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Details of tripartite agreement reached to pro-rate wages

The Employers’ Federation of Ceylon (EFC) released the submissions that were forwarded to the Minister of Skills Development, Employment and Labour Relations by the EFC on the 25th of April 2020, following consultations with representatives from key sectors.

According to EFC the submission was taken up for discussion on 27th March and 4th May before the Task force set up to look into the effects of the pandemic on employment related matters in Sri Lanka, that functions under the aegis of the Minister.

Finality was reached on the 4th May in respect to the payment of wages on a pro-rated basis, detailed in points 5 and 6 of the submissions; on the basis that there can be a distinction between the payment of wages in respect of employees who performed work and those who had to be ‘benched’ (without any work), EFC said in a letter released to all members.

“This arrangement aims at addressing situations where companies will not be able to bring in the entire compliment of the work force due to restrictions that have been imposed (on account of health concerns).”

According to the letter addressed to members, the agreement reached is as follows.

1. The scheme will be applied to pro-rate wages in respect of employees who cannot be deployed at work simultaneously due to health restrictions. Members are encouraged to rotate workers wherever possible and give as many opportunities for employees to resume work & supplement their livelihoods under this scheme.

2. Similarly, the scheme which is applicable to monthly paid employees in all sectors, will be limited in its application for the months of May and June 2020.

3. The Scheme is applicable to all sectors without exception. However, any employer who cannot afford to pay employees based on this scheme could make representations to the Commissioner General of Labour. The Secretariat remains ready to assist such members by taking up such matter on a priority basis.

4. Only employees who reported for duty or those who could not do so due to restrictions imposed by employers due to health reasons are eligible to be considered under this scheme.

Nonetheless, employees unable to report for work to due to restrictions imposed by the authorities, could also be considered under this scheme and payments made on the basis that they have been ‘benched’.

Employees who absent themselves from work despite being rostered and fail to provide acceptable reasons for their absence should be placed on no pay (in lieu of days of such absence).

Others who may provide satisfactory explanations, should be placed on leave, as appropriate.

5. According to the agreement reached, employers will apportion and pay wages for days worked based on the basic salary, and for the days not worked (days on the bench without any work) wages will be apportioned and paid either at the rate of 50% of the basic wage Or Rs 14,500/-, whichever is higher.

Step 1. a. To ascertain the daily rate at which employees who performed work should be paid the following method of calculation should be applied

b. Divide the Monthly basic salary by 30 / 26 days* (*method of division to ascertain the daily rate in your establishment should be applied)

c. Thereafter, to arrive at the salary to be paid for the days worked, multiply the daily rate by the number of days worked

Step 2. a. To ascertain the daily rate at which employees who were benched have to be remunerated, divide Half the Basic Salary OR Rs 14,500/-, whichever is higher, by 30 / 26 days* (*method of division to ascertain the daily rate as used in 1 (b.) above).

b. Thereafter, to arrive at the salary to be paid for the days not worked, multiply the daily rate by the number of days not worked.

Step 3. To ascertain the Monthly salary to be paid to an employee, add the figures finally arrived at (sum totals) as set out in item 1 (c.) & 2 (b.)

Example: Assuming an employee is offered 15 days of work and stays on the bench for 15 days.
Basic Salary – Rupees 30000 20000
Step 1 Daily Rate 30,000 / 30 1000 20000/30 666
Salary for the days worked 15000 9990
Step 2 Daily Rate 15,000/30 500 14500/30 483
Salary for the days not worked 7500 7250
Step 3 Total Salary for the month 22500 17240

Applied 30 days Higher rate applied

6. It was agreed that employers will consider the basic salary considered in pro-rating wages for the purpose of calculating gratuity.

7. As always, members are requested to make use of social dialogue tools at enterprise level to educate, discuss and thereafter implement this scheme. Establishments that have recognized unions as bargaining agents as well as instituted worker councils will be expected to engage with such bodies.

8. Though reported in the media, there was no understanding whatsoever that employers will not resort to terminations of employment. For the time being, such matters will have to be dealt with under existing laws.

9. It must be noted that though this scheme is an initial step, it is nonetheless a historic agreement since it’s a rare occasion in our history where all stakeholders agreed – at National Level- to ‘pro-rate’ wages. Importantly, it also paves the way to further discuss and solidify schemes such as ‘job sharing’ which we envisage to be very much part of our work routine in the months / years to come. Similarly, it also creates an environment for employees to get accustomed to apportioning of wages etc.

10. The secretariat has made arrangements to assist members to formulate new clauses to be inserted in letters of appointment / agreements to reflect these new terms as well as the requirement to re-visit terms and conditions of employment in case of situations that are beyond the control of both employers and employees – both man made and natural disasters, including pandemics.

11. The EFC will continue to pursue its endeavors to obtain further relief for its members at this critical yet important time in our history.

(Signed/ Kanishka Weerasinghe)
Director General
Encl: Submissions Dated 25th April 2020