By Anton Perera
Landmark Decision Highlights Employer-Employee Relationship and EPF Contributions
In a significant ruling by the Court of Appeal, the employment status of debt collectors in the case of Sri Lanka Telecom PLC versus the Commissioner General of Labour and others has been upheld. The court’s decision affirms that the relationship between Sri Lanka Telecom PLC and the debt collectors is that of employer and employee, rather than independent contractors, with implications for Employment Provident Fund (EPF) contributions.
The court acknowledged that determining whether an individual is an employee or an independent contractor requires careful consideration of the specific facts and circumstances of each case. While various tests have been formulated to aid in this determination, no definitive test exists, making it necessary to evaluate each situation individually.
The court stressed that the labels or terminology used in agreements are not binding and can often be misleading. It highlighted that clauses explicitly stating that an appointment does not create an employer-employee relationship, or using payment terms such as “allowance” or “commission” instead of “salary,” do not determine employment status.
In this particular case, the debt collectors were hired by Sri Lanka Telecom PLC to recover outstanding debts from customers. The job advertisements indicated that collectors would receive a commission of 2% on collections, along with reimbursement for travel expenses. However, the commission structure was later amended to offer different percentages based on the time of collection.
The court noted several factors that indicated an employer-employee relationship between Sri Lanka Telecom PLC and the debt collectors. These included the issuance of company identity cards, detailed instructions on how to perform the job, the imposition of discipline and termination clauses, the provision of training, and the authorization to represent the company before statutory bodies.
Additionally, the debt collectors were subject to a dress code, attendance register, and specific days of presence at the company. They received travel and phone allowances and participated in company events and welfare association activities. Service certificates were issued to them, attesting to their employment with the company.
The court dismissed the petitioner’s claim that no fair hearing was conducted by the Commissioner of Labour, noting that an inquiry had taken place with the participation of both parties. It stated that the petitioner’s expectation of presenting its case fully after submitting written submissions was unreasonable.
This landmark ruling reinforces the importance of assessing the totality of the employment relationship, beyond the use of specific terms or labels. It also highlights the significance of EPF contributions and the obligations of employers to provide benefits to their employees. The decision sets a precedent for similar cases and emphasizes the need for companies to ensure compliance with labor laws and protect the rights of their workers.
The full text of the judgement is available here.
