Rapport où le comité demande à être informé de l’évolution de la situation - Rapport No. 332, Novembre 2003

Cas no 2255 (Sri Lanka) - Date de la plainte: 18-MARS -03 - Clos

Allegations: The complainant alleges that the Guidelines for the Formation and Operation of Employees’ Councils issued by the Board of Investment (BOI) which is the overseeing public authority in free trade zones, hamper the creation of free and independent trade unions and prevent them from exercising the right to bargain collectively for five reasons: (a) they require trade unions and employees’ councils to compete for collective bargaining rights; (b) they do not guarantee free elections for employees’ councils; (c) they do not safeguard the independence of employees’ councils vis-à-vis the employer; (d) they provide employees’ councils with favourable treatment which could influence the choice of workers as to which organization they wish to represent them; and (e) they set up a special regime for the resolution of industrial disputes under the authority of the BOI instead of the competent labour authorities

1. 915. In a communication dated 18 March 2003, the International Textile, Garment and Leather Workers’ Federation (ITGLWF) presented on behalf of its affiliate, the Ceylon Mercantile Industrial and General Workers’ Union (CMU), a complaint of violations of freedom of association against the Government of Sri Lanka.
2. 916. The Government furnished its observations in communications dated 10 May and 20 October 2003.
3. 917. Sri Lanka has ratified the Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87), the Right to Organize and Collective Bargaining Convention, 1949 (No. 98), and the Workers’ Representatives Convention, 1971 (No. 135).

A. The complainant’s allegations

1. 918. In its communication dated 18 March 2003, the International Textile, Garment and Leather Workers’ Federation (ITGLWF) alleges that its affiliate, Ceylon Mercantile Industrial and General Workers’ Union (CMU) and other unions in the textiles sector, have found it virtually impossible to organize and secure recognition in Sri Lanka’s free trade zones (FTZs) because, among other things, employers commonly resort to the creation of “employees councils” as promoted by the Board of Investment (BOI), the overseeing authority of Sri Lanka’s FTZs, as a means of hampering the creation of free and independent trade unions and preventing them from exercising the right to bargain collectively.
2. 919. The complainant alleges that in, June 2002, the BOI went further still with the publication of a set of revised standards, the “Guidelines for the Formation and Operation of Employees’ Councils”, many provisions of which blatantly undermine freedom of association and the right to collective bargaining.
3. 920. In particular, the complainant states that employees’ councils are under the control of the BOI which has an active participation in all aspects of the activities of employees’ councils. For instance, under the revised BOI guidelines, when an employees’ council is set up for the first time, it is the BOI that calls for and receives nominations, arranges the election and convenes the first meeting of the elected council. The BOI is empowered to hold an election if the elected council fails to hold an election within one month of the expiry of its term of office. Moreover, the councils must be registered with the BOI and subsequent changes must be notified to the BOI (BOI Guidelines, sections 5 and 7).
4. 921. The complainant further states that employees’ councils are not statutorily provided bodies and lack the minimum safeguards to which trade unions are entitled under the Trade Unions Ordinance. Thus, they are not regulated by a legal instrument but solely by the BOI. However, the BOI is a body responsible for promoting, encouraging and regulating investment and clearly has no legitimate mandate to deal with industrial relations.
5. 922. The complainant relies on Article 3 of Convention No. 87 [as well as paras. 353, 354 and 348 of the Digest of decisions and principles of the Freedom of Association Committee, 4th edition, 1996] in order to suggest that the well-established principle according to which authorities should refrain from interfering with the right of workers’ organizations to elect their own representatives must obviously also apply to associations such as the BOI so that restraint would be required on their behalf. The complainant also suggests on the basis of paragraph 367 of the Digest of decisions and principles of the Freedom of Association Committee that the Committee has explicitly extended the right to elect representatives in full freedom to the election of representatives in works councils.
