By S. S. Selvanayagam
The Supreme Court, having set aside the judgment of the Court of Appeal, issued a Writ of Certiorari quashing the impugned arbitral award granted by the Industrial Court ordering the Singer Industries to pay three-fourths of a month’s salary as gratuity for each year of service to its employees with more than 20 years service.
Justice Chandra Ekanayake with Chief Justice Asoka de Silva and Justice Shiranee Thilakawardena agreeing in her judgement ordered that the Appellant Company Singer Industires is entitled to costs of this appeal fixed at Rs. 25,000 payable by the 1st Respondent the Ceylon Mercantile Industrial & General Workers’ Union (CMU).
Petitioner-Appellant Company cited the CMU, Minister of Labour, Commissioner of Labour, Arbitrator T. Piyasoma, Registrar of the Industrial Court as Respondents.
Sanjeeva Jayawardena with Senani Dayaratne appeared for the Appellant. Shirley M. Fernando with D. V. Dias and Palitha Perera appeared for the CMU. Deputy Solicitor General M. N. B. Fernando appeared for the Minister and the Commissioner.
The appellant Singer Company had filed Writ application in the Court of Appeal seeking to quash the purported arbitral award of the arbitrator which ordered the Appellant Company to pay three-fourths of a month’s salary as gratuity for each year of service to its employees with more than 20 years service.
It contended that in 1991 during the course of negotiations aimed at reaching a collective agreement between it and its manual workers and supervising staff, the CMU made a proposal for the payment of gratuity in excess of that provided for the Payment of Gratuity Act – i.e., in excess of half a month’s salary for each completed year of service.
It stated that in response to the said proposal, it had made an offer to pay three-fourths of a month’s salary as gratuity to employees with more than 20 years service, for each completed year of service beyond the 20th year of service.
It added that the said offer was rejected by the CMU, which made a counter proposal that employees with more than 20 years service be paid one month’s salary for each year of service.
It said it had rejected the counter proposal and that there is no agreement or consensus reached in respect of enhanced gratuity payments, but a formal collective agreement was executed in 1994 in pursuance of a process of collective bargaining including a salary increase and other financial benefits and half a month’s salary for each completed year of service.