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CRIMINAL APPELATE HIGH COURT OF THE EASTERN PROVINCE

HOLDEN AT AMPARA

EP/ HC/AMP/LT/APP//404/2014

R.N.P.R. Bandara,

38, Paalam Kandawura, Uhana,

Ampara.

L.T / 44/602/2011 Applicant- Appellant

Vs.

Commercial Bank of Ceylon PLC,

21, Bristol Street, Colombo 01

Respondent- Respondent

Argued on: - 20th May 2015

Decided on: - 22nd September 2015

Before : Dr. Sumudu Premachandra HCJ

Counsels : Mr. Nimal Hapuarachchie, for the Applicant-Appellant

Mr. Geoffrey Alagaratnam P.C with Mr. Suren Fernando, for

the Respondent-Respondent

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JUDGEMENT

Dr. Sumudu Premachandra HCJ

1] The Applicant Appellant (herein after sometimes called as the Applicant),

employee, of this case has filed an appeal against the order of the learned

President of Labour Tribunal of Ampara -LT 44 (herein after sometimes called

as the Learned L.T President) dated 01st July 2014. The Applicant in his

appeal states while correctly holding that the Applicant was an employee of the

Respondent Bank and his termination of service was unjustified but the

Learned L.T. President has proceeded wrongfully and unlawfully to award

compensation in lieu of reinstatement of Applicant with back wages. Being

aggrieved to said part of the order, the Applicant prefers this appeal. The

Applicant states that said part of the order is bad in law since the termination

was held as unjustified and as a rule the Applicant entitled for reinstatement.

He further states that learned L.T. President has failed to give any reason for

not awarding reinstatement of the Applicant. The Applicant therefore seeks to

vary that part of order and sought an order the Respondent Bank to pay

compensation to the applicant and reinstatement of the Applicant with back

wages calculated on the basis of the salary.

2] While the Applicant dissatisfied with said part of the order, the Respondent-

Appellant (herein after sometimes called as the Respondent Bank,) Commercial

Bank PLC has also dissatisfied with impugned order entirely, has filed a cross

appeal. The Respondent Bank states that the Learned L.T. President has failed

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to, assess and evaluate the evidence in an overall manner and erred in law

holding the Applicant was an employee of the Respondent Bank. Inter alias, the

Respondent avers the applicant never was an employee of the Respondent and

was an employee of a Carekleen (Pvt) Ltd thus the learned L.T. President has

erred in holding that the Respondent terminated the service of the Applicant.

The Respondent further submits that the learned L.T. President has erred in

calculation of compensation without any evidence of actual losses from the

Applicant.

3] When this matter argued before me the parties agreed to hear the appeal

and cross appeal as whole and accept single judgment for both appeals. I now

consider facts before me.

4] I have carefully considered the written submissions placed before me by both

parties with much appreciation. I have also scrutinised the substantive

evidence placed before the learned L.T. President of Ampara.

5] At the inception of this case, the parties informed this court that there was a

case pending in the similar nature in Supreme Court namely

SC/SP/LA/92/2014. But the outcome of that case has not been informed to

this court. It is said by the Respondent that leave to appeal has been refused

yet there is no copy of such order tendered to this court. Therefore, I consider

the Judgment instant case on merits.

6] The crux of the case is relied on whether the Applicant is an employee of the

Respondent Bank or was he an Outsourced Employee of the Bank? Can an

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Outsourced employee treat as an Employee of the Respondent Bank? If so has

he got any legal rights? In the Tribunal that learned L.T. President has

concluded that the Applicant is a worker of Respondent Bank and CareKeleen

(Pvt) Ltd who supplied the workers to the Respondent Bank including the

Applicant. In the sense it is decided by the Tribunal that Carekleen is a

supplier of labourers who works as an Agent of the Respondent Bank. The

Agreement between Carekleen and the respondent bank was tendered at trial

as R11. It contains nine (9) clauses. But none of clause did not clarify what is

the consideration to be passed between Carekleen and he Respondent Bank in

lieu of supplying Outsourced Employees. Carekleen is not a charitable

institution to supply workers free of charge to such a renowned bank in Sri

Lanka. The Agreement has been done without consideration, in that event, it is

seen this Agreement was a pseudo and was drafted to bypass labour laws.

7] The learned President Counsel for the Respondent Bank contends that the

Applicant was not an employee of the Respondent, but of Carekleen (Pvt) Ltd

and the Bank had outsourced certain functions to Carekleen (Pvt) Ltd. Since

the Applicant was an employee of Carekleen there was no termination by the

Respondent. Thus he contends that the application of Applicant should fail but

the learned L.T. President held otherwise.