6. 923. According to the complainant, there are a number of provisions in the Guidelines that undermine the independence of the elected councils and their ability effectively to promote the interests of workers, organize their activities and formulate their own programmes. For instance, section 12 of the Guidelines provides that the procedure for the conduct of meetings shall be determined by the employer in consultation with the council. Moreover, section 13 of the Guidelines provides that the employer and the council shall refrain from doing anything likely to impair the efficiency and productivity of the enterprise. The complainant therefore contends that the BOI has no legitimate mandate to regulate industrial relations, that the fact that the employees’ councils are not freely elected means that they are not “elected representatives”, as defined in Convention No. 135, and that the control exerted by the BOI prevents the employees’ councils from acting in full freedom to organize their activities, formulate their programmes and promote effectively the interests of their members.
7. 924. The complainant alleges moreover that the BOI manual clearly favours employees’ councils over trade unions. For instance, the employer must allow a period of up to two hours for council meetings at least once a month, and must provide the necessary premises and facilities for the conduct of the affairs of the council. The complainant alleges that such favouritism influences the choice of workers as to whether they intend to join an employees’ council or a union. According to the complainant, such favouritism is particularly serious given that unions and employees’ councils are in a position of having to compete for bargaining rights.
8. 925. Moreover, the complainant states that the 1999 Amendment to the Industrial Disputes Act provides that an employer must recognize a union as the collective bargaining agent if 40 per cent of employees are members. The BOI Guidelines say that, if a union represents 40 per cent of the workforce, then it is the union – not the employees’ council – that represents workers in collective bargaining. However, if the union does not meet that minimum requirement, then the council can become the collective bargaining agent if authorized by at least 40 per cent of the workforce (Guidelines, clause 10). The complainant contends that putting unions and workers’ councils in a position where they must compete for bargaining rights is a breach of freedom of association. According to the complainant, this is all the more so as employees’ councils do not meet the criteria set down in Article 3 of Convention No. 135. The complainant also recalls that Recommendation No. 91 refers to collective agreements between employers and the duly elected and authorized representatives of workers in the absence of trade unions. The BOI seems to be wrongly equating, according to the complainant, the absence of a trade union with the absence of a trade union which represents 40 per cent of the workforce.
9. 926. The complainant draws attention to the provisions of Conventions Nos. 135 and 154 according to which, when there exist in the workplace both trade union representatives and elected representatives, appropriate measures must be taken to ensure that the existence of elected representatives is not used to undermine the position of the trade unions concerned. The complainant further allege that these safeguards clearly do not exist in this situation. In determining the level of representativity, the BOI is virtually equating unions and employees’ councils. In practice therefore, a union representing 39 per cent of the workforce would lose the right to bargain collectively to an employees’ council representing 40 per cent of the workers. Unions would only be favoured if both a union and an employees’ council were to represent 40 per cent of the workforce, in which case bargaining rights would be granted to the union. Moreover, as indicated previously, if a union is forced to compete with the employees’ council for bargaining rights, then it is clearly at a disadvantage in view of the favourable treatment given to the councils, which could influence the choice of workers as to which organization they wish to represent them. The complainant further emphasizes the importance of worker representatives being independent for the conduct of collective bargaining.
10. 927. Finally, the complainant alleges that the dispute resolution mechanism for matters taken up by the employees’ council is a further cause for concern, as section 11 of the Guidelines provides the following: “Any matters discussed between the council and the employer but not resolved in a period of 30 days shall be taken up by the council with the Department of Industrial Relations of the BOI for settlement in accordance with the Disputes Settlement Procedure outlined in the Labour Standards and Employment Relations Manual.”
11. 928. The complainant concludes by stating that the provisions relating to collective bargaining rights are contrary to the principle of freedom of association and that, by allowing such guidelines to exist, the Government of Sri Lanka is failing in its duty to encourage and promote the full development and utilization of machinery for voluntary negotiation between employers or employers’ organizations and workers’ organizations.

B. The Government’s replies

1. 929. In its communication dated 10 May 2003, the Government provides, first, general information on the background of the allegations and, second, a specific reply on each point raised by the complainant.
