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| Sunday, 27 March 2005 |
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Business |
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Editorial
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Mixed feelings on new compensation formula by Gamini Warushumana The business community has expressed reservations about the new compensation formula while trade unions are expressing mixed feelings. Minister of Labour Athauda Seneviratne said that the new compensation formula was not formulated by the government. It was formulated by the National Advisory Board of Labour, federations of trade unions, employers and employees after several discussions. Some sections wanted to abolish the compensation formula brought by the UNF government. The Minister said that the final proposals of the formula were approved by the majority. "We discussed all the issues such as capitalism, socialism, globalisation, investment and unemployment and came to the final decision in a democratic manner" The Minister said that the employers cannot terminate the services of workers as they wish and it is necessary to get approval from the Labour Commissioner. Minister of Small and Rural Industries and leader of the labour organisations of the Janatha Vimukthi Peramuna (JVP) K.D. Lalkantha commenting on the necessity of a system to compensate employees at termination of their service said they believe that there should be a proper and efficient mechanism to terminate the services of employees in the private sector. There should be a policy and a legal framework. For example after liquidation of Kabool Lanka the employers fled and employees faced many problems as there was no legal protection for workers to get compensation. Lalkantha said that in some instances firms will have to close down due to the economic impact locally or internationally. In such circumstances the time taken to compensate workers is too long. Therefore there should be a new legal framework to compensate workers. The compensation formula brought by the UNF government was rejected by the working class, because it was formulated in favour of employers. It had encouraged employers to terminate the services of workers. We want to create new employment opportunities and not curtail existing employment. The compensation formula helped employers to hunt trade union leaders and activists, he said. He said that the new formula presented by the government has increased the compensation payable at termination of service and workers benefited. Leader of the Nawa Sama Samaja Party (NSSP) Dr. Wickremabahu Karunaratne commenting on the compensation formula said that they tried hard to abolish this compensation formula. We wanted the earlier system where the Labour Commissioner had powers and employees the bargaining power. Under this compensation formula the employer can pay the minimum compensation and he can terminate the services of employees by merely implementing the formula. Termination of service of employees has now become the prime right of the employer, he said. Karunaratne said that they could have discussed the matter with former Minister Mahinda Samarasinghe and got these amendments done. "The working class wanted to abolish the compensation formula and not amend it. The present government came to power pledging to abolish the formula and ensure the rights of the working class but nothing has changed", he said. Karunaratne said that the compensation formula is a victory for capitalists and not the working class of the country as employees get nothing from the new system. Leader of the Ceylon Mercantile Union (CMU) Bala Thampoe said that they were totally opposed to the new compensation formula. On principle we can't agree, because it has reduced the powers of the Labour Commissioner. He said that the compensation formula introduced by former Minister Mahinda Samarasinghe was also similar. We don't need a formula that does not provide justice to workers with long service in a company. Some sections of workers will face a grave injustice under the new system, he said. He said that they did not want a compensation formula that is formulated for the benefit of the employers. As employers prefer to pay the minimum compensation companies will find ways and means to circumvent the law and thereafter workers would be helpless, he said. Under the earlier system the Labour Commissioner was involved and workers had obtained even 72 months' salary as compensation. However, under the new formula the maximum compensation is 48 months' salary. Secretary of the Sri Lanka Freedom Workers' Union Leslie Devendra said that the new compensation formula proposed double the compensation when compared with the previous formula. The maximum compensation proposed earlier was 31 months' salary and instead 48 months salary has been proposed by the new formula. In addition the government pays another 12 months salary as compensation and therefore maximum compensation proposed by the new formula is 60 months salary, Devendra said. This is the best compensation formula in the Asian region. In India companies with less than 100 workers are not obliged to pay compensation but under the new formula companies with even 15 employees would have to pay compensation. Devendra said that under the earlier formula an employer could evade
compensation payment by showing losses. But under the present system
employers have to pay compensation whether they make profits or losses. At
liquidation a company will have to pay compensation by selling its assets,
he said. |
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