BEFORE THE UNITED STATES TRADE REPRESENTATIVE

PETITION TO REMOVE SRI LANKA FROM THE LIST OF ELIGIBLE BENEFICIARY DEVELOPING COUNTRIES PURSUANT TO

19 USC 2462(d) OF THE GENERALIZED SYSTEM OF PREFERENCES (GSP)

filed by

THE AMERICAN FEDERATION OF LABOR & CONGRESS OF INDUSTRIAL ORGANIZATIONS (AFL-CIO)

December 30, 2009

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Note: USTR neither accepted nor rejected the June 2008 petition to remove Sri Lanka from the list of eligible beneficiary developing countries. The petition was updated and resubmitted on June 24, 2009. Such updates immediately follow the original issue or case profiles. New issues or cases as of June 2009 are found in a new section at the end of the petition. On December 30, 2009, the petition was again resubmitted, this time without Section J on the issue of child soldiers. The cases in the petition were not updated at that time, though some case updates previously provided in a separate document to USTR in November 2009. A. Preliminary Information (no updates) 1. Party Submitting Petition:

AFL-CIO, 815 16th St., N.W., Washington, D.C. 20006 Contact: ph: (202) 637-3904 / fax: (202) 508-6967

2. Country Subject to Review:

Sri Lanka 3. Basis for Petition:

As explained below, the Government of Sri Lanka (GOSL) is not taking steps to afford internationally recognized worker rights, including 1) the right of association, 2) the right to organize and bargain collectively, 3) freedom from compulsory labor, 4) a minimum age for the employment of children, and 5) acceptable conditions of work with respect to minimum wages, hours of work and occupational safety and health.

B. Introduction In 2006, the U.S. imported $143.6 million of goods from Sri Lanka under the Generalized System of Preferences (GSP). In the first 9 months of 2007, imports reached roughly $116.5 million, making Sri Lanka the 14th largest user of the GSP program. However, U.S. imports from Sri Lanka under GSP account for a relatively small percentage of overall trade with the country, as U.S. imports are highly concentrated in textiles and apparel products - most of which are excluded from the program. Products imported from Sri Lanka under GSP have included several rubber products such as tires, gloves and floor coverings as well as brooms and brushes, porcelain household wares, and gold jewelry and jewelry boxes. In recent years, worker rights in the country have deteriorated. The labor law, although amended from time to time (most significantly in 1999), still fails to adhere to the internationally recognized worker rights. The government has also failed to effectively enforce its laws, let alone the international minimum set of labor rights. An inadequate labor inspectorate, together with a hostile Board of Investment (BOI), which is responsible for the administration of the Export Processing Zones (EPZs), contributes to ongoing labor

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violations in this sector. Furthermore, the nation’s judiciary has, in several recent cases, enjoined otherwise legal strikes in the public sector in response to complaints from third party litigants with no legally cognizable stake in the labor dispute. For all of the reasons below, the AFL-CIO urges the USTR to accept this petition for review.1

C. Labor Law Falls Short of ILO Minimum Standards (no updates) The nation’s labor law contains several provisions that do not comply with the minimum rights established by the ILO. Below are the legal deficiencies of most concern to Sri Lankan unions.

1. Trade Union Ordinance 1) Article 15 of the Trade Union Ordinance sets forth the reasons on which the registrar may withdraw or cancel the registration of a trade union. If the registrar decides to withdraw or cancel the union’s registration, it is immediately deemed an unlawful association under Article 18(a). While a union has a right to appeal the decision to the courts, it may take months or years before the union may once again regain its legal status upon a successful appeal. That is why the ILO has expressed that measures of administrative dissolution, even when there is a possibility of judicial review, may involve a serious risk of interference by the authorities in the very existence of organizations. Thus, an administrative decision to dissolve a union should not take effect until after a final judicial decision is handed down.2

2) Article 20 of the Trade Union Ordinance denies the right of free association to five broad classifications of public sector employees: judicial officers, members of the armed forces, police officers, prison officers, and members of any corps established under the Agriculture Corp Ordinance. ILO Convention 87 does allow member states to decide whether or not to extend to members of the armed forces and police the right to associate. However, the ILO has urged members to apply the exemption narrowly by, for example, allowing civilian members of the armed forces to join a union.3 Additionally, the ILO has held that public servants generally, and prison officers and agricultural workers specifically, should be guaranteed the right to associate under law.4

3) Article 21(1)(a) of the Trade Union Ordinance states that a public sector union cannot represent workers from more than one department or specified service of government. Thus, it is impossible for public sector workers to form a federation or confederation of

1 Specifically, Sri Lankan unions requested in 2008 that the U.S. government open a GSP review to encourage the GOSL to address the issues raised in the roadmap attached to the 2008 complaint, which was prepared and adopted by consensus of the leadership of several independent trade unions in June 2008. 2 ILO CEACR, Individual Observation Concerning Right to Organize and Collective Bargaining Convention No. 98 (2008). 3 Committee on Freedom of Association, Digest of Decisions (2007) (“Digest”) ¶ 226. 4 Digest ¶¶ 219 (public servants), 233 (prison staff), 241 (agricultural workers).

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public sector workers, or a local, federation or confederation that represents workers in both the public and private sectors. The ILO Committee of Experts observed that the law should be amended to ensure that organizations of government officers may join confederations of their own choosing, including with organizations of workers in the private sector. Further, local organizations of public employees should be able to cover more than one ministry or department in the public service.5

2. Industrial Disputes Act

1) Under Article 4(1) of the Industrial Disputes Act, the Minister of Labor may compel arbitration of “minor” disputes, regardless of the will of the parties. The determination of what constitutes a minor dispute is completely within the discretion of the Minister. Further, under Article 4(2), the Minister may refer any industrial dispute to an industrial court for settlement. The ILO has repeatedly recommended that the government amend Articles 4(1) and 4(2) to ensure that any reference of labor disputes to compulsory arbitration is only at the request of both parties to the dispute.6

2) Under Article 32A(g), no employer shall refuse to bargain with a trade union which represents “not less than 40 per cent of the workmen on whose behalf such trade union seeks to bargain.” National law may legitimately require a union to demonstrate that it is sufficiently representative before it has the right to bargain on behalf of all workers in an enterprise (members and non-members alike). However, if a union represents a minority of the workers in an enterprise, it should nevertheless be able to bargain at least on behalf of its own members.7

The Industrial Disputes Act, which deprives a union with less than 40% of the workforce from bargaining at all, therefore violates Convention 98.

3) The right to strike is governed by a single sentence of the Industrial Dispute Act.8

The contours of the right, therefore, are not clearly stated and have allowed the government and the courts to impose restrictions that are inconsistent with international law. Emergency decrees invoking the war prohibited strikes in essential services, as very broadly defined by the government. The situation deteriorated further as a result of several arbitrary judicial interferences with the exercise of the right to strike since mid 2006. The Supreme Court of Sri Lanka has held principles of ILO Conventions No. 87 and No. 98 on the right to strike are inadmissible in Sri Lanka. It has also held no enabling laws exist in order to provide for the guaranteeing of principles of ILO Conventions No. 87 and No. 98 in this regard.