2. 930. The Government states that the current BOI Manual on Labour Standards and Employment Relations and the BOI Guidelines on Employees’ Councils were prepared having regard, inter alia, to the recommendations of two tripartite workshops on the implementation of Conventions Nos. 87 and 98 held in January 2001 and May 2002. The second tripartite workshop made substantive progress concerning the application of Conventions Nos. 87 and 98 in the free trade zones and recommended, inter alia, that the BOI Guidelines be brought into conformity with ILO Conventions Nos. 87 and 98. The Government states that the proposal to confer the right to collective bargaining and to settle collective disputes to employees’ councils emanated from the recommendations of this tripartite workshop which also had regard to a research study carried out by two consultants appointed for that purpose by the ILO Office in Colombo. It states moreover that, prior to their adoption, the BOI Manual and Guidelines were placed for discussion before the tripartite steering committee and the National Labour Advisory Council (NLAC), which acquiesced in the proposals. The Ceylon Mercantile Industrial and General Workers’ Union (CMU), on behalf of which the complaint has been made, was one of the trade unions that participated in the tripartite workshop, the tripartite steering committee and the NLAC and suggested that the proposals be noted with the expectation that they would be effectively implemented.
3. 931. The Government then provides responses to the specific issues raised in the complaint.
   • Right of employees’ councils to engage
   • in collective bargaining
4. 932. The Government states that the BOI Guidelines were amended, taking into account the provisions of Conventions Nos. 98, 135 and 154. The Government states that employees’ councils consisting of elected representatives within the meaning of Convention No. 135 have been operating in enterprises falling under the authority of the BOI, including free trade zone (FTZ) enterprises, since 1994. The Industrial Disputes Act, Chapter 131, section 5, recognizes the right to bargain collectively and to enter into collective agreements, not only to trade unions but also to non-unionized workers. Section 48 of the Industrial Disputes Act enables non-unionized workers to be a party to an industrial dispute whether or not there is a trade union in the enterprise. Section 46 of the Act, read in conjunction with section 38(2) of the Industrial Disputes Regulations, 1958, provide that, for the purpose of representation of non-unionized workers in collective bargaining and industrial disputes proceedings, the affected workers are required to nominate and authorize one-five representatives, depending on the total number of the workforce. The Government states that the provisions of the Industrial Disputes Act, as regards bargaining rights of non-unionized workers in a workplace, whether or not there is a trade union in that workplace, are in conformity with the provisions of Convention No. 154 (Article 3). The bargaining rights of non-unionized workers are not restricted only to a workplace where there are no representative trade unions, as is the case under Recommendation No. 91. On the contrary, the BOI Manual and Guidelines restrict the right of non-unionized workers to bargain collectively only in the absence of a “representative” trade union in the workplace.
   • Validity of elections to employees’ councils
5. 933. As to the validity of the election of members to employees’ councils, the Government states that, according to paragraph 5 of the BOI Guidelines on Employees’ Councils, elections are held through secret ballot without any influence or interference from the employers or their representatives. The Government states that the paragraphs of the Digest of decisions and principles of the Freedom of Association Committee referred to by the complainant are intended for purposes of trade union elections according to Convention No. 87 and have no direct relevance to elections of employees’ council members who are deemed to be “elected representatives” within the meaning of Convention No. 135. The Government further notes that the BOI plays the role of a facilitator in establishing employees’ councils. Elections for the establishment of the first council in an enterprise will be conducted by an electoral board consisting of BOI Industrial Relations Department representatives. Subsequent elections to the council are to be conducted by an electoral board constituted by the council itself. The BOI representatives will be present at the subsequent elections as observers to ensure that elections are conducted properly and fairly. Apart from this, the BOI has no role to play in the election of the council or the conduct of its business. The nominations of candidates are made voluntarily by the workers, as in any trade union election and elections are conducted by secret ballot where the management representatives have neither a role to play nor the right to be present at the time of elections. The Government cites an independent study conducted by a research team appointed by the ILO Office in Colombo as regards election of members to employees’ councils: “All those responding have stated the workers nominated worker representatives to workers’ councils and 17 of the 21 responses have indicated that the worker representatives are elected by secret ballot. To that extent, the actual election of representatives by employees appears to be satisfactory.”
