The Employers' Federation of Ceylon

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Tuesday, 20 December 2011 08:55

Today, management has become a complex concept.  It includes many aspects that we did not consider before.  Traditionally, management was looked upon as a relationship between a leader and a group of followers who simply carried out the leader’s instructions without question. 

Today, the whole concept of management has undergone a transformation as a result of the rapid changes that take place around the world, and more importantly, in the business environment.  

Management, today, not only includes managing your employees, but also involves the management of capital, resources, and more importantly the environment.  In this context, managing employer-employee relations becomes a challenge to any employer. 

This article will focus on the topic in the Sri Lankan context and would look at the employment relationship as it stands today, and what we need to do to make it more productive and profitable to both the employer and the employee.


The Evolution of Sri Lanka Employer-Employee Relations 

Blackstone, in his commentaries, defined the employment relationship as the third most important human relationship next to husband and wife, and parent and child.  Essentially, it is a human relationship which needs to be valued and nurtured.  Very often, the human element is forgotten and this leads to unnecessary conflict which eventually, adversely, affects the organization. 

There are many who think that work can only be done within an employment relationship.  This is a misconception.  For example, when we require a particular service which is not an integral part of the day to day activities of the organization, it is possible to obtain that service from an expert who is in the business of providing that service and who would not be considered as an employee. 


Attorney-at-Law, LL.B. (Colombo)

Director General/CEO, Employers’ Federation of Ceylon. 

Member National Labour Advisory Council, Ministry of Labour & Labour Relations 

Therefore, the fundamental question determining the existence of an employment relationship in Sri Lanka rests on the “common law tests” which are adopted by our courts.  These tests make a distinction between a contract of service and a contract for service.  In the case of the former, the employment relationship is established, whereas the latter involves a work arrangement in the nature of an independent contractor.  Control and supervision, and the question as to whether the function is an integral part of the organization’s activities are two vital tests that our courts adopt in determining an employment relationship. 

Therefore, the distinction between these two types of work arrangements is becoming more and more important, especially in countries which have a very rigid and a tight labour regulatory framework.  In the Sri Lankan context, as Sriyan de Silva has pointed out “our labour laws and relations system is a poor example of the use of labour law and relations as a contributor to balanced socio-economic development.”   Historically, Sri Lanka has been promoting “labour friendly” legislation with the intention of satisfying the working people of this country.  Sriyan de Silva has explained this as follows : “South Asian countries such as Sri Lanka have been characterized by political instability and national populist governments whose labour law and relations policies promoted a labour movement dependent on the State to serve its political and economic interests.  In return for Government support, the labour movement received job protection and other facilities.  Trade unions enjoyed political patronage and power and were sometimes represented in Parliament.   With little regard to labour costs as the domestic markets were virtually captive markets, conditions needed to compete in export markets such as productivity, quality and skills, received little attention.  The policy of equity implemented exclusively through labour protection led to inefficiency and inflexible labour market.” 

Furthermore, multiplicity of trade unions and trade union rivalry led to conflictual labour relations in Sri Lanka.  Although there have been certain developments in labour relations between employers and trade unions during the last two decades, such developments have been limited to individual workplaces.  There has not been anything significant that has taken place at macro level that has changed the labour relations framework to suit the requirements of business.  The best example that can be given is the current proposal made by the Employers’ Federation of Ceylon, on behalf of certain export oriented manufacturing companies, to operate a five day week and spread over the working hours on Saturday without an additional payment.  This proposal has been made subject to the condition that it will only be implemented in workplaces where there is clear agreement between employers and trade unions/workers to adopt this work arrangement.  Notwithstanding the fact that this is something extremely reasonable and equitable, both from the point of view of employer and employee, it is disappointing to note that there has not been support for it from the trade unions as well as the labour authorities. 

What are the Challenges?

The most significant challenge we have is to consciously appreciate that industrial relations issues cannot be resolved primarily through regulating employment, and that we need to focus on enhancing relations at the workplace. 

Policymakers, over the years, have been quick to introduce new laws whenever a problem was envisaged in employment.  As a result, the working population of this country has been guided by a notion that security of employment is well established through the enactment of these laws, and once they find employment they could feel secure and contented as the laws would protect them and their jobs. This is the ‘Paradox’ that has emerged in relation to security of employment in Sri Lanka. It has existed ever since our country gained independence.  

