TEWA governs non-disciplinary termination in Sri Lanka. Where it applies, an employer needs the workman's written consent or the Commissioner's prior written approval. Compensation follows a statutory formula that tapers by years of service, capped at Rs. 2,500,000.
TEWA, the Termination of Employment of Workmen (Special Provisions) Act No. 45 of 1971, governs non-disciplinary terminations such as redundancy. Where it applies, an employer needs the workman's prior written consent or the prior written approval of the Commissioner before terminating. The Act says "the Commissioner", defined as the holder of the office of Commissioner of Labour; the office is in practice referred to as the Commissioner General of Labour, and the later amendments use that title.
Employers new to the Sri Lankan market are often surprised by how much protection the law gives workers on termination. The framework is protective by design, and the single most important piece of it is the Act known to everyone as TEWA.
What TEWA covers
TEWA governs the non-disciplinary termination of workmen, meaning the ending of employment for reasons like redundancy, restructuring or economic necessity, as opposed to dismissal for misconduct. Section 3 defines its reach by listing what falls outside it, and those exclusions are worth reading before anything else, because an employer outside the Act does not need the Commissioner at all.
When TEWA does not apply
Section 3(1) has nine limbs. Three of them decide most private-sector cases:
- Small establishments. Where the employer has employed, on average, fewer than fifteen workmen during the six months preceding the month in which the termination is sought. The averaging period is part of the test, so a headcount taken on the day of termination is not the answer.
- Short service. Where the workman has been employed for fewer than one hundred and eighty days in the continuous period of twelve months from the date of employment, if the termination takes place within that twelve months. The count is inclusive: days of absence approved by the employer; absence from an injury by accident arising out of and in the course of employment; absence from anthrax or an occupational disease under Schedule III of the Workmen's Compensation Ordinance; every day on which the employer failed to provide work; every day of absence due to a lockout, or a strike that is not illegal, up to thirty days in the aggregate; and every holiday or day of absence to which the workman is entitled under any written law.
- Retirement. Where the termination takes effect on the workman attaining the minimum retirement age specified in the Minimum Retirement Age of Workers Act No. 28 of 2021. This limb was substituted by Act No. 29 of 2021, and it means a retirement at the statutory age is outside TEWA and needs no approval.
The 180-day count is the one employers most often get wrong. Because it includes approved absence, lawful strike days and days when the employer provided no work, a worker can cross the threshold on a calendar that looks shorter than it is.
The remaining limbs matter to a different reader entirely. Paragraphs (d) to (h) put the Government, the Local Government Service, local authorities, co-operative societies and public corporations outside the Act altogether. A large share of Sri Lankan employment sits in those categories, and an employee there who assumes TEWA protects them is mistaken.
The consent-or-approval rule
The Act turns on a consent-or-approval rule. Where TEWA applies, an employer cannot terminate a workman's employment without either the workman's prior written consent or the prior written approval of the Commissioner General of Labour. Serving notice and paying in lieu is not enough. Without the workman's agreement, the employer has to get the Commissioner's approval before the termination is valid.
The Commissioner's process, and its three limits
The approval process is adjudicative and section 2(2) sets out how it runs. The employer applies; a copy of the application is served on the workman, who must be afforded an opportunity of being heard; and the Commissioner decides. The outcome may be approval, refusal, or approval on conditions, and section 2(2)(e) expressly allows those conditions to include the payment of a gratuity or compensation.
Three features of that subsection matter more to a foreign employer than the procedure itself.
The first is time. Section 2(2)(c) directs the Commissioner to grant or refuse approval within three months from the date the application is received. The Act attaches no consequence to overrunning it: there is no deemed approval, no deemed refusal and no penalty. It is a direction to the Commissioner rather than a guarantee to the employer, and applications have in practice run considerably longer, so it should not be budgeted as a hard deadline.
The second is discretion. Section 2(2)(b) gives the Commissioner an absolute discretion to grant or refuse. There is no statutory list of grounds on which approval must be given, and an employer with an unanswerable commercial case does not thereby have a right to approval.
The third is finality, and it is widely over-read. Section 2(2)(f) provides that a decision under that subsection shall be final and conclusive, and shall not be called in question whether by way of writ or otherwise, in any court, or in any court, tribunal or other institution established under the Industrial Disputes Act. It is a strong clause. It is not the end of the matter, for three reasons.
It reaches only decisions under section 2(2), which is the approval decision. Orders under sections 6 and 6A, which are the orders that cost money, are not within it — and section 10B, inserted by Act No. 23 of 2022, sets out the procedure by which a dissatisfied employer applies to the Court of Appeal for an order in the nature of a writ against such an order. Parliament legislated that route in 2022, which is difficult to reconcile with the idea that review is unavailable.
Section 6B(2) separately preserves a workman's right to apply for any other legal remedy and the jurisdiction of any court or tribunal to grant relief.
And an ordinary statutory ouster does not displace the Court of Appeal's jurisdiction under Article 140 of the Constitution. That has been settled since Atapattu v. People's Bank [1997] 1 SLR 208, on a clause in materially identical terms, and writs have in fact issued against the Commissioner in TEWA matters.