   • Favouritism towards employees’ councils
6. 934. The Government states that the provision of facilities for the conduct of the affairs of the council, time off for attending council meetings, etc., do not constitute favouritism towards employees’ councils over trade unions, but rather mere facilities which an employer is required to provide to elected representatives under Convention No. 135. Hence, according to the Government, the allegation that the BOI Manual favours employees’ councils over trade unions is baseless and without substance.
   • Requirement of 40 per cent representativity
7. 935. The Government states that the Industrial Disputes Act requires 40 per cent representativity for trade unions to bargain collectively. The BOI Manual makes the requirement of 40 per cent representativity applicable to both trade unions and employees’ councils. Both Convention No. 154 and the Industrial Disputes Act enable a trade union and non-unionized workers in a workplace to bargain collectively and compete with each other. The BOI Manual favours trade unions over employees’ councils by recognizing the right of representative trade unions to bargain collectively and denying such right to employees’ councils where both are representative. According to the Government, there is, therefore, no breach of freedom of association involved in requiring 40 per cent representativity for collective bargaining purposes for both trade unions and non-unionized workers.
   • Independence of worker representatives
8. 936. The Government states that members of employees’ councils are elected by secret ballot with no interference or involvement of the employer. Meetings of the councils are conducted by the council members according to their own programmes. They discuss their own issues and their independence in collective bargaining negotiations and disputes settlement is fully ensured. Meetings between the council and the management can be initiated by either party depending on the nature of issues involved, e.g. welfare matters, productivity issues.
   • Competence of the BOI to regulate industrial relations
9. 937. The Government states that the labour administration functions in Sri Lanka are vested in the Ministry of Labour and the Department of Labour, while labour law enforcement and industrial relations functions are the prerogative of the Commissioner-General of Labour with the right to delegate his authority to any of his officers or any named person or office. The BOI has not been delegated with such power or functions by the Commissioner-General. All labour administration functions in the FTZs are therefore carried out by the Commissioner-General of Labour and his officers.
10. 938. The Government also states that when the new BOI Bill was presented in Parliament last year (2002), one of the amendments sought to enable the BOI officers to handle conciliation matters and termination of employment cases. In view of these proposals the Labour Standards and Employment Relations Manual also made provisions for employees’ councils and employers to report disputes arising from direct negotiations to the BOI Industrial Relations Department for settlement. Since the proposed amendments were withdrawn in Parliament, the labour administration functions, including industrial relations functions, continue to be performed by the Commissioner-General of Labour. The relevant provisions of the Manual have never been applied and will be withdrawn with the next revision of the Manual. However, the Industrial Relations Department of the BOI promotes labour-management consultation and cooperation at the enterprise level and provides advisory services to both employers and workers on labour-related problems without exercising any statutory power or functions.
11. 939. In its communication dated 20 October 2003, the Government states that the BOI Guidelines have been recently amended and transmits a copy of the amended Guidelines and Manual. Section 11(v)(a) of the amended Guidelines and Section 15.2(f) of the Manual confirm the competence of the Commissioner-General of Labour with regard to industrial disputes.
    • Recognition of freedom of association
    • and collective bargaining rights
12. 940. The Government finally states that, among other things, the BOI Manual on Labour Standards and Employment Relations recognizes workers’ rights to form and join unions of their own choosing and to bargain collectively and enjoins employers to respect such rights of workers (paragraph (9)(I-iii) of the Manual). It further enjoins employers against engaging in unfair labour practices (paragraph (9)(iv) of the Manual). The Government adds that currently ten unions are operating in 37 enterprises in FTZs. Two of them have concluded collective agreements with the employers. As against this, out of the 250 other enterprises, only 149 have employees’ councils, but none of them have signed any collective agreements over the years. No new councils have been established after the introduction of the bargaining rights to employees’ councils.
13. 941. The Government concludes that the existence of employees’ councils does not in any way hinder or undermine the role of unions in collective bargaining. The councils only provide an alternative forum to workers, in the absence of a “representative” trade union, for purposes of improving their terms and conditions of employment.

