Sri Lanka's Labour Laws & Industrial Disputes

Future Trends in Sri Lanka's Labour Laws and Understanding Industrial Disputes

Figure 1 : Importance of Labour laws for HR Professionals

Introduction 

Sri Lanka's labour laws have been evolving over the years to adapt to changing industrial relations. Labour law plays a crucial role in safeguarding the rights and interests of employees, ensuring fair treatment, and promoting a harmonious work environment. By establishing legal frameworks for employment contracts, working conditions, and dispute resolution mechanisms, labour laws contribute to the overall stability and productivity of industries (Blair, 2001). Consequently, these laws serve to empower workers and promote social justice within the country's economic development.

Sri Lanka Labour Law

In Sri Lanka, Labour Law comprises rules dictating an employer's conduct post-hiring. The public sector follows the Establishments Code, while the private sector adheres to three primary laws.

  • Shop and Office Employees Act – for shops and office employees.
  • Wages Board Ordinance – employees related to any trade.
  • Factories Ordinance – law for industrial trade.

Employment Contract

 
Figure 2 : Type of Employee Contracts

Written employment contracts carry legal weight, whereas verbal or implied agreements also hold significance but may lack legal enforceability. Some common aspects of contracts are Salary, Scheduling, Duties, Duration, A confidentiality agreement, Additional benefits and A non-compete clause (Sarveswaran, 2014).

Key Benefits Safeguarded by Labour Law for Employees

 

Video source: (www.youtube.com, n.d.)

The 'Employment Act of Sri Lanka' covers all aspects of employment, including recruitment, contracts, termination, leave, remuneration, safety, welfare, remote work, hiring foreign workers, and addressing workplace harassment and violence (Jayasekera, Mudalige and Lanka, n.d.). Sri Lanka has strategically aligned its labour laws with international standards to embrace globalization and tap into new markets. This adaptation ensures compliance with global norms, making the country more attractive for international trade and investment. By harmonizing its internal labour regulations with international practices, Sri Lanka aims to foster economic growth and integration into the global marketplace.

 
Figure 3 : Applying Labour Law

Recent challenges, including the Covid pandemic and economic instabilities, prompted a reassessment of Sri Lanka's labour laws. In response, the Ministry of Labour is conducting an extensive evaluation of these laws, aiming to unify them into a singular 'Employment Law.' This consolidation seeks to streamline regulations across industries for enhanced efficacy. This law is expected to be fully implemented by the conclusion of 2024. Few of the main topics that is planned to be included are as follows:

  • Embracing a five-day workweek, flexible scheduling, part-time options, and remote work.
  • Introducing paternity leave as a new inclusion.
  • Recognizing domestic workers as a separate category.
  • Establishing a Social Security Insurance Fund encompassing benefits for unemployment, maternity, health, and compensation.
  • Regulating Manpower Suppliers and Employment Agencies.
  • Implementing an E-Wages system for streamlined payments.
  • Establishing a consistent retirement age of 55 years.

Why Aligning Local Labour Laws with International Standard Matters

Labour laws hold immense sway over how organizations engage globally. Aligned with international standards, these laws ensure compliance with human rights and fair practices. They play a pivotal role in attracting investments and fostering better trade relations for countries, impacting how businesses operate within their borders (Beder, 2012). Additionally, labour laws directly affect supply chain management, necessitating adherence to diverse regulations across borders.

For companies with a global workforce, compliance with varied labour laws ensures uniform employee rights protection. Adhering to local labour laws has become integral to a company's corporate social responsibility strategy, reflecting ethical business practices and fair treatment of workers.

Labour laws not only enforce legal compliance but also shape a country's global competitiveness, attracting businesses seeking efficiency and ensuring worker rights, ultimately influencing an organization's global standing and success.


Industrial Disputes

An industrial dispute refers to disputes between various parties regarding employment matters, including employers and employees, collectively, or between employees themselves. These disputes can cover employment, non-employment, or employment terms, encompassing various workplace issues.

Industrial disputes can disrupt a company's production, potentially enabling competitors to gain market share and increase profitability temporarily (Kusalakumara and Fernando, 2020). However, industrial disputes can also have long-term negative effects on a company's reputation and customer loyalty. This can lead to a loss of trust and credibility in the market, making it difficult for the company to regain its position even after the dispute is resolved. Additionally, prolonged industrial disputes can strain relationships between management and employees, resulting in decreased morale and productivity within the organization.

Alternative Dispute Resolution

Video source: (Lex, 2022)

Conclusion

Sri Lanka is enhancing its labour laws to improve employee rights, create fair workplaces, and align with global standards. The complex regulations, including employment contracts and comprehensive employment acts, reflect this dedication. This aligns with international standards, attracting global investments and promoting ethical practices. The emphasis on ethical supply chains and corporate social responsibility mirrors the changing landscape, where adherence to labour laws is seen as integral to business ethics. Labour laws shape a nation's global competitiveness and an organization's ethical standing. Successful implementation of these laws will be crucial for Sri Lanka's progress and development in the global economy. Moreover, addressing industrial disputes through these revamped laws is crucial. Effective dispute resolution mechanisms embedded within these laws will cultivate better workplace relationships, fostering harmony and contributing to the nation's economic stability and growth.

Reference List

Beder, S. (2012). Suiting Themselves: How Corporations Drive the Global Agenda. [online]

Available at: https://books.google.lk/books?hl=en&lr=&id=y8k7swjAYSAC&oi=fnd&pg=PR5&dq=Labor+laws+hold+immense+sway+over+how+organizations+engage+globally&ots=WnY_luNND-&sig=LQ568rHc6His2Ag8b7cspahIu30&redir_esc=y#v=onepage&q&f=false

[Accessed 24 November 2023].