4) Section 43(1A) provides that a violation of laws related to unfair labor practices can be punished by a fine not to exceed 20,000 rupees (~$185). According to the Ministry of 5 ILO CEACR, Individual Observation concerning Freedom of Association and Protection of the Right to Organize Convention No. 87 (2008). 6 Id. 7 Digest ¶ 976. 8 See Article 32(2). No workman shall commence, or continue, or participate in, or do any act in furtherance of, any strike in connection with any industrial dispute in any essential industry, unless written notice of intention to commence the strike had, at least twenty one days before the date of the commencement of the strike, been given in the prescribed manner and form by such workman or on his behalf to his employer.

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Labor, this fine shall be doubled in 2008. However, the trade unions believe that, even if implemented, the maximum penalty for unfair labor practices would still be too low to provide a sufficient deterrence. The ILO has maintained that legislation must establish sufficiently dissuasive sanctions against acts of anti-union discrimination to ensure the practical application of Articles 1 and 2 of Convention No. 98.9

5) Unfair labor practices such as anti-union discrimination are tried before the Magistrate’s Court. However, only the Ministry of Labor can make a complaint to the Magistrate’s Court. The only option available to unions to expedite the process is to obtain a writ from a higher court, a time-consuming and expensive legal exercise. The lack of a fixed time period to file a complaint before the Magistrate’s Court upon the notification by the union has made the law on offences virtually useless. In fact, the Ministry of Labor has not brought a single case before the Magistrate’s Court since the law was introduced. The ILO has reiterated that trade unions should be able to have direct access to the courts. It stated, “Recalling the importance of efficient and rapid proceedings to redress anti-union discrimination acts, the Committee requests the Government to take measures in consultation with the social partners in order to guarantee a more expeditious and adequate procedure, in particular establishing short delays for the examination of cases by the authority.”10

The government also took a substantial step backward with regard to acceptable conditions of work, specifically with regard to hours of work.

3. Factories Ordinance

The ordinance sets forth the maximum hours of work and of overtime for women and children employed in all factories. The law makes no mention of hours of work and overtime for adult male workers, though in practice the same basic hour and overtime provisions are applied. The provisions with regard to overtime are deemed excessive by trade unions. Article 68 of the Factories Ordinance provides that women and children over the age of 16 may be assigned overtime. The law used to provide that a worker could not be made to work more than 100 hours of overtime in one year. However, the ordinance was changed in 2002 to no more than 60 hours of overtime a month – an increase of 620 additional hours of overtime a year.11

9 Digest ¶ 822.

The employer can, and often does, require factory workers to work up to 108 hours a month, and often well beyond this legal maximum – often without proper payment. Excessive overtime is having a serious impact on the health of Sri Lankan workers. A 2007 report from the Ministry of Labor found that roughly one-third of all

10 See, supra fn. 8. 11 In negotiating the amendment to Article 68, employers initially suggested that the law provide for 100 hours of overtime a month. Unions were successful in reducing the number to 60. However, the unions were assured that the amendment would explicitly refer to the voluntary nature of such overtime. The final text, to the surprise of the unions, included no such provision.

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workers in the Katunayake FTZ had some form of chronic malnutrition and that many workers also developed anemia due to poor nutrition and excessive work.12

D. Injunctions Issued Against Strikes 1. Port Strike Enjoined13

In March 2006, a dispute over wage increases arose between the Sri Lanka Port Authority (SLPA) - a state-owned enterprise, and several unions representing SLPA workers. The unions attempted to resolve the wage dispute through negotiations; however, the SLPA and the Minister refused. Thus, the 14 unions representing workers at the port started a work-to-rule action on July 13, 2006. The Minister did eventually talk with workers on the evening of July 19th. The Minister agreed to some of the workers’ demands and promised to appoint a committee to address the remaining concerns. In the context of these negotiations, the Joint Apparel Association Forum (JAAF), an association of employers in the apparel sector, brought a lawsuit before the Supreme Court on July 21. The JAAF claimed that, as a result of the "work-to-rule" action initiated by the port unions, their normal import and export business activities had been affected, and therefore their “fundamental right” to equality and lawful occupation was being violated by the trade unions.14

The JAAF sought to quash the trade union action and obtain an order to compel the workers to resume normal working hours.

The Supreme Court issued an interim order on July 21 enjoining all union action at the ports until July 25 on the basis of the "prima facie illegality" of the trade union action and the “extensive, ongoing loss suffered by the country as a whole.” The Court also ordered the police and, if necessary, the military to ensure compliance with the interim order. On July 25, 2006 the Supreme Court issued an order extending the prohibition on trade union action until November 25, 2006. The strike action was legal under both national and international law. The Supreme Court cited the economic loss to the nation as a whole as a factor in its determination. However, the right to strike may be restricted or prohibited: (1) in the public service only for public

12 Dr. N.C. Amarasinghe, National Institute for Occupational Safety and Health, Nutritional Status of the Female Garment Factory Workers in the Katunayake Free Trade Zone, Sri Lanka, Labor Gazette, June 2007. The study found that “the Body Mass Index (BMI) of female factory workers showed that (34.2%) of the surveyed sample is suffering from some form of chronic malnutrition.” The study also revealed that “in terms of Iron Deficiency Anaemia, female garment workers are the most affected occupation in the country and the status of iron store depletion is alarming.” 13 See, ILO Committee on Freedom of Association, Complaint against the Government of Sri Lanka by the Health Services Trade Union Alliance, et al., supported by the International Textile, Garment and Leather Workers' Federation (ITGLWF) and the International Transport Workers' Federation (ITF), Report No. 348, Case No. 2519. 14 The constitution of Sri Lanka clearly says that fundamental rights violations may only result from executive branch action. Thus, it is not possible to invoke a fundamental rights claim over an industrial dispute by trade unions, as their collective action does not constitute executive or administrative action.

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servants exercising authority in the name of the State; or (2) in essential services in the strict sense of the term - that is, services the interruption of which would endanger the life, personal safety or health of the whole or part of the population. In general, port operations are not considered an essential service. Further, no evidence was put forward by the JAAF to establish the existence of a clear and imminent threat to the life, personal safety or health of the whole or part of the population. The ILO, on review of the matter, stated that it was “inclined to view the restriction placed on the port workers' action by the injunction issued by the Supreme Court as contrary to the principles [regarding essential public services].”15

The ILO also dismissed the idea that a work-to-rule or go-slow action is an illegal strike tactic. “The Committee recalls that, regardless of whether the action in question is a work-to-rule or actually a go-slow, it has always recognized the right to strike by workers as a legitimate means of defending their economic and social interests, and that various types of strike action fall within the scope of this principle; restrictions regarding these various types of strike action may be justified only if the strike ceases to be peaceful.”16

Finally, and importantly, the JAAF had no standing in the industrial dispute between the 14 port trade unions and the SLPA, as the matter was an industrial dispute between the port and the unions. Moreover, the JAAF's petition to compel the 14 port unions to resume work at full speed undermined the right of workers to determine their own terms and conditions of employment freely and voluntarily. The court established a grave precedent that could, and has, curtailed the exercise of the right to strike by allowing third-party petitions claiming specious rights violations to quash legitimate trade union actions and thus weaken the ability of trade unions to compel employers to engage in collective negotiations. Also troubling, the Supreme Court punished the unions for bringing the case to the ILO Committee on Freedom of Association. The Supreme Court found that, “The unions have been registered under the laws of Sri Lanka and have no status except the recognition given to unions by the laws of Sri Lanka. In the circumstances, whilst proceedings are pending in the highest Court of this country, the unions should not seek redress from an external body.”17

The Supreme Court punished the unions by denying costs of litigation, citing the filing of an ILO Committee on Freedom of Association complaint as a reason.

