FTZ workers demand worker-centred labour law reforms

By Ishanka Singha Arachchi

Efforts by several governments to amend labour laws in ways that primarily benefit employers have repeatedly been defeated due to strong opposition from trade unions. The current government has also presented labour law amendments prepared along similar lines, but these proposals have again faced resistance from trade unions.

As a result, a committee has been appointed to review and reconsider the previously drafted amendments, which were widely seen as employer friendly. The committee has stated that its objective is to prepare a labour-centred set of draft laws.

In this context, the Free Trade Zone (FTZ) Workers’ Collective is expected to submit a series of labour law proposals to the Ministry of Labour. Highlighting the urgent need for a worker-centred legal framework, the collective argues that the new labour law should focus on strengthening existing worker protections, ensuring freedom of association and the right to organize, addressing gender and racial inequalities, regulating employment in the informal sector, guaranteeing social security in the workplace and ensuring democratic participation in decision-making processes.

Sri Lanka’s labour law system is over a century old and has been shaped largely through labour-led struggles. Many of the rights enjoyed by workers today were achieved through collective bargaining and left-wing political movements. As a result, the country has developed a relatively comprehensive labour law framework that covers wages, employment relations, social and occupational protection and welfare, including protections for estate labour and foreign employment.

In an economy characterized by inequality, informality, ethnic stratification and a highly gender segregated labour market, these protections remain essential. However, it is also important to recognize that significant gaps continue to exist within this legal system. Several key labour laws are outdated and fail to reflect contemporary realities of work.

New employment patterns, including FTZ-based manufacturing, subcontracting and manpower systems, short-term platform-based services, routine process-based repetitive work (BPO), knowledge-intensive services requiring specialized skills and analytical capabilities (KPO), as well as informal labour, are still not adequately regulated.

Labour law reforms have been pursued amid strong pressure from employers to expand labour flexibility alongside austerity measures imposed by the International Monetary Fund (IMF) in response to the ongoing economic crisis.

The proposal to merge approximately 18 labour laws into a single labour law was introduced in 2023. However, it raised serious concerns regarding both substance and process, mainly due to the absence of meaningful dialogue with workers, trade unions and grassroots labour organizations.

The need for a consultation process

A comprehensive consultation process is essential in order to reassess the actual working conditions and industrial relations faced by workers in practice and to identify unresolved as well as emerging issues.

Trade union presence and collective bargaining agreements remain extremely limited in many factories and BOI projects. Therefore, consultations must be held in open, independent, neutral and public spaces where employment conditions and labour relations can be discussed transparently. Workers should be able to provide evidence safely without fear of retaliation or undue influence from employers.

It is the responsibility of the Department of Labour to ensure such spaces and to provide the legal protections required for workers who face victimization or reprisals. At the same time, it is equally important to facilitate discussions on labour reforms through the Independent Expert Committee on Labour Reforms and to ensure that trade unions are meaningfully involved in monitoring the reform process.

Specialized advisory and consultation sessions should be conducted for four key sectors: garment, plantation, industrial and informal sector, including manpower and domestic workers.

Strengthening trade unions

As trade union organizations and consolidation have declined sharply, less than 7% of workers are currently unionized. This weakens collective representation and social dialogue and contributes to the deterioration of healthy industrial relations.

Women workers and other marginalized groups remain underrepresented in trade unions and industrial relations structures. As a result, collective bargaining is further constrained and becomes less inclusive.

According to recommendations of the International Labour Organization (ILO) Expert Committee, a trade union – or a formally declared trade union federation – should be recognized as the bargaining agent for workers in a workplace once it reaches a threshold of 25% of the total number of eligible workers in that establishment.

Once a union or federation is recognized as the bargaining agent, management should be legally required to initiate collective bargaining immediately with the explicit objective of reaching a mutually acceptable collective bargaining agreement.

Furthermore, the legal threshold required for establishing a union should apply to a specific operational level within the workplace hierarchy rather than to the entire factory. Accordingly, union membership thresholds should be calculated based on relevant occupational or operational categories, such as production-level workers or executive-level employees, rather than the total workforce of the establishment.

Trade unions are essential for productivity, and achieving this requires laws that promote fair industrial relations. In particular, within free trade zones, undue influence by management and employers in the establishment and administration of works councils often prevents genuine worker representation.

