FTZMA slams Labour Ministry’s move to amend TEWA

• Labour Ministry proposes to remove maximum Rs.1.25mn  termination cap
• FTZMA says it will make companies liable to pay maximum 48 months salary for each worker terminated
• Points out move will kill business and investments

By Shabiya Ali Ahlam
The Free Trade Zone Manufacturing Association (FTZMA) slammed the move by Ministry of Labour to amend the Termination of Employment of Workmen (Special Provisions) Act (TEWA), asserting that the proposed changes are detrimental to employers. 

“We, the business community (members of FTZMA) categorically object to the proposed amendment, which makes well off very few workers at the expense of development of the country seriously damaging continuity of business, investment, generation of employment opportunities,” said the Association in a hard-hitting letter to Labour Minister Nimal Siripala De Silva.

The Ministry of Labour has taken a decision, and is in the process of amending the TEWA, where the maximum ceiling of Rs.1.25 million, paid as compensation in the event of employment termination under section 2 and 6 of the Act, will be removed.

According to FTZMA, with the removal of the Rs.1.25 million cap, companies would be liable to pay maximum 48 months salary for each worker terminated.

The Association warned that the move would further increase the cost of production and “kill” business, investment and protection of employment, specially in the current situation where employers have to pay 50 percent of the basic salary or Rs.14, 500 for each worker who cannot be called in for work due to the pandemic.

“We understand as the minister in charge of the subject, you have the authority to bring and amend legislations as appropriate for the wellbeing of the working people in the country. However, the usual practice of the ministry was to discuss matters at the National Labour Advisory Council (NLAC) at the first instance,” the Association charged.
Reminding the Ministry that the legislation was enacted in an environment where Sri Lanka was implementing an inward-oriented economic policy with prime objective of protecting employment, FTZMA stressed that the aspects envisaged by the legislation at that time have changed now. 

“The country has moved away from such socio economic policies, and open market economic policies were introduced followed by a series of structural adjustment programmes in terms of movement of goods, services and equity markets, but the factor market, labour in particular, remained unchanged with too rigid conditions hampering investment and limiting the creation of employment opportunities,” it said.

The Association urged the ministry to consider and evaluate the social cost-benefits rather than individual cost-benefits of the policy decision.