In terms of the Wages Boards Ordinance, the Minister of Labour has declared a number of Wages Boards in respect of numerous trades which stipulates the minimum wage that is payable in the relevant trade. The employer is not permitted, even with consent of the employee reduced the salary of such employee below the minimum wage stipulated by the relevant Wages Board. However, the Wages Board Ordinance restrictions may not apply to executive staff and the senior management team as most of the Wages Board decisions are for supervisory level and below.
The only recourse available to an employer is to offer a severance package to employees who have become redundant in return for their resignation. However, this will be a costly exercise for an employer in the present context.
These provisions are counterproductive in this present situation. Industries have come to a grinding halt. The continued payment of wages is draining industries dry. The only option available to employers is to terminate excess workman in order to ensure continuation of industries. In the event of termination, expenses will have to be incurred which to many employers will be prohibitive. The laws relating to retrenchment are inadequate and insufficient to deal with situations such as these in a fair and impartial manner considering the plight of both the employer and the employee.
The Commissioner General of Labour is not provided with authority to promulgate necessary regulation to rapidly ease the burden on the employer and to provide temporary relief to the employee during these treacherous times.
There are several provisions in our labour laws which place undue burden on the employer. For instance, in the present context where employees are unable to attend to their duties, the employer is compelled to make contributions to EPF and ETF on behalf of such employee which places immense financial burden on the employer. Even when an employer discontinues the employment of a workman with his or her consent, in terms of the Payment of Gratuity Act, the employer is required to pay the employee gratuity within a period of thirty days of cessation of employment. If the employer fails to do so he will be liable to pay a surcharge.
Other jurisdictions have identified the necessity for the involvement of the state to reduce the burden on the employer and have taken pragmatic steps to cushion the blow for both the employer and employee. For instance, in Singapore the state will put in place a “Job Support Scheme” where the employer will be provided with a 75 per cent subsidy for the first $4,600 of gross wages paid for all local employees. Other countries too are on the verge or already have passed urgent legislation to reduce the burden on both the employer and the employee. Hence, it is of utmost importance that the legislature intervenes and enact legislation to minimize the effect of Covid-19 on the industries and employees.
From the Article written by
Uditha Egalahewa, President’s Counsel
Amaranath Fernando, Attorney-at-Law