C. The Committee’s conclusions

1. 942. The Committee observes that this case concerns allegations that the Guidelines for the Formation and Operation of Employees’ Councils issued by the Board of Investment which is the overseeing public authority in free trade zones (FTZs), hamper the creation of free and independent trade unions and prevent them from exercising the right to bargain collectively for five reasons: (a) they require trade unions and employees’ councils to compete for collective bargaining rights; (b) they do not guarantee free elections for employees’ councils; (c) they do not safeguard the independence of employees’ councils vis-à-vis the employer; (d) they provide employees’ councils with favourable treatment which could influence the choice of workers as to which organization they wish to represent them; and (e) they set up a special regime for the resolution of industrial disputes under the authority of the BOI instead of the competent labour authorities. The relevant extracts of the BOI Guidelines can be found in Appendix I.
   • Right of employees’ councils to engage in collective bargaining and requirement of 40 per cent representativity
2. 943. The Committee observes that both the complainant and the Government agree that the combined provisions of the Industrial Disputes Act and the BOI Guidelines provide that trade unions and employees’ councils have to compete for collective bargaining rights in FTZ enterprises. Either one can become the bargaining agent if it represents 40 per cent of the employees. If however both a union and an employees’ council were to represent 40 per cent of the workforce, bargaining rights would be granted to the union. While, according to the complainant, putting unions and employees’ councils in a position where they have to compete for bargaining rights is a breach of freedom of association, especially as there are no safeguards concerning the independence of employees’ councils, the Government considers that the recognition of bargaining rights to both trade unions and elected representatives is in conformity with Convention No. 154.
3. 944. The Committee recalls that Article 3 of Convention No. 154 provides that the extent to which the term “collective bargaining” shall also extend to negotiations with elected representatives shall be determined by national law or practice, where such national law or practice recognizes the existence of elected representatives. The Committee also recalls that the Workers’ Representatives Convention, 1971 (No. 135), and the Collective Bargaining Convention, 1981 (No. 154), contain explicit provisions guaranteeing that, where there exist in the same undertaking both trade union representatives and elected representatives, appropriate measures are to be taken to ensure that the existence of elected representatives in an enterprise is not used to undermine the position of the trade unions concerned [see Digest of decisions and principles of the Freedom of Association Committee, 4th edition, 1996, para. 787]. Thus, the Committee considers that there is no breach of principles concerning collective bargaining in enabling both trade unions and elected representatives to engage in collective bargaining as long as adequate safeguards are in place so that the existence of elected representatives is not used to undermine the position of trade unions.
4. 945. The Committee notes in relation to the above that, according to the statistical information provided by the Government, only two collective agreements have been signed in the 37 enterprises in which trade unions have been established, out of 287 enterprises operating in FTZs. Moreover, while 149 enterprises in FTZs have employees’ councils, not one has signed a collective agreement. The Committee recalls that, according to Convention No. 98, ratified by Sri Lanka, measures appropriate to national conditions should be taken to encourage and promote the full development and utilization of machinery for voluntary negotiation between employers or employers’ organizations and workers’ organizations, with a view to the regulation of terms and conditions of employment by means of collective agreements [see Digest, op. cit, para. 781]. Taking into account that only two collective agreements have been concluded in FTZs, the Committee requests the Government to take measures with a view to promoting collective bargaining in FTZs in conformity with Convention No. 98 and considering that the 40 per cent rule is too restrictive, to amend this requirement taking into account the views of the parties. The Committee requests to be kept informed in this respect.
   • Validity of elections to employees’ councils
5. 946. The Committee notes that the Guidelines authorize the BOI officers to organize the first elections for the creation of an employee’s council (section 5(i)) and subsequent elections if the employees’ council fails to do so within one month from the expiration of its term of office (section 5(v)). Moreover, the Guidelines provide that the BOI officers will be present at elections as observers to ensure that they are conducted properly and fairly (section 5(iii)). The Committee notes that the complainant contests the validity of elections to employees’ councils and claims that the authority granted to the BOI amounts to interference. The Committee notes that the Government rejects this allegation and emphasizes that the candidates are nominated by the workers, and the elections are conducted by secret ballot while the BOI has the role of a facilitator.