8] I now consider the law on Employer-Employee relationship. The judgment of

His lordship T S. Fernando J in Ratnasabapathy v. Asilin Nona 61 N.L.R.

548, it was held that whether a workman is casual or a regular employee is a

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question of fact to be decided on evidence. Similarly I hold that the Applicant of

this case is an out sourced worker or employee of the Respondent Bank is a

question of fact need to be decided on available evidence. I am mindful in

SUPERINTENDENT OF PUSSELLA STATE PLANTATION, PARAKADUWA v

SRI LANKA NIDAHAS SEVAKA SANGAMAYA his lordship G .P .S. DE SILVA

C. J, [1997] 1 SLR 108, held that "the mere label is not sufficient to classify a

workman as a casual employee, if the real character of his employment is

that of a permanent employee". (Similar view was taken in Nanayakkara v.

The Director General Central Cultural Fund S.C. Appeal 33/91 S.C.

Minutes of 27th January, 1995). [Emphasis is added]

9] In HATTON NATIONAL BANK v PEREIRA [1996] 2 SLR 231His lorrdship G.

P S. DE SILVA, C.J. discussed about the burden in appeal to overturn a

Tribunal decision as "in order to set aside the determination of facts by the

tribunal that the termination was unjustified the appellant must satisfy that

there was no legal evidence to support the conclusions of fact or that the

finding is irrational or perverse. This is a heavy burden". [Emphasis is added]

10] In line with the above principles, I now analyze the evidence. At the trial

before the Tribunal, the Applicant Nadeeka Prasad Bandara and one Trade

Unionist Anura Lalith Ranaweera had given evidence on behalf of the

Applicant. On behalf of the Respondent Bank Human Resource Manager of

Carekleen gave evidence. They marked documents R1 to R22. Through the

Applicant's evidence, the Applicant marked several documents. A1 is the

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Applicant's Commercial Bank (the Respondent) passbook. It shows that his

wages were deposited directly to the Applicant's Bank account which was

maintained in Respondent's Bank in Ampara Branch. This position was

revealed by Respondent's Carekleen witness under cross examination. A2 is

photograph and A3 a paper cutting of a Savings Campaign. That depicts the

Applicant in the Respondent’s bank employee attire. A4 is importantly suggests

that the Applicant was a Staff member of 2010. He has posed a picture with

other staff members including the Manager, highest member of the Ampara

branch. These documents and evidence of the Applicant tally with that the

Applicant worked as an Office Assistant of the branch. Then, A 8 shows that

Carekleen informed the termination of bank service. But the facts of this letter

were disputed by the Applicant. A12 and A 13 are details of Respondent’s Bank

Annual Report 2011. According to A12 it shows the Respondent Bank has two

categories of service, i.e. Full Time Employees and Outsourced Employees (A12

(a). But it is seen the Service Analysis of the Employees as at December 31

there were no Office Assistants or other minor staff were recruited since 10

years (A12 (b). Thus, it is seen that the Respondent Bank adopted a different

method of employing Office Assistants and get their services labelling as

Outsourced Employees. In A13, it is clear that the Respondent Bank has not

taken or recruited any Office Assistants. Ironically, in A14, the Collective

Agreement No. 27 of 2010, clause 15 has referred to Office Assistants’

promotions and first schedule of the Agreement shows the salary scale of Office

Assistants according to their grade. In clause 33, Definition covers “an

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employee covered and bound by this Agreement". There are categories of

services. That means Office Assistants are covered by this Agreement. Hence,

the Office Assistants are labelled as Outsourced Employees is misnomer. It is

clear that they are real employees of the Respondent Bank. The Bank has not

cleared this proposition in their evidence and they only called Human

Resources Manager of the Carekleen. In this scenario, it is evident that

Carekleen is only the facilitator to find Office Assistants, and it works as the

Contractor and the Agent of the Respondent Bank. Evidence shows that when

outsourced employees are needed, the interviews were held and employees

were selected by the Bank and the Carekleen has no say about the selection.

