Employee

Relations

V.SIVALOGATHASAN.
Senior Lecturer in Management Studies,
The Faculty of Humanities and Social Science
The Open University of Sri Lanka
vsiva@ou.ac.lk
 Employee Relations
At the end of this session, you should be able to;
 describe the terms ‘employee relations’, ‘labour relations’

and ‘industrial relations’,

 explain the involvement of different parties in industrial

relations,
 describe the importance of maintaining good industrial

relations in organizations and the consequences of poor

industrial relations for organizations,
 Understanding discipline management and procedure

 Understanding grievance handling and procedure.

Employee Relations, Labour
Relations and Industrial
 Relations
Employee Relations: Employee relations primarily refer
to the relationship among employees (mostly individual)
and employers.
 Labour Relations: Labor relations refer to the
relationship between a group/ collection of employees
(trade unions) and employers.
 Industrial Relations: Industrial relations refer to the
relationship between individual employees, trade unions,
employers and also other external parties such as the
government and international organizations.
Definition
 “Employee relations is that part of the HR function which
deals in maintaining a harmonious relationship between
the employer and the employee. It might be settling the
grievances of the employees, or meeting the demands of
the employees through bargaining or negotiation, or
resolving the disputes between employer and employee,
or regulating their service conditions”
 - Pattanayak (2005, p. 233)
Main Parties Involved in
Employee Relations
 Though employee relations is mainly considered as a tri-
partied relationship among employees, employers and
the government, there are also other parties involved in
this relationship.
 International organizations and other non-government
organizations. E.g. International Labour Organization
(ILO)
 Employers’ associations/ representatives. E.g.
Employers Federation of Ceylon (EFC)
 Courts and tribunals
 Some of the organizations that are actively involved in
the employee relations system in Sri Lanka

 Department of Labour,
 International Labour Organization
 Employers Federation of Ceylon
 Human Rights Commission
 Department of Labour
Department of Labour is the state agency responsible for ensuring welfare of employees in
Sri Lanka
The main responsibility of the Department is to ensure proper implementation of various
labour legislations in the country as well as look into other welfare and education needs
of employees.

The main activities carried out by the Department of Labour

 Enforcement of labour laws and settlement of industrial disputes
 Implementation of Social Security Schemes
 Monitoring occupational hygiene and prevention of industrial accidents
 Regulating employment of persons
 Undertaking planning and research in the field of labor
 Educating social partners with a view to promoting employer-employee relations
 Maintaining Labour Market Information Service
 Collection, Compilation and dissemination of Labour Statistics
 Registration of Trade Unions
 Working closely with the Ministry of Labour Relations & Foreign Employment in fulfilling
Sri Lanka 's obligations as a member of the ILO
 International Labour
Organization
ILO is an international body which is established for the purpose of promoting
good labour practices internationally. The organization has 181 member
states and Sri Lanka became a member of the ILO in 1948.

The main areas ILO currently concentrates are:

 Decent work
 Fundamental principles and rights at work
 Employment
 Social protection
 Social dialogue
 Gender
 Employers Federation of
Ceylon
The Employers' Federation of Ceylon (EFC) is the principal organisation of employers
dealing with labour and social issues in Sri Lanka.The EFC promotes employer
interests at national level and provides a wide range of direct services to its members.

The services provided by the EFC to its membership include;