6. 947. The Committee considers that the calling of a first election for employees’ councils by the authorities is not contrary to freedom of association principles. However, the presence of public officials from the BOI, which is the overseeing authority of FTZs, during such elections, even with a role of facilitator or observer, is contrary to the principle of the free election of worker representatives embodied in Article 3 of Convention No. 135, ratified by Sri Lanka. The Committee stresses that, since the creation of works councils and councils of employers can constitute a preliminary step towards the setting up of independent and freely established workers’ and employers’ organizations, all official positions in such councils should, without exception, be occupied by persons who are freely elected by the workers or employers concerned [see Digest, op. cit., para. 367]. Moreover, the Committee emphasizes that, where the BOI calls for a first election of an employees’ council, the organization of elections should take place in close consultation with the parties concerned. The Committee requests the Government to take all necessary steps to amend section 5(i), (iii) and (v) of the BOI Guidelines so as to ensure that elections to employees’ councils are carried out in the presence of independent persons and only where requested by both parties, and that the first elections are organized in close consultation with all parties concerned. The Committee requests to be kept informed of steps taken in this respect.
   • Independence of employees’ councils
7. 948. The Committee notes that section 12 of the BOI Guidelines provides that the procedure for the conduct of meetings between the employer and the employees’ council shall be determined by the employer, in consultation with the council, and that the meetings shall be convened by the employer. The Committee notes that the complainant contests the conformity of this provision with freedom of association principles because, in its view, it compromises the independent functioning of employees’ councils, thereby hampering the development of independent trade unions in FTZ enterprises. The Committee notes that, according to the Government, the independence of employees’ councils is fully ensured and meetings are convened by either party depending on the subject of the meeting. The Committee considers that the procedure applicable to meetings between the employer and the elected representatives should be determined by common agreement between the parties and therefore finds that the provisions of section 12 provide the employer with a disproportionate amount of discretion in this respect. The Committee requests the Government to take all necessary measures to amend section 12 of the BOI Guidelines so as to ensure that the procedure for the conduct of meetings between the employer and elected representatives is determined by common agreement between the parties, and to keep it informed in this respect.
8. 949. The Committee also notes that section 13 of the BOI Guidelines establishes an obligation on the part of employees’ councils to refrain from doing anything that might impair the efficiency and productivity of the enterprise. The Committee notes that the complainant objects to this provision because in its view, it undermines the ability of the employees’ council to effectively promote the interests of workers, organize its activities and formulate its own programmes, thereby obstructing the development of a genuine negotiations framework in FTZ enterprises. The Committee notes that the Government has not addressed this issue in its response. As stated in the past with respect to measures adopted by a government as part of a stabilization policy, restrictions on collective bargaining based on productivity criteria are acceptable only as an exceptional measure which should be limited in time and scope. Thus, “as regards the obligation for future collective agreements to respect productivity criteria, the Committee recalled that, if, within the context of a stabilization policy, a government may consider for compelling reasons that wage rates cannot be fixed freely by collective bargaining (in the present case the fixing of wage scales excludes index-linking mechanisms and must be adjusted to increases in productivity), such a restriction should be imposed as an exceptional measure and only to the extent necessary, without exceeding a reasonable period and it should be accompanied by adequate safeguards to protect workers’ living standards” [see Digest, op. cit, para. 890].
9. 950. The Committee is of the view that it may be appropriate during voluntary negotiations for the parties to take into account productivity criteria among other elements. However, a prohibition of any action that might affect productivity in the future is contrary to the abovementioned principle, concerning free and voluntary collective bargaining. Moreover, the evolution of productivity in the future cannot always be determined with sufficient certainty. The Committee requests the Government to take all necessary measures to amend section 13 of the BOI Guidelines so as to ensure that the right of employees’ councils to engage in collective bargaining is not subject to a prohibition of any action that might affect productivity and to keep it informed in this respect.