2. Teachers Strike Enjoined In response to the very limited career advancement opportunities available to teachers, they demanded, and the government introduced, the Sri Lankan Teachers’ Service (SLTS) and the Sri Lankan Principals’ Service (SLPS) in 1994 and 1995 respectively. Under these systems, teachers and principals were able to move up the ladder within their respective services and earn the same salaries as those earned by officers under the Sri Lanka Education 15 Supra fn. 17, at ¶ 1142. 16 Id. at ¶ 1143. 17 SC Application No.248/2006.

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Administrative Service (SLEAS). These systems placed grades in the SLTS, SLPS and the Sri Lanka Education Administrative Service (SLEAS) on a uniform salary scale. Under this system, it also became possible for a teacher, while continuing to teach, to study and qualify for higher positions within the SLEAS. This system was maintained until 1997, when the Government established the BC Perera Salaries Commission (BCPSC), with a mandate to review and revise salary scales of the entire public service of the country. In 1997, the BCPSC issued Salaries Circular No. 2/97, terminating payment of the higher SLEAS salaries to teachers – which they of course opposed. In 2006, the government appointed a Salaries & Cadres Commission (SCC). The SCC subsequently issued its own policy, Circular No. 6/2006, which essentially restated the policy of Circular No. 2/97. In response, on July 13, 2006, the teachers union barricaded the SCC office and demanded the removal of Circular No. 6/2006 and a return to pre-BCPSC policy. The government responded by convening a tripartite discussion with the Education Minister, the Department of Education, the SCC, and the teachers’ and principals unions. As a result, the government offered on May 22, 2007 to pay the teachers an interim salary until such time the dispute was resolved. However, the government never followed through on this promise. The SCC gave the unions a firm commitment to render a final decision on the matter by July 5, 2007. The SCC failed to meet this deadline however and promised to deliver their decision by August 7. On that date, the SCC announced its decision to reject completely the Interim Salary Proposal. Shortly thereafter, the government announced that grading of the General Certificate of Education examinations would begin on August 20, 2007. Test evaluation is performed by certain classifications of public school teachers, some of which were members a teachers union. On August 7, 2007, the teachers’ unions informed the authorities that they would boycott the examination evaluation work unless the Interim Salary Proposal was implemented. On August 13, 2007, the President summoned the trade unions for a discussion where he promised to look into the matter but gave no firm commitment. With no movement, the unions went ahead with the boycott – resulting in the exam evaluations coming to halt. According to the unions, the government contacted a student who sat for the exam to file a Fundamental Rights case in the Supreme Court against the unions, the Minister of Education, the Commissioner General of Examinations and the Attorney General.18

The case was filed on August 31, 2007, the same day that the cabinet subcommittee was in negotiations with the unions. The government decided, however, to restart exam evaluations on September 13 without resolving the issue. The unions responded by calling a one-day token strike for September 13. On September 9, the Supreme Court took up the case without summoning the respondent unions.

18 The student alleged that his right to equal treatment was violated by teachers unions’ actions. As above, it is not possible to invoke a fundamental rights claim over an industrial dispute by trade unions, as their collective action does not constitute executive or administrative action.

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At the hearing, the Commissioner General of Examinations told the court that the striking unions were sabotaging the test evaluation and requested that an injunction order be issued against the unions - which the court unilaterally granted. On September 13, the Supreme Court again took up the case without the unions. At the hearing, the Commissioner General of Examinations told the court that unions are continuing with their trade union action despite the injunction, arguing that that the unions were in contempt of court. On the night of September 13, the police affixed the notice of injunction on the doors of the union offices. On September 14, the unions were summoned to appear before the Supreme Court. The chief justice alleged that the union action is amounting to contempt of court and ordered five union leaders be released only if they pay a sum of Rs. 50,000 each as bail. They were eventually bailed out by the principal of a public school in Colombo, who paid the Rs. 250,000 bond for the five leaders involved. The police were then sent to the homes of teachers who were supposed to be evaluating the exams and forced them to work. On June 11, 2008, the teachers union again went on strike citing the lack of any resolution to this underlying salary and career advancement issue. Update: On October 6, 2008, the Supreme Court ordered two annual salary increments to teachers’ salaries but the order was never implemented. Moreover, the Education Minister stated that 3,000 Million Rupees (US$26.3 million) would be allocated in the 2008 national budget for the education sector, including pay raises. This too never happened, causing the teachers’ unions to plan a boycott of the General Certificate of Education (Ordinary Level) examination investigation work in December 2008. The union provided advance notice of their proposed strike to the Education Ministry by letter dated November 26, 2008. The government preempted the union by organizing two candidate students to file a fundamental rights case before the Supreme Court on December 2, 2008. The court issued an injunction in response to the students’ claim. In December 2008, the Education Minister stated that a pay raise for the teachers was going to cost 6,000 Million Rupees (US$52.6 million) and would thus have to be implemented in two stages: 40% in the first stage and 60% in the second. The Education Minister then submitted a memorandum to the Cabinet requesting approval for the pay raise, which was referred to the Public Sector Salaries and Cadres Commission. The pay raise scheme was rejected on December 31, 2008. The issue remains unresolved. E. Trade Union Leaders Threatened On February 6, 2007, three men, including a trade unionist, were abducted in Colombo. The abductions provoked protests by several trade unions, which rallied in front of the Colombo Fort Railway Station on February 7. The following day, the GOSL revealed that it had the men in custody and that they were being interrogated on suspicion of collaboration with the Liberation Tigers of Tamil Elam (LTTE). The unions called on the government to follow established legal procedures if they have credible evidence of collaboration with the LTTE, not abduct persons clandestinely.

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The union activists who participated in the Fort Railway Station protest were then accused of being LTTE agents. From February 8 onward, posters produced by unknown individuals appeared throughout Colombo and elsewhere denouncing the union activists as traitors and/or agents of terrorists.19

These posters specifically targeted Anton Marcus of the Free Trade Zone and General Services Employees' Union (FTZ-GSEU), Saman Ratnapriya and Ravi Kumudesh of the Health Sector Trade Union Alliance (HSTUA), Sampath Rajitha and Raja Kannangara of the Joint Railway Trade Union Alliance (JRTUA), and Joseph Stalin of the Ceylon Teachers' Union (CTU).

As a result of these allegations, the unionists received several death threats. On February 21, the FTZ-GSEU and the HSTUA lodged complaints with the police hoping that they would be given protection so that they could continue to carry out their trade union activities. To date, the police have undertaken no serious investigation and have done little to guarantee the safety of these union leaders. Four trade unionists in all, two from the railway union and two from the teachers union, have been detained on suspicion of being agents of the LTTE. These trade unionists all still remain in custody even though no charges have been brought against them over one year later. Update: As of this writing, the four unionists remain jailed. F. Labor Violations Outside the Export Processing Zones (EPZs)

1. Blue Diamond Ltd.

From 1975 to 1984, roughly 1,000 workers were employed by Blue Diamond to cut and finish diamonds for export. In 1984, workers organized an independent union, breaking away from the existing management-dominated union that had been in the factory for years. In response, the employer fired all of the workers and then rehired most of them back on a contractual basis. Specifically, the employer established several hundred “companies,” each employing 2-3 workers. The work was then provided by these individual companies, all with the same address, under the terms of identical contracts with the primary employer. The workers were employed under this arrangement for 16 years, from 1984 to 2000, when many were rehired as directly employed workers. From 1984 to 2000, the employer failed to pay into the Employee’s Provident Fund (EPF), which is a statutory social security benefit. In 1998, a case was filed with respect to the non-payment of the EPF benefit. Roughly 800 workers qualified for this benefit, though only 400 workers were named in the government’s case. This case has still not been resolved but has instead been languishing in the appellate process for nearly a decade. The next, but by no means final, hearing is on June 24, 2008. 19 One such poster reads: “Agitation By Anton Marcus And Pro-Tiger Agents To Demand The Release Of Sinhala Tigers Who Were Arrested Recently…Let’s Chase Tiger Anton Who Betrays Our Motherland And Our Work Place.”