Labour laws should be amended to incorporate a comprehensive gender policy in labour governance. This must aim to increase the participation and leadership of women workers in trade unions, tripartite bodies and all labour-related forums. It should also ensure safe and supportive conditions that enable women workers to organize, join unions and assume leadership roles in factories and other industries.

Strengthening legal provisions that prohibit and punish unfair labour practices, especially those aimed at dismantling organized trade unions, remains a key priority.

Accordingly, the proposal emphasizes that a new and updated trade union law built upon existing legal provisions should reflect modern labour realities and adopt a worker-centred approach to identifying, investigating and addressing anti-union practices.

Reforms in this area must be carried out through meaningful consultation with workers and trade unions.

The current Trade Union Ordinance should also be amended to include stronger enforcement powers, effective remedies for affected workers and unions and legal authority to initiate civil action against employers who engage in union-busting practices.

Job security

According to the ILO, job security refers to the right of workers to be protected from arbitrary loss of gainful employment and to receive compensation in cases of unfair dismissal.

At present, job security is often undermined by anti-union practices in the workplace, including factory closures and dismissals carried out under disciplinary pretexts.

The Termination of Employment of Workmen Act (TEWA) should be strengthened through improved monitoring and enforcement by the Department of Labour. In cases of factory closures, compensation negotiations with the recognized trade union should be mandatory, with the independent participation of the Department of Labour.

Statutory compensation formulas must be regularly updated to reflect increases in the cost of living, and the current ceiling on compensation in cases of factory closures should be abolished. Voluntary pension schemes should be equal to or higher than compensation provided under TEWA.

In cases of dismissal, trade union participation should be mandatory during internal investigations conducted under collective agreements. The worker under investigation must be entitled to participate in the inquiry with an executive member of their parent trade union.

Employers must also be held responsible for ensuring workers’ health and social security, freedom of association and freedom of expression. Subcontracting practices should be regulated, including mandatory maintenance of labour documentation and the issuance of written contracts to all workers assigned to a workplace.

These regulations should also be extended to the informal sector, including domestic, plantation and other forms of casual labour.

The FTZ Workers’ Collective has emphasized that once an industrial dispute is reported to the Department of Labour, an independent grievance mechanism involving trade unions, employers and the state should be established without delay through a newly appointed Labour Commissioner. In addition, Occupational Safety and Health (OSH) and Gender-Based Violence committees should be established at the workplace level led by trade unions and employee representatives to address workplace safety, health risks, harassment and violence.

Gender equality

Women’s participation in the workforce remains below 30%. Unpaid care work, gender bias and workplace discrimination continue to limit women’s access to safe, decent and fairly paid employment.

Sexual minorities, domestic and care workers are also frequently excluded from labour protections and social welfare benefits.

Unpaid care work remains a major barrier to women’s participation in paid employment. Therefore, a national gender policy on labour participation should be developed in collaboration with the Ministry of Women and Child Affairs. This policy should include the provision and regulation of workplace childcare and daycare facilities.

Key reforms should include eliminating discrimination in recruitment and promotion, expanding legal protection for workers with LGBTQ+ identities, extending maternity leave to 100 days and introducing statutory paternity leave provisions. Legal safeguards must also be introduced to protect workers on maternity leave from unfair dismissal or adverse treatment during leave or upon return to work.

In addition, leave entitlements should be expanded for workers with more than six months of service, and social security schemes should be introduced to recognize and support unpaid care work.

The draft proposals further recommend the establishment of government-run care centres in plantation areas and commercial zones. Domestic and care workers should be formally recognized as a special category of workers with legal protections that safeguard their rights.

The draft resolution also calls for strengthening the Violence Against Women Act by integrating responsibilities under ILO, C190, supported by a dedicated unit within the Department of Labour for monitoring, enforcement and regulation.

The FTZ Workers’ Collective additionally emphasizes that the Ministry of Health should establish and regulate OSH committees, ensure compensation for work-related injuries and illnesses and require mandatory employer insurance coverage for both permanent and casual workers. This includes protection against unsafe working conditions, such as exposure to harmful chemicals and occupational diseases. The collective further urges that all compensation cases should be resolved within six months to ensure timely justice for affected workers.

