Upper limit of employee compensation under TEWA increased to Rs.2.5mn

Despite the earlier objections from the private sector, the upper limit of compensation under the Termination of Employment of Workman Act (TEWA) has been increased from Rs.1.25 million to Rs.2.5 million, with effect from February 19, 2021, the Labour Ministry announced.

In an extraordinary gazette notification published on February 25, Commissioner General of Labour B.K. Prabath Chandrakeerthi replaced the upper cap of Rs.1.25 million to Rs.2.5 million, published in Gazette Extraordinary No. 1384/7, dated March 15, 2005, under the provisions in the act. 

Under the TEWA, a formula has been utilised to determine the amount of compensation to be paid to workers, with an upper limit, at the termination of employment.

However, Labour Minister Nimal Siripala De Silva had pointed out that the upper limit remained unchanged for 15 years. 

Hence, he stressed that it was a timely requirement to increase it, to reflect the  increase in cost of living during the period leading up to now.

Initially, the Employers’ Federation of Ceylon and Free Trade Zone Manufacturer’s Association opposed to the move, while citing increase of costs for investors 
and producers.