   • Favouritism towards employees’ councils
10. 951. The Committee observes that, according to section 8(v) of the Guidelines, the employer is required to allow a period of up to two hours for council meetings at least once a month, and to provide the necessary premises and facilities for the conduct of the affairs of the council. The Committee notes that, according to the complainant, this provision clearly favours employees’ councils over trade unions and such favouritism influences the choice of workers as to whether they intend to join an employees’ council or a union. The Committee notes that, according to the Government, this provision does not constitute favouritism, but rather the granting to elected representatives of the facilities required by Convention No. 135.
11. 952. The Committee notes that, according to Article 2, paragraphs 1 and 3, of Convention No. 135, ratified by Sri Lanka, facilities in the undertaking shall be afforded to worker representatives, regardless of whether they are trade union representatives or elected representatives. The Committee considers that where facilities are provided only to elected representatives and not to trade union representatives, such treatment is discriminatory and provides an unfair advantage to employees’ councils over trade unions, thus influencing the choice of workers. The Committee requests the Government to take all necessary steps to amend section 8(v) of the BOI Guidelines so as to ensure that representative trade unions enjoy the same facilities in the undertaking as employees’ councils without discrimination. The Committee requests to be kept informed of developments in this respect.
    • Competence of the BOI over industrial relations
12. 953. The Committee notes that the complainant expressed concern at section 11 of the Guidelines which provided that any matter discussed between the employer and the council which had not been resolved in a period of 30 days should be taken up by the council with the BOI Department of Industrial Relations for settlement in accordance with the disputes settlement procedure outlined in the Labour Standards and Employment Relations Manual. The Committee notes that according to the complainant, the BOI has no legitimate mandate to deal with industrial relations, as it is a body responsible for promoting, encouraging and regulating investment. The Committee notes the clarifications provided by the Government in this respect. A new Bill was submitted to Parliament in 2002 to transfer the authority to deal with industrial disputes in FTZs from the Commissioner-General of Labour to the Industrial Relations Department of the BOI. However, the Bill was withdrawn and the labour administration functions continue to be performed by the Commissioner-General of Labour.
13. 954. The Committee takes note with interest of the recently amended text of the BOI Guidelines, which, in conjunction with the Labour Standards and Employment Relations Manual, confirm the competence of the Commissioner-General of Labour with regard to industrial disputes.
14. 955. The Committee draws the attention of the Committee of Experts on the Application of Conventions and Recommendations to the legislative aspects of this case and reminds the Government that it may avail itself of the technical assistance of the Office, if it so desires.

The Committee's recommendations

1. 956. In the light of its foregoing conclusions, the Committee requests the Governing Body to approve the following recommendations:
   • (a) Considering that certain provisions of the BOI Guidelines for the Formation and Operation of Employees’ Councils issued by the Board of Investment, which is the overseeing public authority in free trade zones (FTZs), are contrary to Conventions Nos. 87, 98 and 135, ratified by Sri Lanka, and the principles of free and voluntary collective bargaining, the Committee requests the Government to take all necessary measures to:
   • (i) amend section 5(ii), (iii) and (v) of the BOI Guidelines so as to ensure that elections to employees’ councils are carried out in the presence of independent persons and only where requested by both parties, and that the first elections are organized in close consultation with all parties concerned;
   • (ii) amend section 12 of the BOI Guidelines so as to ensure that the procedure for the conduct of meetings between the employer and elected representatives is determined by common agreement between the parties;
   • (iii) amend section 13 of the BOI Guidelines so as to ensure that the right of employees’ councils to engage in collective bargaining is not subject to a prohibition of any action that might affect productivity;
   • (iv) amend section 8(v) of the BOI Guidelines so as to ensure that representative trade unions enjoy the same facilities in the undertaking as employees’ councils without discrimination;
   • (b) The Committee requests the Government to keep it informed of the steps taken with regard to the amendments indicated above.
   • (c) Taking into account that only two collective agreements have been concluded in FTZs, the Committee requests the Government to take measures with a view to promoting collective bargaining in FTZ enterprises in conformity with Convention No. 98 and, considering that the 40 per cent rule is too restrictive, to amend this requirement taking into account the views of the parties. The Committee requests to be kept informed in this respect.
