NEXT Factory Closure in Sri Lanka: What’s Next for the Workers?

Employees demand clear answers and labour support after sudden shutdown

Sudden Shutdown Shocks Workers

Employees of NEXT Manufacturing’s Katunayake plant were taken by surprise when the company announced its immediate closure. The management informed worker representatives on May 19 that the factory would not reopen, citing rising costs as the reason.

However, no detailed explanation was provided. Workers say this decision was made without following proper procedures laid out in their collective agreement.

Workers Demand Transparency

Anto Marcus, Secretary General of the Free Trade Zones & General Services Employees Union, stated that the company failed to consult employees or inform the Labour Commissioner, both of which are required under Sri Lankan labour laws.

He questioned what specific costs forced the shutdown, especially since the company had received various benefits from the Board of Investment. The union has requested a meeting with the Labour Commissioner to discuss the legality of the closure and the next steps for affected workers.

Only One Plant Affected

NEXT confirmed that it will continue to operate two other factories in Andigama and Nawagaththegama. The company said the Katunayake plant had become too expensive to run, partly due to higher operating costs and additional benefits provided to workers there.

Employees at Katunayake received meals, transport, and housing support, unlike those in rural areas who commute from home. The plant was also air-conditioned, which reportedly added to costs.

Broader Industry Concerns

Industry sources suggest that as a directly owned facility, the Katunayake plant faced higher wage pressures, possibly due to activism and scrutiny in the UK.

The apparel industry in Sri Lanka is already under strain. Manufacturers warn that new tariffs—such as a proposed 44 percent duty from the United States—could lead to more closures. Competing countries often face lower tariffs, giving them an edge.

Compensation Offered, Uncertainty Remains

NEXT says it will pay long-serving employees up to 2.5 million rupees under Sri Lanka’s Termination of Employment Act, with additional compensation ranging from two to seven months of pay based on years of service.

Despite this, many workers who have spent decades at the plant are worried about their future. Some fear this closure sets a dangerous precedent for other factories.\

What Comes Next?

The union is pushing for accountability and legal clarity. Workers are calling for a full explanation of the closure and assurance that similar actions won’t be repeated elsewhere without due process.

The outcome of discussions with the Labour Commissioner could shape future protections for factory workers across Sri Lanka.