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The company is now planning to move the factory into the Katunayake Free Trade Zone. In so doing, the employer intends to reduce the workforce from roughly 1,100 to 670. The workers were informed that there is a voluntary retirement scheme available - though many workers report that they were forced by management to sign a retirement agreement. Management has agreed to pay the workers according to a compensation formula, which was introduced by the GOSL. However, management said that it would only recognize years of service from 2000 forward, even though there are numerous workers who have worked for nearly 20 years with the company. Management has also been using the lay-off/retirement scheme to target union members – offering members enhanced compensation packages if they resign from the union. The National Workers Congress (NWC) held a discussion at the Labor Department, Industrial Relation Division, on April 28, 2008 with regard to the retirement scheme that was introduced by management. However, management refused to have any discussion with the NWC regarding this issue. On the following day, management requested the union leaders to turn in their letters of resignation, resigning from the union in return for payment of compensation. The leaders have not resigned and have since had several discussions at the Labor Department in Colombo. Management filed an application with the Termination Unit of the Ministry of Labor asking permission to terminate 63 workers, including union leaders, stating that they have an excess of workers. On May 12, the Assistant Commissioner of Labor summoned the workers and the management for an inquiry. At this inquiry, the union’s lawyer challenged management to provide any valid reason as to why the company should terminate these workers. Management failed to provide any reason. Management suggested that before the end of May 2008, they would organize a discussion for these workers with the Chairman of the company regarding the compensation they are requesting. This meeting never took place. The date of the next inquiry will be June 23, 2008 at the Termination Unit, Department of Labor.20

Update: Fifty-two workers have accepted the compensation package under the Voluntary Retirement Scheme (VRS) and left the company. The remaining ten workers are still fighting for their jobs. Out of these ten, eight are members of the National Workers Congress (NWC). The NWC is representing their eight members at the Termination Unit of the Labor Department. After several hearings, the case was postponed to June 30, 2009. With regard to the non-payment of EPF, the Court of Appeals ruled on December 10, 2008 that the workers were entitled to statutory benefits from 1984-2000. The company filed an appeal to the Supreme Court. The initial trial date was set for May 2009 but was postponed to July 14, 2009. 20 In addition to these claims, the lack of proper safety equipment has also been a serious problem for years. Although required by law, workers are infrequently provided masks, causing many workers to develop respiratory problems from airborne dust and particulates. The lack of protective eyewear has also led to the impairment of eyesight of other workers.

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2. Harepark S.P.21

In 2003, the Independent Workers' Union (IWU) filed a complaint regarding the non-payment of an agreed gratuity to 500 employees of Harepark S.P., a state-owned and managed tea plantation that has since been leased to a private company. Prior to leasing the tea plantations, the government committed to pay all employees at Harepark a gratuity by January 31, 2003. The government failed to stand by its commitment. This led to a mass strike at the Harepark plantation. The estimated sum of money owed to the workers amounts to 1.6 million euros gratuity and 500,000 euros from the Employer Provident and Trust Fund. According to the Assistant Commissioner of Labor of the Kandy-North District, judicial proceedings have already permitted the recovery of some funds. Further, steps are to be taken to recover unpaid contributions to the Employer Provident Fund. The ILO noted that the Government referred to a single, individual complaint on non- payment of gratuity. However, the IWU maintains that the situation concerns 500 employees. The government must ensure that all funds owing, both gratuities and payments to public welfare funds, are paid in full to all eligible workers at the Harepark plantation. G. Labor Violations in the EPZs Internationally recognized worker rights continue to be routinely violated in the EPZs of Sri Lanka. In many cases, union officers and members are suspended, demoted or terminated, and many have been the victims of violent assault. In other cases, employers have promoted non-union employees councils as a way to avoid or to weaken unions (see Section H). Employers frequently fail to pay into the Employees Provident Fund (EPF), a statutory social security benefit. And, employers routinely fail to pay workers the wages owed when they downsize or close factories. When complaints of labor violations are brought before the appropriate governmental authorities, unions allege that employers rarely attend the hearings and, when they do, they frequently violate the terms of settlements and/or arbitration awards with impunity. The government has been unable to enforce these awards. Moreover, the government has been reluctant to enforce the law. Indeed, the Commissioner of Labor has yet to bring a single unfair labor practices case to the courts. Below are just a few examples of typical labor violations in the EPZs of Sri Lanka.22

1. Smart Shirts Lanka Ltd.

21 See ILO Committee of Experts on the Application of Conventions and Recommendations (“CEACR”), Individual Observation Concerning Protection of Wages Convention No. 95, Sri Lanka (2008); ILO CEACR, Individual Observation Concerning Protection of Wages Convention No. 95, Sri Lanka (2005). 22 The union representing the workers at that factory, unless otherwise noted, has provided the information set forth in these cases.

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On December 11, 2007, workers at Smart Shirts Lanka Ltd (Factory #3) went on strike to demand a salary increase to compensate for the very sharp rise in the cost of living. The same day, these workers contacted and became members of the FTZ-GSEU union. The following day, representatives of the workers and employers signed a Memorandum of Settlement with the help of the Ministry of Labor. The workers thereafter returned to work, but management immediately began to retaliate against the workers. For example, the company shortened the length of the regular end-of-year holidays. The union objected, and on December 27, with the intervention of Commissioner of Labor, a settlement was struck on the holiday dispute.

The company also disciplined and discharged two union officers. Mr. Dinesh, a union executive committee member, was transferred to a different department in the company, was denied overtime, and, on December 31, was handed a letter of termination. On January 3, the union’s chief organizer, Mr. Indika Priyadarashna, was also handed a letter of termination, which alleged falsely that he had provided fraudulent production figures. On January 2, workers were forced to work overtime in contravention of the conditions of the December 27th memorandum of settlement. Further, on January 4, 2008, workers in some sections of the factory were forced to work during their holiday, also in contravention of the memorandum of settlement. Update: On January 4, the union filed a complaint with the Commissioner of Labor requesting that he prosecute Smart Shirts Lanka Ltd for its unfair labor practices, especially the dismissals of the union officers. The union also asked that Smart Shirts Lanka Ltd comply with the conditions of the memorandum of settlement. No action has been taken so far despite a reminder sent by the union on August 12, 2008 to the Ministry of Labor Relation and Manpower.

