Labour Department to probe NEXT Manufacturing closure amid worker rights concerns
- CNL Reporter
- May 23, 2025
- News
- Labour Department
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Workers and their trade union have filed complaints seeking legally calculated compensation
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NEXT says it will support affected employees in finding alternative local employment
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An enhanced severance package is promised, subject to agreement
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Closure adds political pressure on Government
The closure of operation by NEXT Manufacturing, a factory owned by UK group, in the Katunayake industrial zone over high operating costs, will come under probe by the Labour Department over possible violations of the law related to workers’ rights, a Minister said yesterday.
The company said its other operations will remain, though.
The Embellishment and Product Development Plants, which are also based in the Katunayake Free Trade Zone, will remain operational but with reduced numbers of employees. NEXT’s other manufacturing operations based in Andigama and Nawgaththegama will also continue to operate as usual. For the removal of doubt, our Colombo sourcing office and operations will not be affected by this change. Sadly, the closure will result in 1,416 redundancies overall, the company said.
In response to a query by Daily Mirror, Industries Minister Sunil Handunnetti said that the company had closed its operations in one factory citing its own reasons, but it did not give prior notice to the government.
“We were not kept in the loop on the decision to close operations. They could have asked for any governmental assistance instead of closing it down,” he said.
Asked whether market volatility in Europe and uncertainty triggered by reciprocal tariffs announced by U.S. President Donald Trump have affected Sri Lankan exports, Minister Handunnetti said, “There is no such issue in the current overall context at the moment. I do not know whether this company had its own reasons in this regard. Otherwise, we have not been hit.”
The Minister said prior notice should be given to the Labour Department and Board of Investment (BoI) in this instance.
Deputy Minister of Labour Mahinda Jayasinghe said that a meeting was conducted with the relevant authorities yesterday. He said he would brief Parliament in this regard today.
A top official of the Labour Department, meanwhile, complained that an application for closure of operations had been made in terms of the Termination of Employment of Workmen (Special Provisions) Act, but not in advance. He said employees who lost jobs had also lodged a complaint seeking compensations calculated according to the proper criterion.
“We will make an inquiry into the case. On behalf of workers who lost jobs, their trade union has lodged the complaint with us. We are fighting for the right of workers,” he said.
The company has, however, announced that it will be working to help those leaving the company to find alternative local employment. The company says it intends to meaningfully enhance the statutory severance package it will pay to those made redundant, and this payment will be subject to an agreement being reached.
The factory closure has already made a political impact on the government with the opposition parties taking up the issue.
