011-SLLR-SLLR-2004-V-1-CEYLON-PLANTERS-SOCIETYON-BEHALF-OF-WEERASINGHE-v.-BOGAWANTHALAWA-PLANTA.pdf
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CEYLON PLANTERS’ SOCIETY(ON BEHALF OF WEERASINGHE)v
BOGAWANTHALAWA PLANTATIONS LIMITEDSUPREME COURTFERNANDO, J.
ISMAIL, J. ANDWEERASURIYA, J.
SC APPEAL NO 82/2002HCA LT 88/9616 OCTOBER, 2003
Industrial Dispute – Termination of services – Unjustified termination -Guidelines for determining quantum of compensation.
The workman was the Superintendent of an estate. He was interdictedon 23.10.92. After a domestic inquiry his services were terminated with effectfrom 23.10.92.
The appellant, a trade union of which the workman was a member, com-plained to the Labour Tribunal. While the application was pending the work-man reached the age of 55 (the optional date of retirement) on 09.02.94. On08.08.96 the tribunal held that the termination of services was both mala fideand unjustified and awarded compensation for 50 months from 23.10.92 to31.12.96, loss of earnings, viz. up to the date of the order of the tribunal and
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for a reasonable period thereafter (which was nearly 5 months) to enable himto obtain other employment. The workman had an unblemished record of 31years of service in the plantation sector.
Held:
Compensation awarded, though generous, cannot be regarded as excessive.Per Fernando,J
‘To compensate the Superintendent means to put him in the position inwhich he would have been but for the wrongful termination. Had therespondent refrained from dismissing him and allowed him to retire on
09.02.94 he could well have appliedfor other employment, and could
well have commenced such fresh employment soon after retirement. Thewrongful termination denied him that opportunity, and for that he must becompensated.”
Case referred to:
1. Jayasuriya v Sri Lanka State Plantations Corporation (1995) 2 Sri LR 379.APPEAL from the judgment of the High Court.
Indra Ladduwahetty for appellant.
LC.Seneviratne. P.C.with Ranil Prematilake for respondent.
Cur.adv.vult
October 31, 2003
FERNANDO, J.The question of law in this appeal is whether, in computing 1compensation for a mala fide and unjustified termination of ser-vice, a Labour Tribunal is entitled to take into account the work-man's loss of earnings only during the period between terminationand his due date of retirement, or even for a subsequent period.
The Superintendent of an estate was employed by therespondent-appellant- respondent (“the respondent") under acontract which gave the respondent the right to retire him onreaching the age of 55 years (“the optional date of retirement”)and the discretion to grant him annual extensions thereafter. He iowas interdicted on 23.10.92. After a domestic inquiry at which hewas found guilty of certain charges, his services were terminatedon 14.06.93 with effect from 23.10.92. A Labour Tribunal applica-tion was filed on his behalf by the applicant-respondent-appellant
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(“the appellant”), a trade union of which he was a member. Whilethat application was pending he reached the age of 55 years on09.02.94. On 08.08.96 the Tribunal held that the termination of hisservices was both mala fide and unjustified; that he had beenemployed in the plantation sector for 31 years, and had a verysatisfactory and, indeed, unblemished record of service; that if hisservices had not been prematurely terminated, his record of ser-vice would probably have enabled him to obtain extensions ofservice after the age of 55 years; and that the manner of termi-nation of his services was such as to prevent him from obtainingalternative employment in the plantation sector until terminationwas set aside by the Tribunal. The Tribunal assessed the value ofhis employment benefits, including salary, allowances andperquisites, at Rs 44,402/- per month, and awarded him compen-sation for 50 months (for the period 23.10.92 to 31.12.1996),amounting to Rs 2,220,100/-.
Against that order the respondent appealed to the High Court,which by its order dated 31.07.2002 affirmed the findings of theTribunal as to the termination and the value of employment bene-fits, but held that it was “prudent to assume that considering theconduct of the [Superintendent] in all matters and circumstancesrelating to this case the [respondent] will decide not to extend hiscontract beyond the age of retirement”, and that “the learnedPresident erred in law in granting compensation beyond theemployee's age of retirement”. The order of the Tribunal wasaccordingly varied by restricting compensation to the period23.10.92 to 9.2.94.
In coming to the conclusion that the Superintendent would, butfor his premature termination, probably have obtained extensionsof service, the learned President relied on a most unusual circum-stance. There was clear evidence that in May 1995, during the pen-dency of the proceedings, the Chief Executive Officer of therespondent informed a Presidential Commission of Inquiry (intoGrievances of Employees of Peoplised Ventures) that a freshinquiry would be held, and if the Superintendent was exoneratedthe respondent would try to give him employment if there was apossible vacancy and that if no suitable employment was available,it would consider granting him some relief. The Superintendent
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agreed. The parties agreed that the inquiry should be held by anindependent retired judicial officer, and they agreed on Mr SheltonPerera. The learned President regarded this undertaking as evi-dence that if the Superintendent was exonerated the respondentwas willing, despite the lapse of more than one year after the dateof his optional retirement, to give him employment – in effect, thatthe respondent would have been willing to grant him extensions of
service even after his optional age of retirement. According to theappellant, Mr Perera's report had been submitted to the respondentbefore the Labour Tribunal order, but had not been produced by therespondent. According to the respondent, that report had been sub-mitted only after that order. Be that as it may, it was produced in thecourse of the High Court proceedings, and in view of the agreementof parties it would not be equitable to exclude it from considerationin determining the relief due.