2. Brandix Finishing Ltd. In November 2007, management unilaterally changed the work schedule that had been in place for over a year without consultation with the union. The workers approached management seeking to restore the same work shift but management flatly denied their request. In response, the majority of the workers went on strike. On November 23, the union called for the intervention of the Commissioner of Labor and, that day, discussions were held at the Labor Office at Avissawella. The Inquiry Officer proposed that the company provide in writing that it would review the new system in two weeks, a proposal that the union was willing to accept. However, management refused to give a written commitment. After two discussions on November 23 and 26, and with no resolution in sight, the union continued its strike. On November 26, the dispute was settled with the intervention of the Deputy Commissioner of Labor, subject to the condition that management would not retaliate against workers engaged in legitimate union action. However, when workers reported to work on November 29, management continued to harass them. The branch union activists

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were demoted and directed to perform unskilled work. Moreover, the company threatened to close the factory if the union continued to demand restoration of the previous work schedule. As the intimidation intensified, some workers tendered their resignation – constructively discharged. The union wrote directly to the director of the company on December 29 to request a meeting to discuss settlement. The request was rejected. The union filed another complaint with the Commissioner of Labor, but despite the intervention of the Commissioner of Labor on March 5, 2008, no settlement was reached. The union thereafter filed a claim with the Labor Tribunal regarding the termination of 40 employees. Update: The hearing on these cases has been postponed several times. Moreover, the cases of several of the workers have been improperly dismissed by the tribunal. Under the law, if a union is appearing on behalf of its members, it is not necessary for all of the aggrieved workers to appear. However, the Labor Tribunal has insisted that all workers must appear before it when the case is called, and failure to do so will result in dismissal. Thus, of the 40 original claimants, only 14 now have cases pending; the other 26 did not appear for one or more of the prior hearings. No action has been taken on the 14 remaining cases.

3. Alitex (Pvt) Ltd. (sufficiently resolved and withdrawn)

4. Star Garments (sufficiently resolved and withdrawn)

5. New Design Manufacturing Ltd. On January 11, 2005, management dismissed three supervisors (non-management employees) without cause. In response to the dismissals, about 250 workers went on strike to demand the reinstatement of their co-workers. The workers filed a complaint with the Commissioner of Labor on January 13, 2005 when management refused to reinstate them. The workers were advised by the Commissioner of Labor to report to work the next day and that a meeting with management would be arranged for Monday, January 17. However, when the workers reported for work on Monday, they were told they needed to interview with management because they had decided to “reemploy” them as new hires. When the workers refused to do so, management locked out roughly 250 of the workers. On January 18, the three dismissed workers received a letter informing them that they were terminated for having instigated an “illegal” strike a few weeks earlier. For the workers, however, the strike was justified because management had announced a plan to introduce a new piece-rate pay system, which workers had rejected as contrary to regulations prevailing in the industry, and which would reduce their earnings. During a meeting on January 19, 2005, the Commissioner of Labor recommended that the company end the lockout and reinstate all of the workers immediately, including the three workers dismissed on January 11, because the company had failed to comply with the procedures laid down by the Board of Investment of Sri Lanka regarding the dismissal of

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workers. Rather than comply with the recommendations of the Commissioner of Labor, the company instead advertised vacancies in the local newspaper and started recruiting new employees. Some employees reported for work over the following days but were not reinstated. The workers reported that the management assigned two supervisors to determine whether those who showed up for work were trade union members. On February 11, 2005, management informed the Commissioner of Labor that it would not allow the workers to report for work unless they accepted to be rehired under new labor contracts, as newly recruited workers. The Commissioner General of Labor reiterated his advice to the management of the company to allow the workforce to report for work immediately without any conditions.23

In March 2005, the workers approached the Free Trade Zones & General Services Employees Union (FTZ-GSEU) for assistance. The union filed a compliant on their behalf with the Ministry of Labor on March 18, 2005, which was referred to compulsory arbitration under Section 4(2) of the Industrial Relations Act. Nearly two years later, on December 17, 2007, the case was heard and management agreed in principle to settle the dispute. The union agreed to go back to work with six months back wages and without a break in service. On December 27, the union sent a letter to the company enclosing a list of 73 workers who were willing to return to work on January 1, 2008. On that date, management convened a meeting of returning workers and told them that they would receive only a monthly wage of Rs. 4,900 – which is substantially lower than the then current minimum wage of Rs. 6,000. On January 9, the union sent a letter to the arbitrator stating that the workers should be reinstated at the current minimum monthly wage. The complaint was reviewed on January 30 and again on February 29, 2008. However, the company informed the arbitrator that they are closing the factory and informed the union on March 3 that it had removed 52 machines from the factory. The court called the case again on March 12, 2008 for a final decision, which directed the employer to pay six months salary. By then, however, the company’s directors had left the country.

The union urgently requested in writing that the Commissioner of Labor and the BOI take action to assess what is owed to the workers, to stop the company from selling off the machinery and other assets until such time the workers’ wages and benefits had been paid and find a new investor to take over the company and continue production. No action has been taken, and no payments have been made to these workers. Update: New Design Manufacturing never deposited the compensation awarded by the arbitrator. The union has requested that the Commissioner of Labor take action to recover the compensation owed. The Commissioner of Labor wrote a letter to the directors of the company on January 13, 2009 advising that a sum of Rs 3,483,000 ($30,552.60) should be deposited with the Assistant Commissioner of Labor in Matara (Southern Province) within 30 days of the date of publication in the Gazette. The Commissioner of Labor also requested that the company comply with the award without delay and that failure to do so would 23 See, ILO Committee on Freedom of Association, Complaint against the Government of Sri Lanka by the Int’l Textile, Garment and Leather Workers' Federation (ITGLWF), Report No. 340, Case No. 2419.

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compel the Commissioner to take legal action for non-compliance of the award. However, the Commissioner of Labor has not received any reply from the company to date nor has it taken any action to recover the funds.

6. G.P. Garment (Pvt) Ltd.

In January 2005, Mr. Geert Derere, Chairman of GP Garments, and Mr. Stefan Van Ende, senior staff, told the union they would be reorganizing the factory to enhance productivity. However, instead of beginning a process of dialogue with the workers, local management immediately resorted to bribes and intimidation. Also, management refused to negotiate long-standing union demands for improvements in wages and working conditions, and instead threatened to close the company if it could not impose changes unilaterally. Eventually, management labeled the union’s warning that it would raise the problems with the international buyers as “terrorism.” The local manager, Mr. Saman Wijesundara, also told the union that it has set aside a $100,000 fund to put an end to the union. As tensions escalated, management brought the special forces of the police into the factory on March 23 in order to intimidate and threaten union leaders. Other union leaders received threatening phone calls and the president of the union was visited at his home by a group of thugs. When workers struck to demand protection from police interference in trade union affairs, the company locked out the workers and took disciplinary action against thirteen workers. The workers continued to picket the factory gates and protest outside the factory offices of the Board of Investment. On April 6, an agreement was reached allowing for the payment of outstanding wages and bonuses, a return to work on April 18, and an inquiry into the case of the thirteen workers who had been banned from returning to work. However, when workers returned to work, their bonuses still remained unpaid. Frustrated by management’s repeated failure to keep its promises, the workers occupied the factory. Two managers, Mr Serge Watte and Mr Stefan Van Ende, who had arrived on site, were prevented for a few hours from leaving when the workers locked the doors. The sit-in ended a couple of days later following a meeting between management, the Commissioner of Labor and the union with an agreement to pay the outstanding wages. That same day, the company wrote a “letter of interdiction” to the workers, banning them from the workplace. Further discussions then took place on April 28 between the company, the union and the BOI, in which the union agreed to allow the company to transfer to the Awissawala factory the materials necessary to complete an urgent order, in exchange for a series of measures designed to ensure a resolution to the dispute. The day after the agreement was signed, the company sent out letters of termination to the entire workforce – roughly 479 workers. When the company tried to recruit new employees to replace those who were dismissed, the BOI directed the company that it could not recruit new employees either directly or through

