• Closure comes after years of unprofitability: UK-based manufacturer
• Labour Min. confirms company will honour gratuity, EPF obligations
• Trade unions, Labour Dept. in talks to finalise redundancy process

Next Manufacturing Ltd. has agreed to fully compensate all 1,416 employees made redundant following the closure of its factory in the Katunayake Free Trade Zone (FTZ) and to honour all statutory dues including gratuity and Employees’ Provident Fund (EPF) payments, the Ministry of Labour reveals.

The compensation will be done according to the terms of the Termination of Employment of Workmen (Special Provisions) Act. 

Speaking to The Sunday Morning Business, Ministry of Labour Secretary S.M. Piyatissa stated that Next Manufacturing was bound to compensate all 1,416 employees made redundant in terms of the act, adding that the company had already expressed its intention to honour its obligations under the act.

He further stated that Next Manufacturing had also agreed to honour its obligations under the EPF Act and the Payment of Gratuity Act.

“They are bound to pay the employees all statutory payments. From what we know so far, they have agreed to honour all these payments,” Piyatissa said.

He added that discussions were ongoing at the Department of Labour between trade unions representing employees of the Next Manufacturing factory and the Commissioner General of Labour with regard to this issue.

He further stated that an application had been submitted by Next Manufacturing to the Commissioner General of Labour seeking approval to terminate the contracts of the employees of the factory, pursuant to the closing down of the same.

On Tuesday (20), the UK garment manufacturer Next Manufacturing Ltd., the supplier of clothing to Next PLC in the UK, announced that it would be shutting down its factory in the Katunayake FTZ owing to high operational costs.

In a statement, Next Manufacturing Director of Manufacturing David Reay said: “At the heart of this decision is the increasingly high operating cost of the Katunayake manufacturing plant. Sadly, the closure will result in 1,416 redundancies overall.”

“For some years now, the plant has been unprofitable and despite our considerable efforts to rectify the situation, we have been unable to make the factory economically viable,” his statement further noted.