Ensuring language rights

Workers in marginalized communities continue to be denied adequate legal protection. Disabled workers also face serious gaps in legal coverage and enforcement. Social exclusion caused by language barriers has created major obstacles for Malaiyaha and Tamil-speaking workers in accessing legal remedies and labour protections.

The resolution proposes that all employment contracts, workplace notices, safety information and other documents relevant to workers be made available in both Sinhala and Tamil.

It is also essential to promote bilingual capacity among labour inspectors, human resources personnel, and government officials. Full implementation of the National Language Policy in labour administration is necessary to ensure equal access to justice and workplace protection.

In addition, the needs of workers with disabilities must be addressed by improving accessibility in workplaces. This should be done in collaboration with the Ministry of Health and the National Secretariat for Persons with Disabilities, ensuring that disabled workers can access employment environments safely and without discrimination.

Internal migrant workers

An estimated 30,000 internal migrant workers live and work in and around commercial zones and industrial parks. Many of them are not formally registered in the areas where they reside and work. As a result, they are excluded from state welfare and social security systems.

The COVID-19 pandemic, the recent economic crisis and severe weather events such as cyclones have further exposed the difficulties faced by migrant workers in accessing state support. Many have struggled to obtain compensation for the loss of homes, income and property due to the absence of proper registration and institutional recognition.

To address this, local authorities should be empowered to facilitate internal migrant workers’ access to state social security systems. Practical solutions include establishing coordination mechanisms among key government institutions such as public health officials, Grama Niladhari offices, Divisional Secretariats, municipal and village councils and the BOI.

In addition, the Department of Labour should introduce a monitoring mechanism to identify and address the working and living conditions of internal migrant workers, as well as their access to public services. Finally, a formal system should be developed to identify and register migrant workers based on minimum eligibility criteria, ensuring that they are not excluded from basic state protections.

Gig workers protection

Informal and gig workers remain largely outside the protection of labour laws. As a result, they are highly vulnerable to exploitation, income insecurity and the absence of social protection.

Further liberalization of labour laws – pushing workers outside state oversight mechanisms and weakening employers’ accountability for working conditions – will expose these workers to even greater risks.

The growing reliance on contract labour can influence market trends and broader macroeconomic factors. However, the employment terms of contract, subcontract or casual workers are often weakly enforced or not legally enforceable in practice. This leaves workers vulnerable to exploitation.

For example, manpower workers are frequently employed on a temporary basis. As a consequence, they experience loss of income security, limited access to basic labour protections, unfair employment practices and inadequate safeguards against excessive working hours and unsafe working conditions.

Wage increase

State intervention in the plantation and estate sector has contributed to minimum wage increases. However, such interventions are not grounded in a consistent institutional or regulatory framework. As a result, wage increases are often dependent on the political will of the government in power. This weakens or replaces wage bargaining processes led by trade unions and workers.

More importantly, productivity improvements achieved through collective bargaining can be directly linked to improved wages and better working conditions. Therefore, wage growth should not be treated merely as a political decision but as a structured outcome of regulated wage-setting mechanisms.

In this regard, it is proposed that institutional and regulatory frameworks be strengthened to ensure regular wage reviews through empowered wage boards functioning as sector-based wage setting mechanisms.

To ensure transparency and accountability in wage determination, verified productivity data should be disclosed to wage board members. Furthermore, sharing such data with factory-level trade unions engaged in collective bargaining would allow wage standards to be determined at the sectoral level based on productivity and factory scale.

It is also necessary to determine the wages of casual and temporary workers through wage boards and to review these wages periodically, particularly during national or global economic crises and pandemics. Minimum wages should also be established at both national and sectoral levels using a transparent living wage formula linked to the cost-of-living index.

Additionally, it would be beneficial to encourage sectoral collective bargaining on wages and working conditions through strong tripartite structures involving workers, employers and the state.

Working hours and health

A joint analysis conducted by the ILO and the WHO has highlighted that excessive working hours and non-standard working conditions have serious negative impacts on workers’ health and well-being.

Working 55 hours or more per week is associated with a significantly higher risk of stroke and sudden cardiac death compared to a standard 35–40-hour workweek. Globally, long working hours were responsible for approximately 745,000 deaths in 2016.

Therefore, it is essential to maintain the internationally accepted standard of an eight-hour workday and a 40-hour work week with at least a one-hour break.

-This article was originally featured on groundviews.org