Sri Lanka

Labor relations, dispute resolution, and the establishment of labor courts and arbitration panels in Sri Lanka are primarily governed by the Industrial Disputes Act (IDA), No. 43 of 1950.

Labor Courts

Industrial Courts in Sri Lanka are presided over by a President, appointed by the President of Sri Lanka. The President of an Industrial Court must be a former judge or a lawyer with significant experience. These courts have jurisdiction over termination of employment, compensation or damages related to unfair labor practices, interpretation of collective agreements, essential services disputes, and offenses under the IDA.

The process in these courts begins with disputes being referred to the Industrial Court by the Minister of Labour. The court then conducts an inquiry, hearing evidence and arguments from both parties. Finally, the court makes a "just and equitable" award (decision), which is binding on the parties.

Arbitration Panels

Arbitrators are appointed by the Commissioner of Labour. They are typically experienced in labor relations and may include legal experts, retired judges, and other qualified individuals. These panels have jurisdiction over industrial disputes referred by the Minister of Labour where arbitration is deemed suitable, and disputes arising in less critical sectors or those where a quick resolution is desired.

The process in these panels begins with the Commissioner of Labour referring the dispute to an arbitrator. The arbitrator then convenes the parties and conducts a hearing. Finally, the arbitrator makes an award, which is generally binding on the parties involved in the dispute.

Typical Cases Handled

Labor courts and arbitration panels typically handle cases related to unfair dismissal, disputes over wages and benefits, violations of collective agreements, discrimination and harassment, and work-related injury compensation.

Compliance audits and inspections are crucial tools for ensuring that businesses and organizations in Sri Lanka adhere to various laws and regulations. These procedures are conducted by a range of entities, including government agencies, regulatory bodies, and independent auditors.

Entities Conducting Compliance Audits and Inspections

Government agencies involved in these processes include the Department of Labour, which enforces labor laws and conducts inspections on working conditions, occupational safety and health, and compliance with employment contracts. The Central Environmental Authority (CEA) inspects and audits for environmental compliance, pollution control, and adherence to environmental regulations. Sri Lanka Customs conducts audits on import and export procedures, tax compliance, and adherence to customs regulations.

Regulatory bodies such as the Securities and Exchange Commission of Sri Lanka (SEC) and the Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB) also play a role. The SEC audits and inspects listed companies and market intermediaries for compliance with securities regulations, while the SLAASMB monitors compliance with auditing standards by auditors of listed companies. Additionally, companies often hire external auditing firms for financial audits, tax compliance audits, and other specialized compliance audits.

Audit and Inspection Frequency

The frequency of these audits and inspections varies based on the specific laws and regulations, the industry, and the risk profile of the organization. Labor inspections may be conducted regularly or in response to complaints. Environmental audits are often mandatory for industries with high environmental impact, with frequencies ranging from annually to every 3-5 years. Publicly listed companies typically undergo annual financial audits.

Importance of Compliance Audits and Inspections

Compliance audits and inspections serve several important functions. They ensure legal adherence by identifying and rectifying deviations from laws, regulations, and industry standards. They also aid in risk mitigation by proactively identifying potential liabilities, thus minimizing fines and reputational damage. Furthermore, audits promote transparency, accountability, and ethical practices within organizations, and the insights gained from them can improve processes, efficiency, and overall compliance culture.

Consequences of Non-Compliance

The consequences of non-compliance can be severe. Organizations may face significant fines for violating laws and regulations. Civil or criminal lawsuits may be brought against organizations or individuals for serious non-compliance. Operational disruptions, such as business closures, license suspensions, or production delays, can also occur. Additionally, non-compliance can result in negative publicity and loss of public trust.

Sri Lanka provides various avenues for reporting violations and has enacted legal provisions to protect whistleblowers. However, there are still practical challenges that need to be addressed.

