Closure of NEXT factory in Katunayake FTZ violates labour law, says Deputy Minister

Colombo, May 23 (Daily Mirror) - The sudden closure of the NEXT apparel manufacturing factory located in the Katunayake Free Trade Zone (FTZ) has drawn strong criticism from Deputy Minister of Labour Mahinda Jayasinghe, who said today that the move violates Sri Lanka's labour laws due to the absence of prior notice.

The Deputy Minister made the statement following a meeting held at the Labour Ministry with trade union representatives, who raised concerns over the loss of employment faced by nearly 2,800 workers after the abrupt shutdown.

A separate discussion was held yesterday (22) between the Deputy Minister and representatives of the NEXT factory administration. 

During the meeting, factory officials claimed that the decision to shut down operations stemmed from sustained financial losses amounting to nearly USD 10 million since the onset of the COVID-19 pandemic. They also cited the rising operational costs as a key reason behind the closure.

In response to concerns, the factory administration stated that they are willing to offer compensation exceeding the amount mandated by the labour law to approximately 1,400 of the affected employees. Furthermore, they expressed willingness to facilitate alternative employment for laid-off workers in other affiliated factories.

However, Deputy Minister Jayasinghe strongly criticised the lack of transparency and communication surrounding the closure. He questioned why the factory failed to notify the Board of Investment (BoI) and the Labour Department in advance, as required by law. 

Factory officials responded that the decision was made urgently in response to growing unrest among employees once news of the closure leaked.

The administration added that other businesses within their corporate group continue to operate successfully, but this did little to ease concerns among labour representatives.

Trade union members voiced firm opposition to the shutdown and urged the Labour Ministry to intervene. 

In response, the Deputy Minister called on the factory administration to reconsider the decision and reopen the facility to protect the livelihoods of its employees.

The situation remains tense, as negotiations between the Ministry, factory management and workers’ unions continue.