After selection the Carekleen has no control over employees. The Carekleen’s

witness admitted that the applicant’s work was supervised by the Bank, Bank

provided the Applicant’s salary, allowances, EPF, ETF. When the chain of

causation is considered, the end user of the Applicant is the Respondent Bank

and during his tenure as Office Assistant, the Applicant has only rendered his

services to the Respondent. Though pay slips (R4, 5, 6) show that salary is paid

by Carekleen but it clearly shows work place of the Applicant is Commercial

Bank Ampara. In Ceylon Mercantile Union v Ceylon Fertilizer Corporation

[1985] 1 SLR 401, the Court has discussed similar nature of situation. While

agreeing with the finding of his lordship Justice Wanasundara, his lordship

Justice Wimalaratne enunciated that “the payment of wages by the Society was

only, a physical act of handing over the wages in the capacity of agent of the

Corporation. One has to remember that it was the Corporation, and not the

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Society that determined the wages of each category of workers - check roll as

well as piece-rate workers. As regards control of work, even the Chief Justice

has no doubt that it was the Corporation that assigned the work, stipulated the

proportions of mixing and indicated the mode of distribution. What appears to

have influenced the Chief Justice is that disciplinary control was in the hands of

the Society. There is, however a strong finding of fact by the President that "it is

absolutely clear that the supervision and control of the workmen were exercised

not by the 2nd respondent (the Society) but by the 1st respondent (the

Corporation)." I cannot see sufficient reason to disturb that finding of fact.” In

this case it was not revealed who has the disciplinary control over the employee

but the service was terminated on the instruction of the Respondent Bank by

the Carekleen and it tacitly shows that control was with the Bank. In

accordance with R 11(Contract between Bank and Carekleen), it shows that

was composed to bypass and evade the responsibilities of the Bank which is an

unfair labour practise as correctly observed by the learned L.T. President and it

suppresses the statutory remedies of Industrial Dispute Act R11 is totally

hostile to the Applicant. Hence this practise must be discouraged and

disregarded. Therefore the Applicant does not bind by R11. The Applicant was

interviewed and selected by Bank officials and Training was given by them. The

Applicant's work place was at Ampara branch. The working hours tally with the

Banking hours and working tools, place to sit and other facilities were provided

by the Respondent Bank. On top of that the work was given and supervised by

the Bank Officers. He assisted the daily operation of the bank. The Applicant

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was a one of wheel of banking machinery although his position was very low

but falls under definition of “banking business” of section 86 of the Banking

Act No.30 of 1988. I am mindful of as Her Ladyship Eva Wanasundara J

observed in Kosgolle Gedara Greeta Shirani Wanigasinghe Vs Hector

Kobbekaduwa Agrarian Research and Training Institute S.C. Appeal No.

73/2014 (Unreported, dated 02.09.2015) "All the workers in any institution

work for the employer. The employer has employed each and every person

having allocated some part of the work of the employer. Let it be the Chief

Executive Officer, let it be a clerk or a peon or even a sanitation labourer, they

are employed under the employer. The employer trusts that they will do their

part of the work properly." In instant case that the Applicant has not only made

tea for bankers but also he posted letters on behalf of bank to their customers

and bank to bank, thus surely he was a part of day to day business of the

Respondent Bank. This situation cannot be taken isolation and can be said as

he was integral to the business of the Bank. In contrast, that CareKleen did not

get any service from the Applicant. Therefore I cannot say that the applicant is

not in "banking business”.

11] The Respondent main contention relies on that the Respondent was not

employer of the Applicant. It is true that there was no direct service contract

with the Respondent Bank. But Evidence shows that there was implied service

contract between the parties. In Brook Street Bureau (UK) Ltd v Dacas

[2004] EWCA Civ 217 (05 March 2004) URL:

http://www.bailii.org/ew/cases/EWCA/Civ/2004/217.html Lord Justice

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Mummery in the IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION), Royal Courts of Justice, United kingdom

observed similar situation and held inter alias “It is plain that increasing

numbers of people, both those who do the work and those who pay for the work

done, find themselves in situations of the kind described by Professor Freedland

and faced with the problems identified by him. The specific legal question in this

case is whether the applicant works under a contract of service (express or

implied) when (a) the applicant has entered into a written agreement, expressed

to be a contract for services and not a contract of service, with an employment

agency; and (b) the employment agency has entered into an express contract

with its client (i.e. the end-user of work done by the applicant) for the provision of

"agency staff", including the applicant; but (c) no formal contract of any kind

has ever been expressly entered into between the applicant and the end-

user, in whose premises the applicant works regularly, exclusively and

for reward until dismissal takes place on the initiative of the end-

user.(Para 11)” . In this case it is crystal clear that the Applicant is the worker

and the end-user is the Respondent Bank which is the employer. [Emphasis is

mine]