 Advisory services on Labour Law, Industrial Relations and Human Resource
Management
 Legal representation in Employment related litigations in Labour Courts and before
Arbitrators, the Department of Labour and the Human Rights Commission
 Collective Bargaining negotiations with Trade Unions
 Drafting of Collective Agreements
 Drafting of all employment related documents such as Contracts of Service, letters of
termination.... etc
 Dispute settlement through negotiations with Trade Unions
 Consultancies on labour issues in enterprise re-structuring
 Drafting of employee Hand Books and Manuals of Procedure
Human Rights Commission
 The Human Rights Commission of Sri Lanka is an
independent Commission, which was set up to promote
and protect human rights in the country.
 It was established in 1996 through Human Rights
Commission Act No. 21 of 1996, to give force to the
commitment of Sri Lanka as a member of the United
Nations in protecting human rights
 Maintaining Good
Employee Relations
High employee Higher efficiency
Ensures optimum use of scarce
satisfaction resources
High employee Low wastage
commitment Innovative ideas
Facilitate change
High employee morale Decrease in indirect costs
incurred through high labour
turnover, absenteeism, etc
Bring goodwill to the organization
Promotes enactment of sound
labour legislations
Poor Employee Relations
 Low employee satisfaction
 Low employee
commitment
 Low employee morale
Low efficiency
Low effectiveness
High wastage
Damages to property
Increase in indirect costs
incurred through high
labour turnover,
absenteeism, disputes,
grievances, etc
Bring disrepute to the
organization
Discourage enactment of sound
labour legislations
Factors Affecting Employee
 Relations
Policies of the organization
 Organizational culture and values
 Communication system
 Rewards system
 Presence of trade unions
 Government legislation
 Employee terms
 Working conditions
 Ergonomics
 Employee welfare activities
 Social Dialogue
 Supervisory training
Improving Employee
Relations
 Recognition of trade unions
 Good communication
 Introduce proper HR policies
 Through welfare committees
 Introducing gain sharing schemes
 Entering into collective agreements
 Case Study
What is Discipline?
 ‘A condition in the organization when employees conduct themselves in
accordance with the organization’s rules and standards of acceptable
behavior’
DeCenzo & Robbins (2001, p. 478)
 ‘The state of employee self control and orderly conduct; indicates the extent
of genuine teamwork within an organization’
Mondy & Noe (2005, p. 451)
 Getting employees to work and behave according
to the expectations of the organization,
Importance of Maintaining
Discipline in an Organization
 Help carry out the day to day functions of the organization smoothly
 Help to achieve organizational goals and objectives as expected
 Increase the efficiency of workers as they adhere to the various
policies, rule and regulations of the company which are formed for
the achievement of efficient employee performance and
organizational success
 Improve employer employee relations
 Leads to goodwill of an organization
 Save money spend on disciplinary action, court cases, tribunals,
sabotage, etc that arises due to disciplinary matters.
 Maintain industrial peace, as there are less problems in
organizations
 Major Causes of
Indiscipline
Organizational factors Personal factors
Working environment. Personality
Nature of supervision. family problems
Job satisfaction. psychological problems
Career prospects.
Pay and perks.
Insufficient training
Lack of communication
Categories of Indiscipline
Insubordination Misconduct
 Refusal to Obey a Direct  Damaging Company

Order Property
 Abusive Behavior  Dishonesty

 Unprotected Union  Theft

Activity  Fights and Altercations

 Disrespect for supervisors  Off-Duty Misconduct
 Refusal to accept transfer  Sleeping and Loafing
  Strike-Related Activity

 Sexual Harassment
 Categories of Indiscipline

Substance Abuse
 Intoxication and Alcoholism
Other
 Safety rule violation
 Drug Abuse
 Absenteeism without

Unsatisfactory Performance
approval
 Late attendance
 Negligence

 Quality problems

 High wastage

Generally these above misconducts can be categorized in to two aspects, as;

 Extremely Serious
 Less Serious
 Types of Discipline Management
Practices
 Preventive Discipline
 to prevent indiscipline occurring in companies through encouraging employees to follow the
orderly behaviour expected by the company
 Corrective Discipline
 to correct employees when rule violations occur at workplaces, through necessary means.
Generally the means of correcting misconduct is punishment.
 Progressive Discipline
 There are several steps in the disciplinary process and the punishments progresses The
process generally has three to five steps, starting most often from verbal warning and ending
with termination.
 Positive Discipline
 Positive discipline can be identified as another aspect of preventive discipline which also
encourages self discipline.
 to make the employee learn from his past mistakes with the help of the organization.
Disciplinary Actions Available to a
Company
Common disciplinary actions used in Sri Lankan
 Verbal warning