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labor contractors or through transfers from other factories belonging to the same company until the dispute is settled. However, the Minister of Investment Promotion and National Enterprise Development permitted G.P. Garments to recruit new employees in disregard for the BOI order. The union filed a claim against the employer over the dismissals. The case was eventually submitted to compulsory arbitration. However, at the same time, the company petitioned the court to have the Attorney General prosecute 37 of the workers under the Hostage Act. The company also requested that the union’s case be stayed until a final decision is handed down with regard to the Hostage Act claims. The case was in fact stayed, a decision that the union has now appealed. The union believes that the hostage claim was filed merely as a dilatory tactic to prevent adjudication of the merits of their complaint. Today, the company continues to operate, though with a largely union-free workforce. Update: The union later learned that the workers were indicted under the Penal Code, not the Hostage Act, with a total of 13 charges against them. When the High Court called the case on November 20, 2008, 35 of the 37 employees appeared before the court. The court released them on bail of Rs.10,000 ($87.7 USD) each. Warrants were issued for the two employees who did not appear in court. The case was first postponed to February 12, 2009 and again on May 11, 2009. The cases are currently expected to begin in July 2009, though an indictment has yet to be issued. Meanwhile, on November 6, 2008, the GP Garment Factory closed and some of the workers were transferred to another factory in Awissawella (about 60 km away). The remaining workers left as they did not want to travel the distance to the other factory. The workers who left the factory did not receive any compensation.

7. Workwear Lanka24

On December 27, 2003, workers at Workwear Lanka went on strike to protest management's harassment aimed at workers who had objected to the company's failure to pay the last month's wages and end of year bonus. Shortly thereafter, about 260 workers held a founding meeting to set up a branch union of the FTZ-GSEU. Immediately thereafter, management questioned each worker about his or her affiliation to the union and threatened members to resign from the union or face dismissal. On December 31, 2003, management issued letters to the vice-president, treasurer and executive committee members of the union and other activists accusing them of conducting an illegal strike on December 27.

On January 1, 2004, the union informed management of the names of the branch union’s officers. The following day, five union officers, including the branch union president, were barred from entering the factory by the security guards. The union requested a meeting with 24 See ILO Committee on Freedom of Association, Complaint against the Government of Sri Lanka by the International Textile, Garment and Leather Workers' Federation (ITGLWF), Report Nos. 336 & 340, Case No. 2380.

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management to discuss the anti-union harassment and intimidation and filed a complaint with the Commissioner General of Labor requesting intervention. The Commissioner requested that union and management representatives meet with him on January 12 to discuss the situation.

On January 4, the company issued a formal “charge sheet,” a written statement from management detailing charges against the five union officers to the branch union secretary, holding her personally responsible for the “illegal” strike and the company's subsequent losses. Management also demoted a number of other workers because they had refused to resign from the union. Management failed to attend the January 12 meeting and instead wrote to the members of the union indicating that they would not be dismissed if they plead guilty to the company’s charges and asked for a pardon in writing. The workers refused and, on February 3, were dismissed. The union president was demoted to floor sweeper on February 9 and subsequently resigned.

By February 10, another 100 workers, many suspected union members, had been dismissed on the basis that their services were no longer required; however, the company had been actively recruiting new workers through an employment agency.

On February 24, management finally attended the meeting convened by the Commissioner of Labor. The Commissioner advised management that the harassment of union members was an unfair labor practice and therefore unlawful. The Commissioner also advised management to expedite the disciplinary proceedings against the branch union officers and members who had been suspended and pay them 50% of their salary for the period of suspension. The Commissioner of Labor also requested that the decision of the disciplinary inquiry against the branch union officers be sent to him before April 30, 2004. By letter dated March 1, 2004, management requested eight suspended workers to respond to the charges against them on or before March 16, 2004. Even though the company had agreed to hold its first discussion with branch union before March 10, 2004, they did not do so. The branch union executive committee met on March 10, 2004 and wrote a letter to the management requesting a discussion referring to their earlier promises to do so. The following day, March 11, another complaint was also filed with the Commissioner of Labor reporting that the company was not paying the suspended workers 50% of their salary. On April 6, management informed the Commissioner that it agreed to conclude the disciplinary procedures before April 30 and to pay the suspended workers 50% of their salary from the date of suspension until the finalization of the inquiry. The company agreed to pay these wages on April 10 and to hold new meetings with branch union officers on April 23. On April 10, management once again refused to pay the suspended workers as agreed and stated that it would only pay them if the inquiries were finalized before the end of the month.

On April 18, workers attending the domestic inquiry learned that their prior demand to have legal defense was refused. The workers protested and the inquiry was postponed until April 24. On April 25, the suspended workers attended the domestic inquiry with a letter

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protesting the refusal of counsel and other irregularities. When the workers submitted this letter to the inquiry officer, they made it clear that their participation in the inquiry would be under protest due to these concerns. At the request of the company's lawyer, the inquiry officer denied the suspended workers admittance to the inquiry and requested that they withdraw their letter. The workers refused and the inquiry officer proceeded without the workers present.

On April 28, the union again wrote to the Commissioner, noted management’s failure to uphold the April 6 agreement and requested that the employer be compelled to pay 50% of the workers' salaries, arbitrate the dispute regarding the termination of services of about 100 workers and that the government bring an action against the company for unfair labor practices. On May 7, the Commissioner put forward several proposals to settle the dispute, including allowing the suspended workers to retain counsel and restart the domestic inquiry, which should be concluded before July 30. Until such time, the suspended workers should be paid 50% of their salaries from the date of suspension.

The company asked for time to get advice from their directors about these proposals. The union agreed to consider the proposal after hearing the company's decision. On May 13, the union wrote to the Commissioner requesting immediate action on the unfair labor practice charges due to the company's reluctance to settle the matter on the basis of the proposals. The union took the case to the ILO Committee on Freedom of Association. The ILO reviewed the case in 2006 and recommended that the GOSL:

take the necessary steps without delay to ensure that a procedure on the allegations of anti-union discrimination be opened and be brought to a speedy conclusion in a fully impartial manner and to keep it informed in this respect. Furthermore, if the allegations are found to be true, the Committee requests the Government to ensure in cooperation with the employer concerned that: (i) the workers dismissed as a result of their legitimate trade union activities are reinstated without loss of wages and without delay or, if reinstatement in one form or another is not possible, that they are paid adequate compensation which would represent sufficiently dissuasive sanctions for such anti-trade union actions; (ii) the workers demoted as a result of their legitimate trade union activities are restored to their former posts without delay; and (iii) the workers under suspension because of their legitimate trade union activities are allowed to resume work without delay and are paid wages for the period when they were unjustly denied work.25

On August 16, 2005, the branch union requested the Labor Commissioner to hold a referendum to determine whether the union represented 40% of the workforce. Instead, the employer registered the employees’ council, a non-union consultative body of workers, as the Work Wear Lanka Employees’ Council Union in September. The company then informed

25 Id.

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the labor authorities that they had recognized the union as the collective bargaining agent of the workers and requested that the referendum requested by FTZ-GSEU be cancelled. Accordingly, the Commissioner of Labor postponed the referendum indefinitely. On October 5, 2005, roughly 260 workers went on strike over the suspension of the branch union’s president and the company’s refusal to recognize the union (and its recognition instead of the employees’ council). In response, the employer sent letters of dismissal to all workers participating in the strike. On October 8, the employer made a request to hire new workers until the matter was settled. The Commissioner, however, refused to grant permission to hire workers on a contract basis. The BOI informed management to stop recruiting new employees because of the violation of the right to strike. The company sought a restraining order against BOI’s instruction from the Court of Appeal, which was granted. Today, production is carried out with contract workers, some of who have been absorbed as permanent workers. On January 2006, the union filed a case regarding the dismissal of 260 workers. There has as yet been no final judgment on this case. Update: The complaint alleging unlawful termination was withdrawn by the union and re-filed with a Labor Tribunal under the Industrial Dispute Act No. 56 of 1999, which the union determined was the proper forum and law for the acts of unlawful termination.

