Domestic inquiries and their importance in Labour Law

Recent Supreme Court pronouncements in Barberyn Reef Hotel Ltd. Vs. Suriyarachchige Raju (SC No. 132/2016) and R. Chandrasena Vs. The Monetary Board (SC No. 148/2012) have given added emphasis to the importance of holding a domestic inquiry once an employee has committed an offence/misconduct, which in the eyes of an employer warrants stern disciplinary action and would most often include the termination of his/her services. It is important to understand why a domestic inquiry should be held in the first place and the far-reaching effects of its decision in the context of labour law. 

The mandate of an inquiry officer holding a domestic inquiry relating to a misconduct(s) is to determine whether the specific charge(s) levelled against the employee had been established or not. Unlike in India there is no statutory requirement in Sri Lanka necessitating the holding of a domestic inquiry prior to the termination unless collective agreements (mostly found in the plantation sector), the contract of employment or standing orders/house rules so provide. Although the Industrial Disputes Act has no reference in St. Andrew’s Hotel Ltd. Vs. Ceylon Mercantile Union and Director CWE Vs. Ranatunga, it was held that there is no duty to hold a domestic inquiry unless there was a special provision to do so in terms of the contract of employment or the collective agreement. 

If holding an inquiry is a provision under the terms of employment, shouldn’t more legitimacy be given by courts (Labour tribunals) to its evidence, considering the fact that most or all of the evidence at the inquiry may be replicated by the employer at the labour tribunal which results in further delay. The circumstance will be particularly dire to an employee, who has been suspended without pay for a period of time facing the inquiry and has subsequently filed an application to the labour tribunal for an unfair termination. It is settled that the Supreme Courts have emphasised on their desirability in conducting an inquiry which will reinforce the bona fides of an employer. 

Justice Alles in Batticaloa Multi-Purpose Cooperative Societies Union Ltd. Vs. Velupillai (70 NLR 60) considered the relevance of the use of evidence given at a domestic inquiry and articulated that Presidents of Labour Tribunals should examine and act on the evidence lead at the domestic inquiry upon satisfying themselves that the evidence has been properly recorded, where the employee had a fair opportunity of meeting the allegations made against him and seeking support for his findings from the evidence so led. 

There is no debate that a Labour Tribunal President is expected to act judicially but the duty cast on the President should be carried out in terms of Section 31 (C) of the Industrial Disputes Act whilst conforming to the elementary principles of natural justice and evaluating the evidence in a judicial manner before making proper orders.   

Justice Alles’ sentiments are that the Labour Tribunal President holding proceedings in terms of Section 31 (C) of the Industrial Disputes Act is vested with discretion as to the extent of the evidence lead at the domestic inquiry that maybe used in deciding matters before it, but regrettably Justice Alles’ judicial sentiments are confined only to its judgments as it is seldom practiced by the Labour Tribunal Presidents. There is an immense disparity between the judicial attitude of the Superior Courts and the Labour Tribunal Presidents towards the evidence lead at a domestic inquiry.

The Commission on Industrial Disputes Ceylon (1966-1969) recommends that termination or other disciplinary action less than dismissal should be allowed in cases of misconduct, neglect or incompetence on the recommendation of a domestic inquiry and also provides guidelines for the holding of such inquiry. The White Paper on Employment Relations – 1978 recommends the holding of a domestic inquiry compulsory prior to dismissing an employee for misconduct and gives certain guidelines for the conduct of such inquiries and illustrates that no employee dismissed on a decision of a domestic inquiry is entitled to seek relief under the Industrial Disputes Act unless on grounds of mala fide or denial of natural justice or had acted arbitrarily. The National Workers’ Charter – 1995 proposes ‘Show Cause’ and suspension procedures to be formulated by law.   

Dr. H.J.F. Silva in ‘Domestic Inquiries – An effective Strategy for Labour Tribunal Case Management and Speedy Justice’ opines that if domestic inquiries are given legal recognition, and are conducted in a manner acceptable to both employers and workmen, much of the work of the Labour Tribunals could be reduced. A substantial amount of time at the Labour Tribunal is spent on recording evidence, and at times witnesses might have left their employment by the time the application is called for inquiry and this would pose a difficulty to a party relying on such a person’s testimony. This results in further delay.

It is the writer’s view that the evidence led at the domestic inquiry in most cases have corroborative value and should most definitely be used to evaluate the credibility of the testimonies of witnesses, who had testified at the inquiry but cannot be considered as substantive evidence as highlighted by recent Supreme Court decisions. If statutory recognition is given to ‘domestic inquiries’ and the proceedings and/or record is made admissible before the Labour Tribunals, the employers will be compelled to hold such inquiries that are accepted in the eyes of the law. The employer and the employee will stand to benefit by the process of conducting a domestic inquiry.  

In India, the Industrial Employment (Standing Orders) Act 1946 (Amended) requires employers in Industrial establishments to formally define their conditions of employment. One of the matters to be included in the standing orders is the suspension or dismissal for misconduct. The law has prescribed a set of model standing orders which provides that ‘no order of termination shall be made unless the employee concerned is informed in writing of the alleged misconduct and is given an opportunity to explain circumstances alleged against him’. 

This requirement holds the employer and/or company under a legal obligation to conduct an inquiry prior to the termination of an employee. Upon the conclusion of such an inquiry the labour courts can interfere with the employer’s decision only if there’s evidence of mala fides, when the behaviour of the employer results in victimisation or unfair labour practices, where the employer is in violation of the principles of natural justice or finally when the findings of the inquirer is completely baseless or perverse.

It will be noted that the underlying principles of all of these and many judicial pronouncements are centred around the two maxims of common law to the effect, audi alteram partem and Nemo debet esse jude in propria causa. It is recognised that the essence of justice is largely procedural and the history of liberty has largely been the history of procedural safeguards. The procedure has been said to be the heart of ‘Due Process’. 

The fundamental principles of judicial procedure, known by the Phrase ‘Rules of Natural Justice’ requires the employer to follow a procedure whenever he desires to proceed against any delinquent employee for an alleged misconduct. As the procedure of a proper domestic inquiry is not codified unlike in India it is unfortunate that in matters pertaining to employee misconduct which results in a domestic inquiry, the question of procedure has been left to the rules of natural justice, which is uncodified and are, at times, liable to vary according to the ‘Chancellor’s foot’. Despite judicial pronouncements and a plethora of academics propounding the importance of a codification of the domestic inquiry procedure, our Legal system is yet to adopt such a process. 

The silver lining for parties relying on the process of conducting a domestic inquiry is that recent Supreme Court decisions by Justice Aluwihare in Barberyn Reef Hotel Ltd. and R. Chandrasena’s cases emphasise the importance of following the principles of natural justice and the evidentiary value given at a domestic inquiry. Justice Aluwihare citing several authorities concluded that equity is not sympathy and a court is barred from reaching a just and equitable decision based solely on sympathetic considerations, but rather by considering the employer and employee’s situations based on a holistic approach. The Supreme Court justice further acknowledged that it is accepted that conducting a domestic inquiry will be useful as it will establish the bona fides of the employer. 

The writer is hopeful that Justice Aluwihare’s judicial sentiments will resonate with the Labour Tribunal President’s when dealing with unfair terminations after the conclusions of a domestic inquiry.

(The writer was a former Industrial Relations Advisor at the Employers Federation of Ceylon and is currently a Consultant Counsel for a top-tier law firm in Colombo, practising in the areas of Labour and Criminal Law. He also acts as a legal consultant to several private and public listed companies in Sri Lanka.)