 

Blair, M.M. (2001). Team Production Theory and Corporate Law. SSRN Electronic Journal. [online]

Available at: https://josephmahoney.web.illinois.edu/BA549_Fall%202018/Session%204/4_Blair_Stout%20(1999).pdf

[Accessed 24 November 2023].

 

Jayasekera, B., Mudalige, N. and Lanka, S. (n.d.). PROOF ILO DECENT WORK AGENDA AND SRI LANKA: TEETH FOR TIGER. [online]

Available at: http://ir.kdu.ac.lk/bitstream/handle/345/2577/Law%20new_13.pdf?sequence=1&isAllowed=y

[Accessed 24 November 2023].

 

Kusalakumara, J. and Fernando (2020). Trade Unions and Their Impact on Productivity: A Review of Sri Lankan Context from 1995 to 2015. Sri Lankan Journal of Human Resource Management, [online]

Available at: https://mgt.sjp.ac.lk/hrm/wp-content/uploads/2021/01/4748-13323-1-PB.pdf

[Accessed 25 November 2023].

 

Lex (2022). Alternative Dispute Resolution, Arbitration explained. YouTube. [online]

Available at: https://www.youtube.com/watch?v=T2F5fK5cnYM

[Accessed 25 November 2023].

 

Sarveswaran, A. (2014). Contract of Employment in Sri Lanka: A Contract like Any Other, But a Contract Not like Any Other! 192.248.104.6. [online]

Available at: http://192.248.104.6/handle/345/1477

[Accessed 24 November 2023].

 

www.youtube.com. (n.d.). YouTube. [online]

Available at: https://www.youtube.com/watch?v=-KT_AaDv9YM&t=26s

[Accessed 24 November 2023].

Comments

  1. Manthika SK24 November 2023 at 18:21

    The blog post provides a comprehensive overview of Sri Lanka's labour laws and industrial disputes. It effectively covers the key aspects of labour laws, including employment contracts, employee benefits, and dispute resolution mechanisms. The blog post also highlights the importance of aligning local labour laws with international standards.

    ReplyDelete
  2. Mohamed faiz MBA HR24 November 2023 at 20:42

    This bog explains the most important labour related laws in a simple manner and a great work on labour laws.

    ReplyDelete
  3. Rasika Gardihewa25 November 2023 at 00:09

    This blog post provides an extensive and insightful overview of Sri Lanka's evolving labor laws and the landscape of industrial disputes within the country. The emphasis on the evolving nature of labor laws to adapt to global standards is particularly noteworthy. Detailing the fundamental aspects of labor law, such as contracts, rights, and evolving amendments, offers a comprehensive understanding of the legal framework governing the employer-employee relationship in Sri Lanka.

    ReplyDelete
  4. Zeinab Ahamed HRMBA28 November 2023 at 03:55

    This comprehensive overview of your blog post effectively highlights Sri Lanka's evolving labor laws and their alignment with international standards. and also emphasizes the country's commitment to enhancing employee rights and the potential benefits of a unified 'Employment Law.' The importance of these laws in attracting global investment and ethical business practices is clearly outlined. Informative.

    ReplyDelete
  5. HRMBAPriyantha28 November 2023 at 10:05

    Understanding these laws and mechanisms is crucial for both employers and employees to ensure fair and lawful treatment within the workplace. It's advisable for employers to consult legal experts or HR professionals well-versed in labor laws to ensure compliance and prevent disputes, and for employees to be aware of their rights and the available channels for dispute resolution.

    ReplyDelete
  6. Aravinda Fernando MBA2929 November 2023 at 00:34

    This highlights the nation's dedication to improving worker rights as well as the possible advantages of a single "Employment Law." It is made abundantly evident how important these laws are to luring in foreign investment and moral corporate conduct. very well done.

    ReplyDelete
  7. Janaka Bandaranayaka29 November 2023 at 09:07

    In the ever-changing realm of business, organizations continuously seek innovative approaches to elevate employee performance and realize their strategic aspirations. While traditional performance management practices, such as annual performance reviews, retain their significance, embracing emerging trends and adopting a holistic approach is paramount to cultivating a thriving work environment that empowers employees to flourish. Thanks Janaka

    ReplyDelete
  8. HR MAB Fazil Farook 20231 December 2023 at 14:43

    This blog post on Sri Lanka's labour laws, I must say, it's really impressive! The way you've delved into the evolution of these laws and their current significance in the industrial sector is quite insightful. It's clear that you've put a lot of thought and research into this, and it really shows in the quality of your writing!

    ReplyDelete
  9. Roshani_HR_MBA_B291 December 2023 at 22:44

    Great insight, In Sri Lanka, HRM and the laws governing labor relations are closely related. For the purpose of maintaining a lawful and peaceful workplace, HR practitioners must be well-versed in labor laws, industrial dispute resolution procedures, and other pertinent legislation. Keeping up with legislative changes is essential for efficient HR administration in Sri Lanka.

    ReplyDelete
  10. Merril John2 December 2023 at 06:09

    Your exploration of Sri Lanka's Labour Laws and Industrial Disputes is enlightening. The detailed insights into the legal framework provide a valuable resource for both employers and employees navigating the complexities of the workplace. Well-researched and informative, your blog serves as a crucial guide in understanding and complying with the labor regulations in Sri Lanka.

    ReplyDelete
  11. Shanker Nithya3 December 2023 at 06:11

    Your blog post on Sri Lanka's labor laws and industrial disputes to be both enlightening and insightful. The detailed overview you provided on the legal landscape sheds light on the complexities that HR professionals and employees navigate. Thank you for providing such a comprehensive overview.

    ReplyDelete

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