8. Ceyenergy Electronic (PVT) Ltd. The Ceyenergy Electronic Company, which employs about 200 workers, manufactures energy efficient light bulbs and electrical appliances at its Colombo factory for local and export markets. The companies in the Ceylinco Group have no independent unions, although there are several management-dominated unions. On November 19, 2004, all but 40 workers of the Ceyenergy Electronic Company resigned from the company unions and joined with the Free Trade Zones & General Services Employees Union (FTZ&GSEU). Immediately after being informed of the formation of the branch union by a letter dated November 19, 2004, management unilaterally terminated three members, demoted the branch union president, and dismissed one of the activists. Workers were also denied their regular annual bonus. The union wrote several letters to the chairman, Deshamanya Lalith Kotalawela, and asked him to discuss these matters; however, the letters were never acknowledged. The union thus filed a complaint to the Commissioner of Labor and requested intervention. Although the Assistant Commissioner of Labor set an inquiry for January 26, 2005, the company representative did not attend. In the meantime the BOI of Sri Lanka introduced a Rs. 500 salary increase to all BOI approved enterprises that should be implemented beginning January 2005. The company also refused to pay this salary increase. The members of the branch union at Ceyenergy decided to launch a picket campaign after normal working hours on February 2, 2005. When

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the union activists were preparing placards on February 1, 2005 at their boarding house, they were assaulted. A group of thugs entered the boarding houses and assaulted the workers by using cricket wickets and injured five activists including the branch union president. Two of them were admitted to the hospital and three others were discharged after treatment. Members of the branch union decided to begin a work stoppage on February 2 in support of their fellow workers who were assaulted. Branch union members continued their picketing until they felt assured of their safety. The police arrested one suspect who was involved in the assault. However, company lawyers appearing on his behalf had him released on bail. Union members continued the picketing campaign until February 10, 2005, when the Commissioner of Labor called a meeting with the management. At the discussion, the lawyers representing the company asked for a postponement until March 2, 2005. In the meantime, on February 18, 2005, the company announced that they would shut down the factory for 10 days and advised the workers to return then. However, union members received a letter dated February 18, 2005 stating that the company had decided to dismiss all workers who joined the company after 2002. The company asked workers they intended to dismiss not to report for work until they had finalized applications to the Commissioner of Labor seeking permission to terminate them. The company submitted an application to the Commissioner of Labor to lay-off 138 employees. As a result, all union members except the branch union president and three others were laid-off. The company originally promised to pay salaries to the workers until the Commissioner of Labor granted permission to terminate their service. The company stopped payment of salary from May 2005. The union filed a complain to the Commissioner of Labor on the basis that company terminated the services of the employees by refusing to offer them work as well as the payment of salary. This inquiry went on until December 2007 and the Deputy Commissioner of Labor still has not rendered a final judgment. The union also asked the Commissioner of Labor to prosecute the employer under the provision of the Industrial Disputes Act anti-union discrimination. The commissioner has so far refused to do so but has stated no reason for the delay. Update: The Commissioner of Labor’s Termination Unit issued an order on February 21, 2008 on the application made by the company. The order demanded that the company deposit a sum of Rs. 8,433,150.00 ($73,975) as compensation and back wages for the 132 workers on or before November 28, 2008. The company has not deposited the compensation and has stated that they will file a writ application against the order of the Court of Appeal. The Commissioner of Labor’s Prosecution Unit has begun taking steps to prosecute the company to recover the compensation. H. Employees’ Councils (no update) One of the greatest problems in EPZ factories is the widespread creation of management-controlled “employees’ councils.” The Sri Lankan government continues to allow the BOI employees’ councils to take root and spread unimpeded by the enforcement of national laws. The BOI has previously argued that workers’ councils are evidence that freedom of

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association and collective bargaining are respected in the EPZs. To the contrary, workers’ councils are management dominated. It is management that chooses most workers’ council representatives and stacks the councils with supervisors and office-based (rather than shop floor) workers. Also, management sets the schedules and agendas for meetings and limits discussions to marginal workplace issues, avoiding wages, hours and most conditions of work. In addition, employees’ councils have been the means by which management has attempted to thwart unionization efforts. In some cases, management will refuse to recognize the nascent union and instead “bargain” directly with the employees’ council as if the body were the legitimate representative body of the workers. In other cases, management will offer benefits to workers’ council members if they do not join the union, or threaten members of the workers’ councils if they do. In one case, Work Wear Lanka, the company went so far as to register the workers council as a union – an application that was approved by the government. Unions have reported the recent use of workers councils to frustrate internationally recognized worker rights in several factories, including: Synotex Lanka pvt Ltd and Star Garments Factory 1 & 2. The use of workers’ councils to subvert the will of workers to form a union is a clear violation of the right to organize and bargain collectively. I. Labor Inspection in EPZs (no update) The Export Processing Zones (EPZs) are under the purview of the Board of Investment (BOI), which has its own Industrial Relations Department under a Director of Industrial Relations. The BOI also has the autonomy to establish its own rules and standards. This fact, taken together with the fact that labor inspectors under the jurisdiction of the Ministry of Labor cannot make unannounced visits to workplaces inside EPZs, substantially reduces the frequency and effectiveness of inspections. Indeed, the existence of separate industrial relations under the BOI has been, and continues to be, prejudicial to the interests of workers. It is important to note too that the BOI’s Chairman has always been a prominent business leader. Thus, important governmental functions have been turned over to the private sector, which is less likely to recognize and guarantee the rights of workers in the zones. The unions have long called for the abolition of the BOI labor inspectorate and for putting the responsibility for inspections under the jurisdiction of the Ministry of Labor. It is very difficult for anyone, even a labor inspector, to enter an EPZ. Anyone who seeks to enter the zone must present his or her national identity card at the gate and state the purpose of his visit to BOI security. Security will then call the factory to determine whether entry to the zone may be granted. If allowed, then a pass is issued and the vehicle may enter. All entrants must pay a fee of 60 rupees.

