The restructuring of the Ceylon Electricity Board (CEB), Sri Lanka’s largest State utility, has created a confrontation between Government authorities and employees, with the CEB Engineers’ Union (CEBEU) warning of potential violations of both the law and fundamental rights.
The controversy revolves around the proposed assignment/transfer of employees to newly formed successor companies under the Sri Lanka Electricity Act No.36 of 2024 (as amended) and the accelerated pace at which the Ministry of Energy is pushing to implement the transition.
Proposed restructuring
On 22 August, CEB General Manager Eng. W. Edussuriya issued Circular No.2025/GM/20/Pers, directing all divisions and branches to notify employees of their proposed placement in successor companies.
This instruction, based on a Ministry of Energy directive dated 21 August, stipulates that every CEB employee must receive an official letter informing them of their assignment by 26 August. The circular also includes sample notice formats and a list of which divisions will be moved to which successor entities.
The restructuring plan divides the utility into four main companies: Electricity Generation Lanka Ltd., which will absorb the Generation Division; National Transmission Network Service Provider Ltd., which will take on the Transmission Wired, Projects, and Assets Management Divisions; National System Operator Ltd., which will cover Transmission Non-Wired functions and the Chairman’s Office; and Electricity Distribution Lanka Ltd., which will handle the four Distribution Divisions along with Corporate Strategy, Finance, and other key units under the General Manager.
Far-reaching consequences
At first glance, the process appears to be a technical exercise in organisational unbundling. However, employees and unions argue that the move is not just an administrative reshuffle but a fundamental transformation of their employment contracts, with far-reaching consequences for job security, benefits, and professional futures.
The CEBEU has been at the forefront of challenging the process. In a detailed letter dated 24 August, addressed to Ministry of Energy Secretary Prof. K.T.M. Udayanga Hemapala, the union has accused the ministry of acting unlawfully and even in contempt of the Supreme Court’s explicit determinations on the matter.
“It is our considered view that your directive is, ex facie, in contravention of the Sri Lanka Electricity Act and constitutes contempt of the express determination of the Supreme Court,” the letter states.
The union’s argument rests on two pillars. First, it contends that the legal prerequisites for assigning employees to successor companies have not yet been satisfied. The law requires the formal establishment of these companies, complete with boards of directors, organisational structures, and defined roles, before any staff can be transferred.
Second, the union stresses that the notices being issued to employees fall far short of what the law demands. The template letter provided in Annex 1 of the General Manager’s circular has merely mentioned the name of the successor company but omits crucial details such as designation, specific duties, salary structure, promotional pathways, and even the physical location of work. Without this information, employees cannot make an informed choice about whether to accept the transfer or opt for the Voluntary Retirement Scheme (VRS).
The Supreme Court addressed this issue directly in its determinations on the 2024 Electricity Bill and the 2025 Amendment Bill. In both rulings, the court emphasised that employees’ rights under Articles 12(1) and 14(1)(g) of the Constitution cannot be curtailed by forcing them to make decisions without full knowledge of their new terms and conditions.
The court warned that while the legislation appeared to give employees a choice between transfer and retirement, in practice that choice was illusory if the details of the VRS were not disclosed in advance.
“Any other course of action would violate Articles 12(1) and 14(1)(g),” the court declared, affirming employees’ entitlement to terms no less favourable than those they currently enjoy.
Despite the allegations, Ministry Secretary and CEB Chairman Prof. Hemapala vehemently denied any wrongdoing. He asserted that both the ministry and the CEB had adhered strictly to all relevant rules and regulations in their operations.
Eroding worker protections
For employees on the ground, the issue is not just about constitutional principles but about their livelihoods.
Many have spent decades working within the CEB, building careers with the expectation of stability, pensions, and union protections. The sudden announcement of transfer to private limited companies — regardless of whether they remain under State control — has generated widespread anxiety.
Workers in technical divisions worry about how their grades and seniority will be recognised in the new structures, while staff in administrative and finance units express concern about losing established career pathways.
For those approaching retirement, the lack of clarity around the VRS is particularly distressing. Employees fear they are being asked to sign away their rights without knowing what compensation or security they might receive.
The union has described the Government’s approach as “a devious misapplication of the determination of the Supreme Court, amounting to contempt of court”.
According to its legal advisers, issuing assignment letters before the publication of the VRS is unlawful. Moreover, by providing no substantive information on roles, responsibilities, or entitlements, the process denies employees the ability to make a reasoned choice.
“It merely identifies the successor company without providing any substantive information regarding the terms and conditions of employment such as position, responsibilities, seniority, or promotional pathways,” the union has noted.
This standoff also highlights deeper tensions over the direction of energy sector reform. Successive governments have floated the idea of unbundling the CEB, citing inefficiency and the need for financial restructuring. Proponents argue that creating separate generation, transmission, system operation, and distribution entities will make the sector more transparent and accountable, aligning with international models.
Senior engineers attached to the CEB, however, fear it is a prelude to privatisation, breaking up the public utility into parts that can eventually be sold off or handed to private investors. For many employees, the unbundling is less about efficiency and more about eroding worker protections and undermining one of the last major State-run enterprises.
Waiting in uncertainty
The timeline has added to the pressure. The General Manager’s circular required that all assignment letters be distributed by 26 August, just four days after the directive was issued, leaving little time for discussion or clarification. Employees have expressed frustration that such a momentous change is being rushed through without meaningful consultation.
“We are being forced into making a blind choice,” said one senior engineer, speaking on condition of anonymity. “If we don’t respond in two months, it will be assumed we accept the transfer, but how can anyone accept without knowing their designation, location, or salary?”
The Engineers’ Union has taken a firm stand. Its letter warns the Secretary to the Energy Ministry that if the process continues in its current form, the union will be compelled to initiate legal proceedings, including contempt of court action.
The letter has been copied to the President, the Minister of Energy, the Chairman of the CEB, and all members of the CEBEU.
In a separate advisory to its members, the union has instructed engineers to refrain from drafting, issuing, or signing any documentation related to the assignment process, warning that such actions could expose them to legal liability outside the union’s protection.
For now, employees across the CEB wait in uncertainty, caught between circulars and court rulings, directives and determinations, unsure whether their careers will continue under familiar protections or in uncharted corporate structures.