Mechanisms for Reporting Violations

In Sri Lanka, there are several mechanisms in place for reporting violations:

• Internal Reporting Systems: Many companies have established internal mechanisms for reporting violations. Employees can report their concerns to designated officers, HR departments, or through hotlines.
• Government Agencies: There are several government agencies that handle reports of various types of violations:
  • Commission to Investigate Allegations of Bribery or Corruption (CIABOC): This commission handles reports of corruption and bribery.
  • Department of Labour: This department handles reports of labor law violations and workplace safety issues.
  • Central Environmental Authority: This authority receives complaints related to environmental violations.
  • Regulatory Bodies: There are also regulatory bodies for industry-specific violations, such as the Securities and Exchange Commission and Sri Lanka Customs.
• Non-Governmental Organizations (NGOs): Some NGOs offer support services and reporting channels, particularly in the areas of human rights and corruption.

Legal Provisions for Whistleblower Protection

Sri Lanka has several legal provisions in place to protect whistleblowers:

• Industrial Disputes Act (IDA): This act offers limited protection against reprisals for workers who raise concerns or participate in legal proceedings related to labor disputes.
• Witness and Victims of Crime Protection Act, No. 12 of 2015: This act provides general protections to witnesses and victims, which could potentially apply to whistleblowers in certain circumstances.
• The Right to Information Act, No 12 of 2016: This act may offer protection to whistleblowers who disclose information in the public interest by making a request under this act.
• Proposed Whistleblower Protection Law: A draft law is currently under consideration that aims to establish a more comprehensive legal framework for whistleblower protection.

Practical Considerations and Challenges

Despite these legal provisions, there are still practical challenges that whistleblowers face:

• Fear of Retaliation: Whistleblowers may still fear reprisal, job loss, harassment, or intimidation, despite the legal protections in place.
• Limited Awareness: Employees may not be aware of the reporting mechanisms available to them or their rights as whistleblowers.
• Organizational Culture: A lack of a supportive company culture and strong internal reporting systems can discourage whistleblowing.
• Effectiveness of Protection Mechanisms: The existing legal safeguards may be perceived as inadequate or difficult to enforce.

Sri Lanka, a member of the International Labour Organization (ILO), has ratified several fundamental ILO conventions related to labor rights. These international labor standards significantly influence and shape domestic labor laws in Sri Lanka.

Key Ratified ILO Conventions

• Forced Labour Convention, 1930 (No. 29): Prohibits all forms of forced or compulsory labor.
• Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87): Upholds the rights of workers and employers to form and join organizations of their choosing.
• Right to Organise and Collective Bargaining Convention, 1949 (No. 98): Protects the right to collective bargaining.
• Equal Remuneration Convention, 1951 (No. 100): Ensures equal pay for men and women for work of equal value.
• Abolition of Forced Labour Convention, 1957 (No. 105) Reinforces the prohibition of forced labor.
• Discrimination (Employment and Occupation) Convention, 1958 (No. 111): Prohibits discrimination on the basis of race, color, sex, religion, political opinion, national extraction, or social origin.
• Worst Forms of Child Labour Convention, 1999 (No. 182): Aims to eliminate the worst forms of child labor.
• Minimum Age Convention, 1973 (No. 138): Sets a minimum age for employment.

Impact on Domestic Labor Laws

Sri Lanka's domestic labor laws are generally aligned with the principles enshrined in these ILO conventions. Key areas where international standards are reflected include:

• Prohibition of Forced Labor: The Bonded Labour System (Abolition) Act, No. 22 of 1992, explicitly abolishes forced labor.
• Freedom of Association and Collective Bargaining: The Trade Unions Ordinance of 1935 and the Industrial Disputes Act (IDA) provide a framework for the exercise of these rights.
• Non-discrimination: Provisions in the Shop and Office Employees Act, Wages Board Ordinance, and the Constitution of Sri Lanka address discrimination in employment.
• Child Labor: The Employment of Women, Young Persons, and Children Act and the Penal Code prohibit and regulate child labor.

Challenges and Areas for Improvement

While Sri Lanka has made progress in aligning its laws with international labor standards, some challenges and gaps remain:

• Enforcement: Effective implementation and enforcement of existing labor laws is sometimes a challenge, especially in informal sectors or specific industries.
• Gaps in Legal Coverage: Certain categories of workers, such as domestic workers or those in export processing zones, may have less robust legal protection.
• Social Dialogue: Strengthening tripartite social dialogue between the government, employers' organizations, and workers' organizations could enhance compliance efforts.