12] In Brook Street Bureau (UK) Ltd v Dacas case (supra) English Court

identifies Implied Contract of Service. In paragraph 16 of said judgment says

that “The statutory definition of a contract of employment as a "contract of

service" expressly includes an "implied" contract. This should not be overlooked. I

think that it has been. Like other simple contracts, a contract of service does not

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have to be in any particular form. Depending on the evidence in the case, a

contract of service may be implied- that is, deduced - as a necessary

inference from the conduct of the parties and from the circumstances

surrounding the parties and the work done. As already indicated, the

overall situation under consideration is shaped by the triangular format used for

the organization of the work: the applicant, the employment agency and the end-

user are all involved. Each participant in the triangular situation may have an

express contract with either one of, or with each of, the other two

parties.”[Emphasis Added]. It is seen, to determine the issue, true nature of

relationship between respective parties must be identified. Though the

applicant has no contract with the Respondent Bank, the learned LT President

has correctly held that there was implied contract of service between the

Applicant and the Respondent Bank.

13] In line with above notions, it is my considered view that the learned L.T.

President has not erred in law for finding that the Respondent Bank is the

employer of the Applicant. The findings of the learned L.T. President that the

Respondent is the employer is well founded with the adduced evidence in the

trial. I further hold that Outsourced Employee is a form of workman comes

within the definition of Industrial Dispute Act (as amended) and no one can

circumvent labour laws under the shelter of Outsourced Employee. It is seen it

would be a bad practice and curtail of labour rights if court thinks that

Outsourced Employees are out of the purview and definition of Industrial

Dispute Act. Why I say so is under De Silva v The Associated Newspapers of

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Ceylon Ltd 1978/9 (2) SLR 173 the servant has been defined in line with the

control test and discretion of the employer and in instant case the Applicant's

total control was with the Respondent bank. Thus, the Applicant cannot sue

and get redress against the Carekleen as it had no control over the Applicant.

Say for instance, if Carekleen was sued by the Applicant then, they can raise a

defense under "control test" they are not the employer of the Applicant. If so

rights of the Applicant left with nowhere. Thus, Outsourced Employees rights

cannot be denied just simply they do not have an express contract with the end

user, in this case Respondent Bank. I therefore cannot see any reason to

disturb the finding of learned L.T. President is wrong and unlawful in relation

to Employer-Employee aspect.

14] I therefore hold that the cross appeal of the Respondent Appellant should

invariably fail. Thus EP/ HC/AMP/LT/APP//405/2014 appeal is dismissed

with cost.

15] I now decide whether the Applicant’s appeal has merits to succeed. The

learned counsel for the Applicant stresses that learned President of Labour

Tribunal has erred in law while holding termination was unjustified but failing

to reinstate the Applicant with back wages. He says as a rule the Applicant

entitled for reinstatement. I am mindful the principles of granting orders on

just and equitable grounds. In SALEEM v HATTON NATIONAL BANK

LTD [1994] 3 SLR 409 His lordship KULATUNGA, J. articulated the matters to be

concern as " In making orders in cases of termination of services, the court in

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consonance with the spirit of labour law and practice and social justice is guided

by three cardinal principles, namely, the jurisdiction of the Labour Tribunal is

wide, relief under the Industrial Disputes Act is not limited to granting benefits

which are legally due and the duty of the tribunal is to make an order which may

appear to it to be just and equitable." In that event Court held even though

termination was justified LT may consider compensation. It says "A Labour

Tribunal may order compensation upon a termination of services even where

such termination is justified and no distinction as to whether such termination

was upon a closure of an industry or for misconduct as a disciplinary; measure

can be imposed in considering a claim for compensation." In UP COUNTRY

DISTRIBUTORS (PVT) LTD., v. SUBASINGHE [1996] 2 SLR 330, the court held

though the award made by the tribunal is just and equitable. The tribunal has

a discretion in determining the quantum of compensation, on the basis of the

facts and circumstances of each case. That discretion should not be unduly

fettered. His lordship Wijetunga, J. noted that "the legislature has in its

wisdom left the matter in the hands of the tribunal, presumably with the

confidence that the discretion would be duly exercised. To my mind some degree

of flexibility in that regard is both desirable and necessary if a tribunal is to

make a just and equitable order". In line with above principle the learned LT

President has a discretion to grant compensation in lieu of reinstatement.

