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Labour law reform

Labor laws are meant to regulate the relationship between employers and workers in which the interests of both sides are safeguarded. Employers have to ensure that the place of work is safe, hygienic and airy, and that the workers are not exposed to health hazards. The salary and perquisites drawn by the workers and the terminal benefits should be sufficient to enable them to meet their own and their family’s needs.

Where entrepreneurs are concerned, the labour laws should help them operate their businesses with a clear vision of their statutory rights and obligations and protect them against undue interference from government officials or the subversion of discipline by the workforce.

Once employers fulfil their obligations under the law, they expect reciprocal commitment and cooperation from their employees. Regrettably, such a critical sphere of legislation that affects both the national economy and people’s welfare, has been totally neglected by successive governments for the last more than two decades.

During this period a number of commissions were formed by the governments with the primary motive of simplifying and consolidating the labour laws and introducing a one-window operation related to welfare laws in which the employers had to pay monthly contributions to the government.

The commissions headed by Justice (retd) Shafi-ur-Rehman, Justice (retd) Zaki-ud-Din Pal and Naseem Shujaat Mirza etc had come up with logical, realistic recommendations and even prepared draft legislations. The latter were shelved for one reason or the other. Unfortunately, in this country, labour law reform has never been any government’s priority.

The last PPP set-up enacted the 18th constitutional amendment in 2010, whereby the federal government devolved its power of labor legislation to the provinces. Unfortunately, the job of according provincial status to all labor laws, which was to be achieved in June 2011, remains incomplete.

Meanwhile, Punjab and Khyber Pakhtunkhwa have used this opportunity for political point-scoring and expediency. For instance, in Punjab the minimum wage for unskilled workers is fixed at Rs12,000 per month but in KP it is Rs15,000, effective from July 2014, which has been challenged in court by employers. In Sindh, the minimum wage board’s recommendation to fix it at Rs12,000 is yet to be endorsed by the government. Balochistan has recently increased the minimum wage to Rs12,000 (July, 2014).

Control of two of the money-generating legislations is with the centre that is hesitant to transfer the funds to the provinces. These are the Companies Profits (Workers Participation) Act, 1968 and the Employees’ Old-Age Benefits Act, 1976 (EOBA). This stalemate is adversely affecting the interests of the workers of both industrial and commercial enterprises.

Through an amendment in the act in 2005, monthly contributions payable by the respective employees and employers under the EOBA were linked to the wage under the Minimum Wages for Unskilled Workers Ordinance, 1969. However despite the fact that the minimum wage was increased from Rs8,000 to Rs10,000 per month effective from July 1, 2013, the EOBA contributions are still paid at Rs8,000 due in part to the difference in minimum wage in the provinces. Consequently, the meagre EOBA pension of Rs3,600 per month has not been increased for 354,632 pensioners in Pakistan. (It was last increased in January 2012.)

In October, 2013, the Sindh Employees Social Security Institution (Sessi) increased the wage ceiling for coverage of workers under the ordinance from Rs10,000 to Rs15,000. Simultaneously, the rate for payment of monthly contributions by the employers was also linked to the revised wage ceiling, ie 6pc of Rs15,000. However, the Employers’ Federation of Pakistan has filed three petitions before the Sindh High Court on behalf of 87 employers, challenging the legality of this increase. The court has accepted the petitions and restrained Sessi from putting pressure on the petitioner companies to pay the contribution at enhanced rates.

A double bench of the Sindh High Court had vide its judgment in February 2011, held five amendments to labour laws brought about by the then government through the Finance Act, 2007, as ultra vires. Those amendments, which should have gone through parliament, had extended comprehensive benefits to the workers, which had to be brought back to the previous position by virtue of this judgment.

The worst affected were the benefits granted under the Companies Profits (Workers Participation) Act, 1976. The amendments of 2007 had enlarged its scope to cover the employees of contractors and increase in the amount of profit-sharing by a company’s own employees.

An appeal filed by the workers unions against the above judgment, is pending. The federal government could have come to the workers’ rescue by restoring the status of these laws through an act of parliament, but regretfully there is total inaction on its part.

The writer is an industrial relations professional.

Parvez Rahim, "Labour law reform," Dawn. 2015-03-19.
Keywords: Social sciences , Social aspects , Social needs , Social rights , Social security , Social justice , Judicial process , 18th amendment , High court , Labor laws , Labor rights , Wages , Pakistan , Balochistan , Khyber Pakhtunkhwa , Sindh , PPP