Sri Lankan Airlines Limited vs. Sri Lankan Airlines Aircrafts Technicians Association and Others – SC APPEAL 79/2013-2018

In the case between Sri Lankan Airlines Ltd. and the Sri Lankan Airlines Aircraft Technicians Association (SLAATA) with associated labor representatives, the Supreme Court addressed the issue of whether the employer’s refusal to pay the “13th month incentive bonus” for the year 2001, based on Clause 13 of the Collective Agreement, was justified. It was held that the bonus constituted an earned entitlement rather than a purely discretionary payment, and that the employer’s discretion could not be exercised unreasonably or contrary to established practice and evidence. The judgment reaffirmed the principle that managerial discretion in employment agreements must be used fairly and in good faith, ensuring that employees’ earned rights are upheld. This decision relied on the interpretation of