KOLUUNDZIJA

VS.

COMMISSIONER GENERAL OF LABOUR AND OTHERS

COURT OF APPEAL
DE SILVA, J.
KARUNARATHNA, J.
CA/WRIT/339/2014
AUGUST 16, 19, 2019

Writ of certiorari-Employees' Provident Fund Act-EPF payment- Employee or independent contractor-Applicable tests

The 5th respondent complained to the Commissioner General of Labour against the petitioner employer for non-payment of Employees Provident Fund (EPF) dues for the period from 01.11.2005 to 30.06.2011. The petitioner does not dispute that the 5th respondent was an employee under the petitioner within the meaning of the EPF Act for the period 01.08.2011 to 30.06.2012 in terms of a written contract of employment. The petitioner states that during the disputed period the 5th respondent had been working in terms of several consultancy agreements marked P3 to P9.

After inquiry, the Commissioner General of Labour directed the petitioner to pay the arrears of EPF for the disputed period on the basis that the 5th respondent was an employee and not an independent contractor during that period as well. The petitioner filed this application before the Court of Appeal seeking to quash the said decision by a writ of certiorari.

Held :

1. The petitioner placed much emphasis on the fact that the 5th respondent had accepted in the contracts marked P3 to P9 that she is not an employee of the petitioner and that she will not claim any benefits available to an employee. This contention is unsustainable as the characterisation by the parties of the nature of the contract between them is not determinative of the true legal relationship between them. Their relationship is determined by the law and not by the label they choose to put upon it.

2. The courts have adopted different tests such as the control test, the integration test, the economic reality test etc. to determine

whether a person is an employee within the meaning of the EPF Act or an independent contractor. When applying these tests to the facts of the instant case it is clear that the 5th respondent was an employee during the disputed period as she was inter alia: (i) reporting to the Operations Manager, which meets the control test requirement; (ii) required to submit monthly work plans and work in consultation with regional programme co-ordinators in core functions of the petitioner, which satisfies the integration test; (iii) expected to prepare her work methods in terms of the "Terms of Reference", which satisfies the elements of the control test; (iv) provided with an office as well as a desk, chair and computer and a permanent seat, which gives some indication that the contract is a contract of service; (v) provided with insurance cover for medical and personal accidents, which supports the position that she was an integral part of the business of the petitioner.

3. The reference to section 114 of the Inland Revenue Act, which deals with PAYEE Tax, and section 153 of the Withholding Tax Act, and the contention that PAYEE Tax is deducted by an employer from an employee and Withholding Tax is deducted by a specified person when paying fees to another for independent professional services and that during the disputed period only Withholding Tax was deducted from the 5th respondent is not decisive. Such an arrangement is the consequential application of the label that the parties agree to attach to their relationship and cannot be used to be determinative of the true nature of the legal relationship between the parties.

Cases referred to :

1. Council of Civil Service Union v. Minister for the Civil Service [1985] AC 374 at 408
2. Facchini v. Bryson [1952] 1 Times Law Reports 1386
3. Ferguson v. John Dawson and Partners (Contractors) Ltd [1976] EWC Civ 7, [1976] 1 WLR 1213
4. Y.G. de Silva v. The Associated Newspapers 1983 BALJR Vol 1 Part III 118
5. Ready Mixed Concrete Ltd (South East) v. Minister of Pensions [1968] 2 QB 497 at 515
6. Fre