Sri Lanka Insurance Corporation Ltd. v Jayathilake – sllr 2008 volume 1 page 411

In the case between Sri Lanka Insurance Corporation Ltd. (Plaintiff) and Jayathilake (Defendant), the court addressed whether the refusal to extend an expired employment contract constituted “unjust termination” or “constructive termination” warranting relief under the Industrial Disputes Act. It was held that the refusal by the employer to extend the contract, in the absence of at least two requisite grounds demonstrating employer wrongdoing, does not amount to constructive termination. The principle reaffirmed is that an employer’s discretionary authority in employment contract extensions, when exercised within policy and without demonstrable arbitrariness or malice, does not by itself create liability under unfair dismissal provisions. Reliance was placed on statutory amendments, intern