Maximum compensation limit for employment termination to be doubled
January 12, 2021 02:23 pm
The Cabinet of Ministers has given the nod to amend the Maximum Compensation Limit of the Compensation Formula in effect under the Termination of Employment (Special Provisions) Act, No 45 of 1971.
Termination of Employment Act, as amended by Act No. 12 of 2003, was enacted for the purpose of providing relief at the termination of service of workers.
The Act introduces a formula for determining the amount of compensation to be paid to workers at the termination of employment.
Accordingly, the compensation determined on the basis of the period of service of the workers under the regulations imposed by the Minister of Labour.
However, the regulations include a provision that the amount of compensation calculated according to the formula above should not exceed Rs 1,250,000.
The government has observed that the workers with higher monthly salaries receive lower compensation in the event of job loss due to unfair dismissal of workers and closure of institutions.
Accordingly, the Cabinet of Ministers approved the proposal presented by Minister of Labour to increase the maximum amount of compensation from Rs 1,250,000 to Rs 2,500,000, the Government Information Department said.
In the meantime, the Cabinet of Ministers approved the extension of grace period for the payment of salaries to the private-sector employees until March 2021, in the wake of the outbreak of COVID-19 pandemic.
The decision on the matter was taken by the task force representing employees, trade unions, the National Labour Advisory Council, the Ministry of Labour and the Department of Labour, appointed to look into the payment of salaries to the private-sector employees during the virus outbreak.
The task force has accordingly decided to continue the following measures, which they had previously agreed to carry on until the 31st of December 2020:
- Continuation of occupation without any loss;
- Employing the staff members in institutions to work in proportionately under a shift system or another suitable procedure which is unable to employ all the workers in the institutions due to the need for maintaining social distance;
- Paying a more advantageous sum of money; either 50 percent of the basic salary or Rs 14,500 of the basic salary for the month in which they had paid the last salary to the employees of the institutions who were required to stay at home due to unemployment; and
- Payment of contributions by the employer to the Employees’ Provident Fund (EPF) and Employees’ Trust Fund (EPF) for such salaries.
In addition, taking into account the tourism industry that is in a dire situation due to the COVID-19 pandemic, the Cabinet of Ministers has granted approval for the resolution furnished by the Minister of Labour to extend the aforementioned concessions further up to the month of March this year, for the institutions relevant to the sector.