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NEW INFORMATION / CASES – 2008/2009 A. Additional Cases Sofia Lanka (Pvt.) Ltd. Sofia Lanka (Pvt.) Ltd. set up a factory under the name of Unichella (Pvt.) Ltd. Factory #2. The workers of Sofia Lanka joined the Free Trade Zone & General Services and Employees Union (FTZ-GSEU) in late 2005. The union informed management of the formation of the branch union and the names of the officers by letter dated October 18, 2005. During the change over from Sofia Lanka (Pvt) Ltd. to Unichella (Pvt) Ltd. Factory No. 2, the FTZ-GSEU proceeded to form a branch union. In December 2008, the union informed the management of Unichella (Pvt) Ltd. Factory No. 2 of the newly elected officers and committee members. After receiving this information, management forced some union committee members to resign and transferred the workforce (except for the remaining union officers and committee members) from Factory No. 2 to Factory No. 1. In the same month, the branch union Treasurer, Assistant Treasurer, Assistant Secretary and two committee members tendered their resignations from union due to employer harassment and intimidation. The FTZ-GSEU wrote to the company chairman asking for a discussion to settle the claims. The union also filed a complaint with the Commissioner General of Labor alleging violations of the Industrial Disputes Act. Sinotex Ltd In January 2009, the Sinotex Company, without warning, closed its doors and terminated the employment of all of its workers. Many of those workers were members of the FTZ-GSEU. By letter, the workers were told to come to collect checks between the 20th and 23rd. The letter also suggested that the company had submitted an application seeking approval of the termination to the Commissioner General of Labor and that compensation was being calculated according to government schedules. However, it does not appear that such an application was made. On January 19, the union and members sough a meeting with the Commissioner of Labor and a complaint was submitted challenging the termination. However, the government never scheduled an appointment with the worker representatives to consider the complaint. Given the failure of the government to respond, the workers had no choice but to collect the compensation offered by the employer. Workers were also required to sign a “conditions of settlement of dispute” form under duress. The union’s lawyer, on behalf of the 512 Sinotex workers, filed a lawsuit with the Court of Appeals to declare null and void the Memorandum of Settlement for the government’s failure to hold a hearing on the termination and allow the union to present its arguments. On March 13, 2009, the Court of Appeals decided to allow workers to proceed with their petition. At the hearing on April 30, 2009, the lawyer representing the Office of the Commissioner of

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Labor, the Attorney General as well as the lawyer representing the company requested time to file their objections until June 5, 2009. When the case was taken up for hearing on June 05, 2009, the lawyer appearing for the Attorney General requested time to file his own objections until June 30, 2009, which was granted by the Court. Wheel Work (Pvt.) Ltd. Wheel Work (Pvt.) Ltd. factory is jointly owned Italian and Sri Lankan company situated in the Biyagama Export Processing Zone (BEPZ). The factory manufactures rubber-mounted wheels and plastic-mounted steel rims for export. Workers of this factory formed a branch union of the Free Trade Zone and General Services Union (FTZ-GSEU). By letter dated Dec. 8, 2008, the FTZ-GSEU duly informed the company of the formation of the branch union and the names of its officers and committee members. The company has yet to acknowledge receipt of the letter. Even before the union informed the company, however, the employer learned of the effort and proceeded to form an Employees’ Council in an effort to undermine the union. However, the FTZ-GSEU succeeded in having its members elected to the EC. Immediately after the formation of the branch union, management allegedly engaged in following unfair labor practices:

• Union members were forced to resign from the branch union • The company withdrew the seven-day casual leave which workers enjoyed from

the inception of the company • The company refused to grant Rs.1000/- (US$8) salary increase recommended by

the BOI from January 2009 • The company changed of the shift system frequently to harass union members. • The company required workers to work on Saturdays, and treated them as normal

working days without overtime (when Saturdays are half days) • The company made branch union officers perform unskilled work such as

cleaning of the garden, removing them from duties such as operation of industrial sewing machines

• The company dismissed some union members claiming that they have taken excessive no-pay leave. However, the company had not taken disciplinary action before for taking no-pay leave.

The FTZ-GSEU tried to negotiate with management by requesting an opportunity to discuss these issues; however, the company refused to meet the representatives of both the branch union and the FTZ-GSEU. Following several complaints, the Commissioner of Labor held three discussions with the union and the company. The Commissioner asked the company to cooperate with the union but it refused, stating that they did not want to have a union in the factory. The Commission subsequently ruled that the company’s actions with regard to seven-day casual leave and the Saturday work shift violated the Wages Board Ordinances. The company agreed to restore the seven day casual leave but continues to defy the Commission on the Saturday issue.

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Separately, some union members asked the company to restore attendance and incentive bonuses. They were told that they would be restored if the workers resigned from the union. Around the same time, the union’s Joint Secretary and a machine operator were suspended on May 6, 2009 for alleged negligence of duty. However, the machine operator was allowed to return to work the following day because he tendered his resignation from the union. An internal inquiry has been set for the Joint Union secretary for June 24, 2009. His request to have an independent hearing officer review the charges against him was rebuffed. Because management is alleged to continue to engage in unfair labor practices and has refused to negotiate with the union, the union wrote a letter to the Commissioner of Labor urging him to take legal action against the company and to take steps to hold a referendum in the factory. The union was recently informed that a labor officer will be sent to the factory to make arrangements to hold a referendum. The other issues remain unaddressed. Paradigm Clothing Pvt. Ltd., situated in Hiniduma (Galle, Southern province), is a Sri Lankan owned garment factory with a workforce of about 800 workers that supplies products to several international buyers such as Nike and Gap. On May 3, 2009, management closed the factory, supposedly temporarily, due to a lack of orders. The Progress Union filed a complaint to the Labor Commissioner in May 2009 arguing that the provisions of Termination of Employment of Workmen's Act (TEWA) compensation formula and procedures were not observed when effecting termination. The inquiry is pending. Global Clothing (Pvt.) Ltd. is a Sri Lankan and Taiwanese owned garment factory with a workforce of about 760 workers situated in the Biyagama Free Trade Zone (Western Province). Workers in this factory sought help from the All Ceylon Federation of Free Trade Unions (ACFFTU) because their Employees Provident Fund (EPF) and Employees Trust Fund (ETF) contributions have not been remitted by the company to the Central Bank of Ceylon for the last two and half years. These workers have worked for the company for ten years or more. Workers at Global Clothing also allege that they have been made to work continuously (both the day and night shift) without enjoying legally required periods of rest, have not been fully compensated for overtime work, have been made to work on statutory holidays, have not always been paid in a timely manner and have had to work in unhygienic conditions. Women workers have also reported having been subject to verbal abuse by supervisors. DMR Apparel (Pvt.) Ltd. is a Sri Lankan owned garment factory situated in the Koggala Free Trade Zone (Southern Province) with a workforce of 350 workers. This factory has yet to implement a yearly minimum salary increment set by the Zones’ Board of Investment (BOI) for its workers beginning January 2009. B. Uncompensated Overtime

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Sri Lanka`s private sector employers organization, the Employers` Federation of Ceylon (EFC), requested that the Labor Ministry reduce the workweek by eliminating the normal half-day of work on Saturdays. The director-general of the EFC said that the redistribution of the Saturday work hours over the rest of the workweek should not require payment of overtime as workers also get an extra day off. The Labor Ministry was also quoted as saying that by working only five days a week, operating costs will be reduced, and jobs of workers will be made more secure. Previously, the Sri Lankan Government has allowed employers to extend the normal work hours from eight to nine hours on week days without overtime pay. An advisory committee on labor that includes the unions met on the issue but has yet to reach a final agreement. The unions are demanding that overtime pay should be given to workers for all hours worked beyond 8 hours. Conclusion For all of the reasons above, the AFL-CIO urges the USTR to remove Sri Lanka from the list of beneficiary developing countries under the GSP.