 Written warning

 Fine

 Suspension with or without pay

 Pay cuts

 Reduction of bonus or other benefits

 Delay of promotion

 Demotion

 Delay increments

 Transfer

 Dismissal
Factors to be Considered in Taking
Disciplinary Action
 Fairness of the rule/regulation/standard
 Proper communication of rules/regulations/standards
 General practice of the organization in managing discipline
 Seriousness of the problem
 Duration of the problem
 Frequency of the problem
 Employees work history
 Corrective action taken
 Mitigating factors
 Necessary support
Steps of a Normal
1. Inquiry
Conduct a preliminary investigation.
2. Issue a charge sheet/ Show cause letter.
3. Obtain a letter of explanation and take action
based on it.
4. Suspend the service of the employee pending
inquiry, if necessary.
5. Notice of inquiry
6. Domestic inquiry
7. Take necessary Disciplinary action depending
on the outcome of the investigation and also
the disciplinary procedure of the company
What is a grievance?
 Very simply, grievance can be defined as a
discontent of a person arising out of feeling
dissatisfaction, disappointment or distress.
Grievance can arise due to many reasons
such as family problems, health problems,
employment matters, etc.
Importance of Handling Employee
Grievances
 Prevent larger problems
 Improve employee satisfaction and
commitment
 Affect morale and commitment of employees
 Careful about decision making
 Detect problems and rectify
 Lead to better employer employee relations
Sources/Courses of

Grievances
Grievance regarding terms of employment
Pay
 Compensation
 Rewards
 Promotion
 Transfer
 Continuity of services


Grievances regarding conditions of work

 Health and safety

 Time of work

 Overtime
Sources/Courses of
Grievances
Grievances regarding the job
 Nature of the job

 Authority

 Supervision

 Responsibilities

Grievances regarding discipline

 Discipline investigations

 Punishments

Other
 Unfair treatment

 Change
Grievance Handling
Procedures
Board of Directors Grievance Handling To settle the matter within
Committee a Week

Head of the
Appeal against the settlement

department
To settle the matter within
of Grievance Handling

3 to 5 days

Immediate
Committee

supervisor
To settle the matter within
3 to 5 days


Aggrieved party
Features of a Successful
Grievance Handling
Procedure
Dealt at the first instance
 Settled at the lowest level
 Availability of appeal
 Speedy settlement/ Settle at a minimum time level
 Fix time limits
 Proper communication
 Acceptance by relevant parties
 Should be applicable to all in the organization
 Simple and easy to understand
 Settle grievances at lowest cost
 Necessary training
 Keep the necessary record
 Case study
SUPERANNUATING BENEFITS

 Employees’ Provident Fund

 Employees’ Trust Fund

 Payment of Gratuity
EMPLOYEES’ PROVIDENT FUND
 The Employees’ Provident Fund Act no 15 of 1958 and
the Regulations framed came into operation on 1st June
1958.

 Thereafter the Act has been amended several time.

 They ensure retiring benefits to employees the joint

responsibility of the employee and employer.

 Entitled to membership in the EPF from the very first day

of employment.

 EPF maintained by Central Bank of Sri Lanka

EMPLOYEES’ PROVIDENT FUND
 What kind of job entitles to membership?
 Permanent, non-permanent, trainees, temporary,
casual, shifts workers.
 Daily wage workers, piece rate, on contract basis,
on commission basis.
 Employees on monthly pay, weekly pay
 All rank of employees
 Partners and Directors earning from the company
EMPLOYEES’ PROVIDENT FUND
 Who are they not covered under EPF Act?
 Public servants
 Organization run by family members
 Non-working Directors
 Partner – who are not earning salary
 Local authority, Contributors to approved PF
 Apprentices under National Apprenticeship Act
 Charitable institutions
 Person under 14 years of age and
 An employer’s spouse
EMPLOYEES’ PROVIDENT FUND
How are contributions computed?
Computed on total earnings
 Salary , wages or fees
 Cost of living allowance, special living allowance
 Holiday payments
 Cash value of food supplied or others
 Food allowance
Higher rate
contribution By
 Employees contribution – 8%
mutual agreement
 Employer contribution – 12% but cannot reduced
 Total – 20%
EMPLOYEES’ PROVIDENT FUND
 How to get membership?
 Employer required to complete form – D and send it to
the Labour Office within 14 day of recruitment of first
employee.
 The commissioner of Labour send a registration
Number
 EPF No – 66250/A/1
 Employer required to complete forms –A,B and H and
deliver them to LO within 14 day of recruitment.
 B form returned to Employee
EMPLOYEES’ PROVIDENT FUND
 When will a benefit claim be paid?
 When leaving service on reaching age of retirement
– Male 55, and Female 50
 When leaving service on grounds of marriage
 When leaving on permanent disability
 When migrating to another country on a permanent
visa
 When leaving for employment in Gov.service
 In the event of the death of member
 When leaving on a corporation being closed down
EMPLOYEES’ PROVIDENT FUND
 For delays of payment of EPF, employer will have to pay a surcharge -
5% to 50%
 10 days delay - 5%

