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Mayor Arya Rajendran issued the suspension order following an internal investigation report.
The High Court had, in 2023, struck down the Kerala government's decision to ban plastic bags weighing less than 60 grams per square metre.
Court termed the accident unfortunate.
The body of the deceased was found along with garbage in the Thakaraparambu area, which is around 750 m away from the railway premises.
Sivankutty accused the Opposition Leader of attempting to gain political mileage from the tragedy without even visiting the site.
Railway authorities said the cleaning of the canal was the Corporation's responsibility.
He said he was praying for the life of the missing worker.
It is suspected that he got stuck in a garbage pile.
The incident happened around 5.30 am on Thursday in an area where raw materials for footwear production were stored.
Rather than employing full-time surveillance, AI will be leveraged to detect and investigate suspicious footage.