they are confronted with an industrial relations issue. As a result of there being more regulation on employment, the working population in Sri Lanka also believes that true security of employment can only be obtained through legislation. But there are gaps in the existing system. 

Occupational safety and health is covered for industrial workers in the Factories Ordinance No. 45, but there are no safety regulations for agricultural work. Because of different provisions in the Maternity Benefits Ordinance No. 32 and the Shop and Office Employees’ Act, maternity benefits, which should be uniform, are different for white-collar and blue-collar workers. While maternity leave is measured by the number of working days for shop and office employees, it is measured in ‘total days’ for factory workers. They also include different clauses for including holidays, and the need for nursing intervals.

The Industrial Disputes (Amendment) Act No.56 of 1999 along with the Termination of Employment of Workmen (Special Provisions) Act No. 45 of 1971, the Shop and Office Employees Act, Wages Board Ordinance and the Gratuity Act No. 12 of 1983, has been highlighted as having a negative impact on employment generation and are likely to get the most attention from reformers. 

Labour law reforms must curb the unequal power balance that lies in new employment forms and guarantee equal rights to all workers across the spectrum regardless of whether they are men or women, or if they are employed in traditional or non-traditional forms of employment. Ensuring that contract employees, temporary employees or manpower employees are not left out of the ambit of labour law so that they too can enjoy the rights enjoyed by other workers must be the essential task of labour law reforms.


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