Pro-rate wages pact likely to be further extended: EFC

Employers’ Federation of Ceylon (EFC) Director General Kanishka Weerasinghe presenting a situation report on the impact of COVID-19 on employers. Members seated at the panel (from left): EFC Asst. Director General/Head of Solutions - HR & Legal Sewwandi Wijesekera, EFC Deputy General Vajira Ellepola, University of Colombo Prof. Sunil Chandrasiri, (second from right) Economist Dr. Ramani Gunatilaka, and (extreme right) EFC Advisor HR and Coordinator Research Dinesh Ruwan Kumara - Pic by Kushan Pathiraja

• Says employers still struggling with cash flows despite lifting lockdowns
• Extension will be a blanket approach and not sector-specific
• Stresses current labour laws do not provide for pandemic-like situations
• Points out pandemic given rise to a range of issues relating to compensation
• Warns institutional weaknesses may discourage resilience, flexibility, and adaptability of the labour force on supply side

By Shabiya Ali Ahlam
The tripartite agreement applicable to all industries that was extended till September is likely to be further extended as private sector businesses that were dealt a crippling blow by the pandemic have appealed for further assistance in dealing with their workforce.

 The Employers’ Federation of Ceylon (EFC) said although the economy has opened up, private sector employers are still struggling to manage cash flows since the COVID-19 pandemic continues to impact their businesses.

“Our members have shared with us that they are still struggling and that their cash flows are tight. This is the case specially with the leisure sector. We have received requests to explore the possibility of extending the tripartite agreement and we are looking at that,” said EFC Director General Kanishka 
Weerasinghe yesterday.

He confirmed that any extension made would be applicable to all industries regardless of the level of impact.

“We will have to adopt a blanket approach since this issue is of a national level. Selecting only those sectors that are badly hit would be discrimination as all sectors have witnessed negative implications in some form or the other,” Weerasinghe told Mirror Business when queried whether the pro-rate wages extension would be 
sector-specific.

The tripartite agreement, which was first announced in May, aims at ensuring payment of wages and employment within the existing legal framework and was endorsed by the Cabinet of Ministers on May 14. In mid-July it was announced that the agreement would be extended for three months 
ending September.

The agreement pushed private sector employers to pay its employees either 50 percent of the total salary or a minimum of Rs. 14,500. 

According to the Ministry of Skills Development, Employment and Labour Relations, the pro-rate wages agreement was approved by both employers and several trade unions at a tripartite Labour Task Force meeting. 

While the decision was taken in the spirit of sustaining businesses while ensuring job security of employees and continuity of businesses within the existing legal framework, legal practitioners argue the said agreement has no legal validity.However, it is learnt that many employers have already placed reliance on the same and have acted as suggested in the said agreement.

Employers, who have not been able to meet the terms of the agreement, have sent sections of their workforce on mandatory no-pay leave until further notice. As Sri Lanka’s existing labour laws do not provide for pandemic-like situations, it is unclear if employees sent on mandatory leave would be called back to work.

According to Weerasinghe, the fact that the legal framework does not cover crisis situations leaves a “huge gap” in institutional mechanisms needed to manage such instances. He elaborated that studies on labour relations during the lockdown revealed the pandemic has disrupted both the demand and supply sides of the labour market, and the country’s labour legislations do not have the capacity to address issues relating to employment, labour relations, and employee welfare arising out of the crisis.

The initial assessment of the COVID-19 impact on employers, facilitated by the EFC, revealed that the pandemic had given rise to a range of issues relating to compensation during the lockdown period and in times of serious liquidity problems.

“These institutional weaknesses may discourage resilience, flexibility, and adaptability of the labour force on the supply side,” Weerasinghe said.

He stressed the need for employers, employees, and State organisations to be innovative, technology-oriented, adaptable, and resilient to thrive in the new normal.