It is necessary to refer to the charges against theSuperintendent, because learned President's Counsel for therespondent had strenuously submitted to the High Court that hewas responsible for discipline on the estate, and was holding aposition of trust and confidence; that he was guilty of falsifyingentries in the running chart of his official vehicle; that he hadbetrayed the trust reposed in him; and that the respondent could nolonger have any confidence in him. He urged that even though therespondent had not challenged the concurrent findings of theLabour Tribunal and the High Court that the termination was unjus-tified, the findings in respect of those charges were relevant to thelikely refusal of extensions, and therefore to the assessment ofcompensation.
The substance of the two charges against the Superintendentwas that he had mis-stated the extent of his official travel for August1992, and failed to submit to the internal auditor on 16.10.92 therunning charts for the months of July and September 1992. Therewas evidence that it was the driver's responsibility to maintain therunning charts; that the Superintendent was required to counter-sign in confirmation of their accuracy; that the driver had fallen illand left in October; that the mileage for a particular official trip inAugust had been overstated by 49 kms; that even if that excessreflected private travel incorrectly recorded as official, and was
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added to the Superintendent's private travel for that month, his per-mitted allowance for private travel would not have been exceeded;and that in any event any loss caused by excess private travelcould have been recovered from him.
The learned High Court Judge summarised the position in hisjudgment: that the learned President's finding in no way amounts toa finding of falsification; that making an incorrect entry and falsifi-cation are altogether different; that there was no finding of anydeliberate act of making false entries; that there was no falsificationof entries in the running chart; and that although the 100Superintendent had the responsibility of satisfying himself that theentries were correct, yet the circumstances were not so serious asto warrant termination.
In his report Mr Shelton Perera exonerated theSuperintendent. Not only did he hold that the Superintendent wasnot guilty of any of the charges, but he also observed that thecharges “seem to have been dug out to get rid of him by hook or by
crook”.
The principal question is whether compensation should berestricted to the period prior to the optional date of retirement. no
In Jayasuriya v Sri Lanka State Plantations Corporation,WAmerasinghe, J. stated:
“The usual date of retirement, and if there be evidence to showthat it was probable that his date of retirement would be extended,then that extended date of retirement would, I think, represent theoutside limit. The date of retirement has been taken in some deci-sions to be the relevant date up to which the computation of futurelosses have been made…. It is a good starting point. However, asVythialingam, J, pointed out in Ceylon Transport Board v Wijeratne,[1975] 77 NLR 481, the usual date of retirement ought not to be 120‘mechanically’ adopted …. because of the risks and vicissitudes ofan employee's life…. ‘He may die. His services may be terminatedfor misconduct or on account of retrenchment. The business maycease to exist or close down’….
There is no evidence in this case that the petitioner is in sucha state of poor health that he is not likely to live up to the date of
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normal retirement of 55 years, which is well below the nationalexpectation of life. I therefore assume that he would live up to theage of retirement, but I do not take any period beyond that age intoaccount, for there is no evidence with regard to probable exten-sions, of service.” [emphasis added]
In this case the learned President was entitled to treat theagreement reached before the Presidential Commission as suffi-cient evidence that extensions of service were probable. The awardof compensation up to 31.12.96 pre-supposes-extensions of ser-vice up to the age of 57 years and 10 months, which is by no meansunreasonable.
However, there is another circumstance which supports theTribunal's assessment of compensation, which did not arise forconsideration in Jayasuriya's case: whether in exceptional circum-stances the “outside limit” could be a date even after the mandato-ry date of retirement. The Tribunal held that the manner of termi-nation was such that the Superintendent could not have obtainedother employment in the plantation sector until his name wascleared. The difficulty which a workman faces in mitigating his loss,particularly in the plantation sector, was discussed byAmerasinghe, J. (at page 412).
Even after his mandatory age of retirement, when no furtherextensions are permissible, an employee is nevertheless entitled toobtain employment under another employer. It is by no meansuncommon for an employee to commence a fresh employmentafter retirement, and to continue in that employment for another fiveor even ten years. If, however, his services are terminated malafide, he would generally be /unable to obtain suitable employmentelsewhere until his name is cleared. The consequent loss of earn-ings would also be attributable to the wrongful termination, andwould be recoverable. If not, serious anomalies and injusticeswould result. Thus if a workman is dismissed one month before hismandatory date of retirement, upon false charges involving moralturpitude, it would be inequitable to restrict compensation to onemonth's salary, i.e. up to the date of retirement. His loss is muchgreater. But for that wrongful termination, he could have com-menced a new employment after retirement. The resultant loss ofearnings is the direct and foreseeable consequence of the wrong-
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ful termination, regardless of his date of mandatory retirement. Inthis case, too, the Superintendent was entitled to compensation forthe loss of earnings up to the date of the Labour Tribunal orderexonerating him, and for a reasonable period thereafter to enablehim to apply for and obtain other employment. To compensate theSuperintendent means to put him in the position in which he would 170have been but for the wrongful termination. Had the respondentrefrained from dismissing him, and allowed him to retire on 9.2.94,he could well have applied (even before his due date of retirement)for other employment, and could have commenced such freshemployment soon after retirement. The wrongful termination deniedhim that opportunity, and for that he must be compensated.
The learned President allowed compensation not only up tothe date of his order, but also for a period of nearly five monthsthereafter. That would cover the period needed for applications,interviews, and selection, and though generous, cannot be regard- isoed as excessively so.
I allow the appeal, set aside the order of the High Court, andaffirm the order of the Labour Tribunal. The appellant will be enti-tled to costs in a sum of Rs 25,000/-.
ISMAIL, J.-I agree.
WEERASURIYA, J.-I agree.
Appeal allowed.