As a result, employees have not been encouraged to develop their skills and ensure that they are relevant to the organization that they work for at any given time.  In an environment where enterprises have to compete for markets very fiercely, the employees also need to always update their knowledge and competencies to stay relevant.  True security of employment can only be guaranteed through acquisition of relevant skills.  

We need to ask ourselves the question, “Will my employer decide to hire me again if he is given that option today?”  In this context, it is also relevant to mention a striking characteristic of young job aspirants today.  Undoubtedly, Sri Lanka possesses smart and intelligent youngsters who are able to grasp knowledge and technical competencies very quickly.  However, we see that most youngsters are quite preoccupied in acquiring qualifications rather than paying attention to sharpening certain soft skills which are imperative to work in any organization. 

 Daniel Golemen in his book titled “Working with Emotional Intelligence”, states that employers today are adopting a new yardstick in making choices in relation to employees.  He states, “The rules of work are changing.  We are being judged by a new yardstick; not just by how smart we are, or by our training and expertise but also how well we handle ourselves and each other ……. The new measures take for granted having enough intellectual ability and technical know-how to do our jobs; it focuses instead on personal qualities such as initiative and, importantly, adaptability and persuasiveness.”  Sri Lanka needs to look at a new work arrangement model that will provide a basic legal framework of labour protection, with room for flexibility in regard to contractual arrangements, workforce size, working times and functions.  

Do We Have Any Opportunities? 

The greatest opportunity that we have in relation to seeking changes in the labour framework is, the labour policy enunciated in the Government’s Ten Year Horizon Development Framework (Mahinda Chintana).  This policy refers to 4 future policy directions which the Government has identified.  They are, 

1. Employment generation

2. Skills development and labour productivity

3. Flexible labour laws

4. Strengthening employer-employee relationships. 

Therefore, it has really “hit the nail on the head” as far as identifying the crucial policy areas that we need to focus on.  However, what we need is translation of these policies into action through reforms in relation to our employee relations framework.  

The economic downturn in 2009 did have its effect on some of the enterprises in Sri Lanka.  In fact, some employers have pointed out that it was a “blessing in disguise” as they were able to reorganize their work arrangements in a more productive and efficient manner with co-operation of the employees as a result of the implications of the economic downturn. 

The EFC organized a symposium in 2010 to showcase some companies which had successfully faced the challenges of the recession.  This symposium afforded an opportunity to these companies to showcase their success stories.  Some of the key messages that came out at this symposium were the following : 

1. The need to have a clear focus on customer and the employees.

2. The need to “walk the talk” by management.

3. Employees’ engagement and empowerment in finding solutions. 

These success stories clearly echo the famous words of Sir Winston Churchill, who said, “See opportunities in every difficulty rather than difficulties in every opportunity.” 

Do We Have a Way Forward? 

Managing employer-employee relations today is a formidable challenge not only to employers but employees as well.  One important factor that we need to take into account is that we need to treat both employers and workers as equal partners and focus on workplace relations. 

In this regard, the EFC conducted a study on enterprises in 2004 as to what criteria are needed to establish a sound corporate culture on workplace relations.  This study was conducted by some members of the professional staff of EFC along with Emsolve Consultants.  This study revealed some interesting findings which came out from employees as well as union leaders in different enterprises.  It also revealed management thinking.  Some of the findings are as follows : 

1. Fair and consistent treatment of employees.

2. Flexibility in changing HR policy wherever necessary to match the profile of the workplaces.

3. Empowering employees and helping them to enhance their self-esteem is a powerful tool in building culture.

4. Absence of “distance” between management and employees.

5. Availability of career paths and opportunities for development within the organization.

6. A culture of effective communication mechanisms.


Today, enterprises are faced with the challenge of sustainability.  In other words, what should we do today to sustain our businesses tomorrow?  There had been reference to the 3 ‘P’s in relation to sustainability, which focuses on the Planet, People and Profit.  We could even say that we need to focus on 3 ‘E’s which are the Enterprise, Employees and the Environment.  

As for the Enterprise, we need to ensure that it remains as a viable entity amidst all the changes that happen around it.  

As for Employees, we need to ensure that they have the relevant skills and competencies and attitudes to withstand the challenges of the work environment.  

As for the Environment, we need to ensure that the enterprise gives back to the environment what it has taken from it.    

Sri Lanka has the potential to move in the right direction.  What is needed is a firm commitment and action on the part of all stakeholders including the public. 



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Last Updated on Tuesday, 20 December 2011 09:18

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