MBA 5217 - Legal Aspects of Business/Business Law

Legal Aspects Relating to Terms and Conditions of

Employment
Individual Assignment by
D N P Munasinghe
2017/MBA/WD/40
Trimester V
 Legal Aspects Relating to Terms and Conditions of
Employment

When an employer decided to recruit new staff, the two parties namely the employee and the
employer is required to adhere by the regulations provided under the legal aspects relating to
such employment.

In relation to Sri Lankan scenario certain acts have been passed to ensure a healthy relationship
between the employer and employee. The following paper describes such legal aspects in the
context of Bank of Ceylon and its staff.

What are the terms and conditions of employment

This refers to the rights and responsibilities related to a job that the two parties, the employer
and the employee will be agreed at the time of recruitment This includes Job title, duration of
training, grade, rate of pay, hours of work, leave, allowances, medical benefits, obligation and
conditions, termination etc. While requirement for certain terms and conditions comes under the
mandate of an institution or an organization some are under the purview of legal provisions.

I. Job title

This refers to the post of a particular job category to which the employee is recruited. Ex -
Trainee banking assistant of BOC.

II. Duration of training

If a certain employee requires to undergo a training period in order to acquire knowledge and
skills related to a particular position it is stated under this. In BOC under the duration of
training, the time period including commencing and ending dates as decided by the employer
and the place of training is given. Also the employee has to agree to work at any branch
assigned during the training period.
III. Wages

This refers to the allowance to be paid for the employee by the employer for providing service.
In BOC the allowances are determined according to the grades simply as follows;

multi-duty assistant
Office assistant
Staff Assistant
Junior Executive Officer
Executive Officer
Assistant Manager
Branch Manager
Senior Manager

Subject to the provisions of subsection (2) of section 5 of Labor Act in Sri Lanka employer is
required to maintain wage records with regard to each wage period implying following ;

(a) the wage period,

(b) the names of the workers who are paid wages in respect of such wage
period,
(c) the number of hours or days during which each such worker has worked in such
wage period,
(d) the wages paid to each such worker in respect of such wage period,
(e) the date of payment of such wages,
(f) the deductions from such wages, and
(g) particulars of such other matters as may be prescribed.

IV. Working hours

Hours of work is defined as the period of time that an employee is required to perform and
therefore considered as paid labor.

Subject to the provisions of any regulation referred to in subsection (3) and subject to the
provisions of subsection (5) of Labor act in Sri Lanka [§ 2, Law 7 of 1975] , the normal period
during which any person may be employed in or about the business of any shop or office -

(a) on any one day shall not exceed eight hours, and
(b) in any one week shall not exceed forty five hours.
The period referred to in this subsection shall not include any interval allowed for rest or for a
meal under any provisions of this Act or any interruption permitted by any regulation referred to
in subsection (3).

In accordance with the provisions stated under the labor act in Sri Lanka BOC has define hours
of work for the staff from 8:00 AM to 4:45PM inclusive of meal interval. Apart from the define
working hours BOC staff is required to work beyond the normal hours of work and on the
holidays as required and they will be paid according to the bank regulations applicable for such
extra working hours.

V. Leave

It is described as a period of time a worker is away from his assigned work while maintaining the
statues of employee.

According to the provisions of part 1 section 6 (1) (b) of annual holiday and leave of SHOP
AND OFFICE EMPLOYEES ACT ; In respect of the second or any subsequent year of
employment during which any person has been continuously in employment in or about the
business of any shop or office, that person shall be entitled to take and shall take a holiday of
fourteen days with full remuneration, of which not less than seven days shall be consecutive
days, and the employer shall allow such holiday and be liable to pay such remuneration.

Further Part 1 Section 6 (3) of the SHOP AND OFFICE EMPLOYEES ACT stipulates ;

In respect of each year of employment during which any person has been continuously in
employment in or about the business of any shop or office, that person shall, subject to the
provisions of subsection (4) and to such conditions as may be prescribed, be entitled to take on
account of private business, ill health or other reasonable cause, leave with full remuneration for
a period or an aggregate of periods not exceeding seven days, and the employer shall allow such
leave and be liable to pay such remuneration.

However permanent BOC staff member is entitle to following leave per annum in contrast to
the above as fallows.

Annual leave - 21
Casual leave - 07

VI. Medical Benefits

Simply it refers to health insurance offered by an employer to an employee. This includes dental
insurance, vision care, life insurance, sick leave, Medical reimbursement etc.
In BOC medical insurance coverage is granted according to the grade. The particular medical
insurance provides coverage for the entire family as well.

Under the circumstances where the employee unable to attend to the work due to a health issue
he is entitled to sick leave in accordance with the organizational legislations.

accordingly any employee of BOC is entitled to 14day Sick leaves.

VII. Employee provident fund (EPF) and Employee Trust Fund (ETF)

EPF and ETF can be recognized as social security schemes for those who are not entitle for a
pension once they got retired.

It has been a mandatory requirement to be performed by the employers under EMPLOYEES'

PROVIDENT FUND Act, No. 24 of 1971 and EMPLOYEES’ TRUST FUND ACT No.46 OF
1980.

Accordingly under the provisions made in above acts, an employer is required to contribute 15%
of the employees monthly salary for EPF and 3% of employees monthly salary for ETF while
employee should contribute 10% of his monthly salary for EPF.

In contrast to the aforementioned BOC is providing with its staff both the EPF, ETF and a
pension schema providing them with a financial stability following their retirement.

VIII. Termination

Employee's quitting of a job and thereby ending the duration under a certain employer. This can
be either on accord of employer or employee.

As per the agreement entered between BOC and employee, in the event of misconduct ,neglect
of duties, breach of trust or discipline or insubordination BOC can terminate his employment
without prior notice.

Due to some reasons or the other if a staff member wishes to terminate the employment
agreement he should provide BOC one month notice in writing.