   • (d) The Committee draws the attention of the Committee of Experts on the Application of Conventions and Recommendations to the legislative aspects of this case.
   • (e) The Committee reminds the Government that it may avail itself of the technical assistance of the Office, if it so desires.

Appendix I

1. Guidelines for the formation and operation of employees’ councils
2. (extracts)
3. As a measure of promoting employees’ participation in decision-making on matters affecting them and labour-market consultation and cooperation on matters of mutual concern at the enterprise level, the Board of Investment (BOI) of Sri Lanka facilitates the establishment of employees’ councils consisting of elected representatives of employees in the BOI enterprises.
4. [...]
5. 2. The objects and functions of the council shall be –
6. (a) the regulation of relations between the employees and the management of the enterprise;
7. (b) the promotion and maintenance of effective participation of employees in the affairs of the enterprise through consultation and cooperation between the employees and the management of the enterprise on matters of mutual concern to both parties;
8. (c) the representation of employees in collective bargaining and settlement of industrial disputes;
9. (d) the contribution to the promotion and maintenance of industrial peace and improvement of efficiency and productivity in the enterprise;
10. (e) the promotion of the interest, welfare and well-being of the employees in the enterprise generally.
11. [...]
12. 5.
13. (i) Election to the council shall be through secret ballot of eligible employees in the enterprise, in case the number of nominations received exceeds the number of members to be elected.
14. (ii) Elections for the establishment of the first council shall be conducted by an electoral board consisting of BOI Industrial Relations Department representatives.
15. (iii) A three-member electoral board for conducting subsequent elections to the council shall be constituted by the council. The BOI Industrial Relations Department representatives will be present at the elections as observers to ensure that the elections are conducted properly and fairly.
16. (iv) When the term of office of the council expires, the electoral board constituted by the council shall hold elections to fill the positions in the council within a period of one month thereafter.
17. (v) Where the electoral board of a council fails to hold the election within one month of the date of expiry of the term of office of the council, the Industrial Relations Department of the BOI will take steps to hold the election.
18. (vi) The electoral board shall –
19. (a) call for and receive nominations;
20. (b) arrange, hold and supervise elections to the council;
21. (c) declare the results of the election;
22. (d) convene first meeting of the council presided by one of the members of the board for the election of a president, vice-president and secretary of the council.
23. (vii) Banners, posters or handbills are not to be exhibited or distributed or meetings held on the premises in the process of canvassing votes in connection with the election.
24. [...]
25. 8.
26. (i) The council shall elect a president, vice-president and a secretary at the first meeting convened by the electoral board.
27. (ii) The council shall meet as often as is necessary and at least once a month. The date, time and venue of the meeting shall be arranged by the president of the council.
28. (iii) The council will discuss any matters affecting the interests of the employees of the enterprise and decide on matters to be taken up for discussion with the employer. Decisions of the council will be by majority vote.
29. (iv) Minutes of all proceedings, including names of those present, matters discussed, decisions taken and voting, shall be maintained by the secretary. Minutes will be signed by the president, secretary and at least one other member of the council.
30. (v) The employer shall allow up to two (2) hours’ duty leave for a meeting of the council and provide the necessary premises and facilities for the conduct of the affairs of the council.
31. [...]
32. 12.1. The employer and the council shall meet as often as is necessary and at least once in every three months to –
33. (a) discuss matters of mutual concern to both parties; and
34. (b) review the employment relations situation at the enterprise with a view to ensuring the maintenance of industrial peace and improving efficiency and productivity.
35. 12.2. The meetings for the purposes referred to in the preceding subparagraph shall be convened by the employer.
36. 12.3. The procedure for the conduct of such meetings shall be determined by the employer, in consultation with the council.
37. 13.
38. (i) It shall be the duty of the employer and the council to work together in a spirit of mutual trust for the good of the enterprise and its employees.
39. (ii) The employer and the council shall refrain from doing anything likely to impair the efficiency and productivity of the enterprise.
40. [...]