 10 -30 days delay - 10%

 1 – 3 months delay – 20%

 3 – 6 months delay – 30%

 6 – 12 months delay – 40%

 Over 1 year delay – 50%

 Housing loans up to 75% from certain banks

 Administration of Fund lies with the Commissioner of Labour and EPF

division of Central Bank of Sri Lanka
EMPLOYEES’ TUST FUND
 Employees’ Trust Fund was established by ETF Act No.46 of
1980.
 The main objective of the fund is to provide benefits to
members during employment and upon retirement.
 The employees’ Trust Fund Board administers the fund.
 The ETF Act applies to those employed in semi-government,
corporations, universities, statutory bodies, private sector
 All employees employed in the above establishement are
covered
 Employers are required to contribute a sum equal to 3% of
total earnings of each employee to the fund on monthly basis.
EMPLOYEES’ TUST FUND
 Who are they not covered under this Act
 Pensionable government servants
 Domestic servants in any household
 Charitable organization having less than 10
employees
 Employees in vocational training institute for
special needy persons
 Employees of establishment run by family
members only
 Apprentices under National Apprenticeship Board
EMPLOYEES’ TUST FUND
 Active members of the Fund are entitled to a range of
benefits
 Free life insurance

 Permanent diability insurance

 Financial assistant for the heart surgery

 Reimbursement of the cost of intra-ocular lens

implanted following cataract surgery

 Financial awards for members’ children passing the

year five scholarship exam with merit

 Hospitalisaton medical insurance

 Low interest housing loan

EMPLOYEES’ TUST FUND
 ETF Board
 Under the purview of the Ministry of Finance and
Planning - Nine member board
 4 members nominated by Minister of labour
 1 member nominated by minister of Finance
 1 member nominated by minister of trade
 1 member nominated by EFC
 2 members elected by trade union
EMPLOYEES’ TUST FUND
 Withdrawal of fund balance
 Cessation of employment

 Change employment, retirement, dismissal etc…

 Eligibility for recovering benefits

 Completion of at least for over 12 months

 Below the age of 70

 For death due to any illnesses, 12 months active period not

compulsory
 Second refund is not allowed until the lapse of 5 years from last refund

of claim
 It is possible to apply 2nd refund within 5 year period under some

circumstance.
 Reaching 60 years of age, migration etc.
PAYMENT OF GRATUITY

 Payment of Gratuity Act No.12 of 1983

provides for payment of gratuity by employer
to employees at the time of termination of
employment.
 This was amended several times
 It has two parts
PAYMENT OF GRATUITY

 PART- 1
 Recognized two types of employee
Labours – 14 day salary for each year of completed.(before
Nov.1959)
 7 days salary (after Nov.1959)
Other than Labour – one month salary for each year of completed.
Excluding categories:
Employee of any portion of land
gratuity settled under the Industrial dispute Act.
Indian repatriates
PAYMENT OF GRATUITY
 PART -2
 Applies to all other employees

 Who are entitled to gratuity

 Employed in establishment have 15 or more employees

 Who have served for more than 5 years

 Employees in public corporations and charitable organizations

 All types of employees

 Apprentices trainees not covered

 Calculation of gratuity

 Monthly paid employees – half month salary for each years of completed
 Daily paid employees – 14 days salary for each years of completed
 Piece rated employees – 14 days salary for each years of completed
PAYMENT OF GRATUITY
 Employer’s responsibility
 Should make the payment of gratuity within 30 days of termination

 Where the employer delays to pay gratuity, following surcharges

will be levied upon the employer

 Not more than 1 month – 10%

 1 to 3 months – 15%

 3 to 6 months - 20%

 6 to 12 months – 25%

 More than 1 year – 30%

 Some damage can be recovered from gratuity but cannot withhold

any amount from gratuity