What the clause does mean is narrower and still important: the inquiry before the Commissioner is where the case is won or lost on the facts, because review is not a rehearing. And challenging an order is expensive before it is anything else, since sections 10A and 10B require an employer to lodge cash security first.
How the compensation is calculated
Compensation under TEWA is not at the Commissioner's discretion as to amount. Section 6D provides that any sum payable as compensation on a decision or order of the Commissioner shall be computed in accordance with such formula as the Commissioner determines, in consultation with the Minister, by Order published in the Gazette.
The Order in force was published as Gazette Extraordinary No. 1384/7 of 15 March 2005. It pays by band, and the bands taper: the early years of service are worth considerably more per year than the later ones.
| Years of service | Months per year of service | Cumulative maximum |
|---|---|---|
| 1 to 5 | 2.5 | 12.5 months |
| 6 to 14 | 2.0 | 30.5 months |
| 15 to 19 | 1.5 | 38.0 months |
| 20 to 24 | 1.0 | 43.0 months |
| 25 to 34 | 0.5 | 48.0 months |
The TEWA compensation calculator works the table for a given salary and length of service, and applies the ceiling. Two consequences follow from the shape of it. Service beyond thirty-four years adds nothing, so the formula maximum is forty-eight months of salary. And because the first five years carry two and a half months each, a relatively short-service workman is entitled to a great deal more than a pro-rata reading of the table would suggest.
One thing the table does not settle is what a month of salary means for this purpose, and whether the figure is built on basic salary or on total earnings changes the answer by more than any band does. That is a question for the Order and for how the Commissioner applies it, not one to assume. The Schedule to the 2005 Order is not available online, so the bands above are set out as they are reproduced consistently across the Department, the International Labour Organization and Sri Lankan practitioners rather than quoted from the instrument itself.
Over the formula sits a cash ceiling, and this is where published figures most often go wrong. The 2005 Order set a maximum of Rupees One Million and Two Hundred and Fifty Thousand. That figure was doubled by Gazette Extraordinary No. 2216/17 of 25 February 2021, an Order of the Commissioner of Labour substituting Rupees Two Million Five Hundred Thousand. The ceiling is therefore Rs. 2,500,000, and whichever of the formula figure and the ceiling is lower is what is payable.
The superseded Rs. 1,250,000 is still quoted in circulation, including in material published by government bodies, and at least one public calculator applies bands that do not match the Order. Anyone relying on a figure should check which Order it was worked out under.
Terminating without approval
An employer who terminates in contravention of the Act is not simply exposed to a compensation claim. Under section 6 the Commissioner may order the employer to continue to employ the workman from a specified date, in the same capacity as before, and to pay the wages and all other benefits the workman would otherwise have received. The section puts a duty on the employer to comply. Failure to comply with an order under section 6 or 6A is an offence under section 7.
Section 5 is blunter still: a termination in contravention of the Act is illegal, null and void, and of no effect whatsoever.
The sanction is criminal as well. Section 7(1) provides for imprisonment of either description for a term of not less than six months and not exceeding two years on summary conviction, with no fine in the alternative; section 7(2) puts the burden of proving compliance on the accused; and under section 9 every director and officer of a body corporate is deemed guilty. Section 8 adds Rs. 500 for each day the failure continues, together with the wages and benefits accrued to conviction, recoverable as a fine.
There is a deadline on the workman's side, and it is short. Under section 6B(1) no order may be made under section 6 or 6A on a workman's application unless the application was made within six months of the termination. A workman who lets that pass loses the remedy, whatever the merits.
Where the termination follows the closure of a trade, industry or business, section 6A allows the Commissioner to order compensation as an alternative to reinstatement, which is usually the live outcome in a closure rather than reinstatement itself.
Reinstatement with back pay is a materially worse outcome than a compensation order made with approval, and it is the reason the approval step is not a formality to be worked around.
Negotiated exits
Because refusals and compensation orders are genuine possibilities, employers often find that a negotiated exit, a mutually agreed separation with an agreed payment, is quicker and more predictable than fighting an application through the Commissioner. Knowing TEWA well is therefore as much about structuring sensible severance as it is about the formal procedure.
Disciplinary dismissal is different
Disciplinary dismissal follows a completely different route. Where an employer wants to dismiss a worker for misconduct, TEWA's consent-or-approval mechanism is not the relevant path. Fair procedure will usually require a properly conducted domestic inquiry, and a worker who thinks the dismissal was unjustified can seek a remedy from a labour tribunal, which can order reinstatement or compensation. Treating a misconduct case as a TEWA termination, or the other way round, is a common and expensive mistake.
Practical steps for employers
For employers the practical points stay the same. Work out at the start whether a separation is disciplinary or non-disciplinary. Check whether TEWA applies to the establishment and to the worker. Keep thorough records. Take advice before acting. Getting a Sri Lankan termination wrong costs not only in compensation but in the delay and disruption of contested proceedings.