16] The learned Counsel for the Applicant drew attention that in SRI LANKA

STATE PLANTATION CORPORATION v. LANKA PODU SEVA SANGAMAYA

[1990] 1 SLR 84, the Court held that Where the termination of service is found

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to be unjustified, the workman is, as a rule, entitled to reinstatement. But

in contrast to that in the case of HATTON NATIONAL BANK v. PEREIRA

[1996] 2 SLR 231 His lordship G. P S. DE SILVA, C.J took different view and

held that "Where termination is unjustified the workman cannot as of right

demand reinstatement. The tribunal is required to make a just and equitable

order. The order must therefore be just and equitable to both parties.

Consequently, the tribunal has the discretion to order payment of

compensation as an alternative to reinstatement. [Emphasis is mine] Thus

it is two paths to go. The Learned LT President has chosen not to reinstate the

Applicant but to award compensation. Was it just and equitable?

17] To address this question, it is seen that the Applicant was not dismissed on

a ground misconduct or mistrust between the parties. His dismissal was a

policy decision taken by the Respondent Bank to reduce Outsourced

Employees. In Indrajith Rodrigo v Central Engineering Consultancy

Bureau [2009] 1 SLR 271 his lordship Marsoof J states in what circumstances

warrant reinstatement. In that case, his lordship states as follows;

"I hold that the order of reinstatement made by the Labour Tribunal

should be affirmed. It is a well established principle that the primary

(albeit discretionary) remedy for harsh, unjust or unreasonable termination

of employment is reinstatement to the same position or re-engagement to a

comparable position held prior to the said termination. Compensation is a

secondary cure and is only ordered where, in the discretion of the

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Court or Tribunal Court, it is held that reinstatement or re-

engagement is not appropriate. Reinstatement has always been

awarded at the discretion of the Labour Tribunal or Court and such

discretion has to be exercised judicially taking into consideration all the

circumstances of the case" [Emphasis is mine]

18] Instant case, the Learned L.T. President has not mentioned why he has

refused reinstatement in his judgment. He has stated that "මී ලඟට මා විසින් සලකා

බැලිය යුතුව ඇත්තත් ඉල්ලුම්කරුට තමම විනිශ්චධිකාරතයන් හිමිවිය යුතු සහනය කුමක්ද යන්න

පිළිබඳවයි.ඒ අනුව සලකාබලන විට ඉල්ලුම්කරුට නැවත තසේවය ලබාදීම තවනුවට ඔහුතේ මාසික වැටුප

වන ......." Apart from these words, nothing has mentioned regarding

reinstatement. If the learned L.T. President is reluctant to award

reinstatementhe should give reasons to that effect. I hold that Tribunal had

failed to give any reason for refusing the reinstatement of the Applicant. Thus

that decision is untenable. It is mindful although the Reinstatement has always

been awarded at the discretion of the Labour Tribunal; such discretion has to

be exercised judicially taking into consideration all the circumstances of the

case. It is seems to me the Learned L.T. President has failed to evaluate the

plight of the Applicant. The Applicant was although terminated with effect from

30th June 2011; the Bank has allowed him to work till 13th of September 2011.

The Respondent did not deny that the Applicant has worked during this period

at Ampara Commercial Bank Branch. The applicant worked as Office Assistant

and this employment was his bread and butter. It is my considered view no one

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should be denied reinstatement unless it is not appropriate, practical or viable.

I therefore hold that Tribunal has failed to act judicially when considering

proper redress to the Applicant. Thus, there is no issue of awarding

compensation. Awarding Compensation should not be panacea for everything.

If circumstances demand reinstatement must be awarded as a rule. In line with

above legal parameter, I hold the Applicant's Appeal must succeed on above

reasons. Thus EP/ HC/AMP/LT/APP//404/2014 appeal is allowed.

19] Result of these appeals are as follows;

a) EP/ HC/AMP/LT/APP//404/2014 appeal is allowed. I hold that

the Applicant Appellant's service to be treated as intact from the

inception of his work as Office assistant that is 01st April 2009 till

the date of this judgment. The Applicant is to be reinstated By the

Respondent Bank as Office Assistant in Ampara Branch forthwith

full back wages and allowances if any, in accordance with his last

drawn salary. Since the Applicant will be getting back wages and

reinstatement, I quash the part of compensation granted by the

Learned L.T. President order dated 01St July 2014. The applicant

entitled to get Rs 50,000 cost of this litigation summarily assessed.

Judgment of this Court is to be conveyed to the Respondent Bank

through the Labour Tribunal of Ampara forthwith.

b) EP/ HC/AMP/LT/APP//405/2014 appeal is dismissed with cost.

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20] This is uniform judgment for both appeals. Registrar of this Court is

directed to remit original case record to the Labour Tribunal Ampara forthwith.

Sumudu Premachandra

High Court Judge -Ampara