July 03, 2006	Monday	Jumadi-ul-Sani 6, 1427

FINANCE Act—2006 has brought substantial changes in the quantum and scope of various benefits and welfare measures for workers employed in industrial and commercial establishments.

Workmen’s Compensation Act-1923: The limit of monthly wages for entitlement to benefits under the Act has been raised from Rs3000 to Rs6000. It implies that a greater number of workers will now be entitled to such benefits than before.

Factories Ac 1934: (a) The total period of spread over of daily working hours inclusive of the rest interval has been raised to 12 hours. This has given rise to the impression that the normal working hours have been increased. In fact, the normal working hours as per Sec 34 and 36 providing for nine hours a day and 48 hours a week remain the same.

The result of increase in the spread-over will be that the employer will now be entitled to take extra work from a worker for a longer period than before on payment of twice the normal rate of wages for each extra hour worked.

For example, as per the amendment, the maximum spread-over of working hours of a worker will be 12 hours including the rest interval, which in the case of a non-continuous process run on the basis of six full days a week could be: eight hours normal working hours, half an hour rest interval and three and a half hours overtime. A further half an hour rest that will be admissible during the overtime period has been counted in the overtime which are to be paid at twice the normal rate (1962 PLC 1380).

Working hours in a continuous process which has been exempted from restrictions of spread-over are regulated under the provincial rule made under the Act. For example, the Sindh Adult Exemptions Rules—1989 provide that a worker in a continuous process shall ordinarily be employed on eight-hours- shift basis without any rest interval.

The rules provide for a maximum of twelve hours overtime in a week. This limit is likely to be raised through appropriate amendment in the rules. If a factory or a commercial establishment observes less than 48 hours a week, it has to treat any hours worked over and above the hours so observed as overtime hours (1970 PLC 513).

Women workers have been allowed to work up to 10 p.m. in two shifts provided the employer provides transport facility. Previously a woman worker was not allowed to work after 7 p.m. The amendment will inter alia encourage employment of greater number of women.

West Pakistan Standing Orders Ordinance—1968: Contract worker has been included in classification of workmen in the Standing Order and defined as workman. The words, “works on contract basis” in the definition imply work that is usually done on contract basis for piece work, the rate and the manner of performance are usually settled through a contract.

It means that a piece-rated worker has been brought in the net of classification of workmen in the Ordinance. He will be an employee of the establishment for all intents and purposes and entitled to all the benefits under the ordinance subject to the condition laid down for each benefit.

Companies Profits (Workers Participation) Act—1968: The definition of worker entitlement to benefits under this Act previously depended on the quantum of average monthly wages. The amended definition provides, “Worker in relation to a company means an employee of the company who falls within the definition of worker as defined in the IRO, 2002 and has been in the employment of the company for a period of not less than six months.”

This will mean coverage of a far greater number of workers than before. As per the definition of worker in the IRO, 2002 every employed person is a worker except those employed mainly in administrative or managerial capacity. The use of the word “mainly” is important, and means that even those apparently employed in managerial or administrative capacity will be workers unless it is shown that they are performing functions mainly of administrative or managerial nature.

Clause (1) of the schedule to the Act has also been amended providing for application of the Act to a company engaged in an industrial undertaking only if it employs 50 or more workers, or the paid-up capital of which is Rs5 million or more or the value of its fixed assets is Rs20 million or more. This will obviously take out some of the companies from the purview of the Act.

Clause (4) of the schedule providing for the categorisation of workers for the purpose of distribution of profits has also been amended. The new three categories are (i) workers drawing average monthly wages not exceeding rupees five thousand, (ii) workers drawing average monthly wages exceeding Rs5,000 but not exceeding Rs7500 and (iii) workers drawing average monthly wages exceeding Rs7500 but not exceeding Rs10,000. Besides, the maximum limit of amount that a worker can get as his share in the profit has been increased to Rs12000.

West Pakistan Shops and Establishments Ordinance—1969: The maximum limit to which the daily working hours, including rest interval, of an employee can be spread has been increased to twelve hours. This will have more or less the same repercussions as in the case of a non-continuous process in a factory depending upon the number of working hours observed by an establishment subject to the condition that there should be one hour rest interval after six hours working and the total working hours shall not exceed 60 in a week.

The Act further provides that the maximum overtime hours of an employ shall not exceed 624 in a year. It means that the spread-over in a commercial establishment or office run on the basis of five and a half working days a week could be: eight normal working hours, one hour rest interval and two to three hours overtime on every day of the full five working days with five normal working hours on the half day, keeping in mind that the total overtime hours do not exceed 624 hours. A piece-rated worker is not entitled to double payment for overtime.

West Pakistan Minimum Wages for Unskilled Workers Ordinance—1969: Minimum wages of an unskilled worker fixed under the ordinance have been raised from Rs3000 to Rs4000 per month. For calculating the minimum wages of daily rated worker, the amount of minimum wages has to be divided by 26.

The wages of piece rated worker shall be so fixed that he gets not less than the minimum wages for working up to 26 days. This has given rise to the impression as if the wage period of all workers has been fixed as 26. But it is not so.

In fact, the main object of defining the month as normal working period of 26 days is not the fixation of wage period for all kinds of workers but is to make sure that the employer pays in full the minimum wages to an unskilled factory worker, whether he allows him weekly holidays with wages or not. The Factories Act does not expressly provide for payment of wages for weekly holidays. As a result, some of the employers do not allow paid holidays especially to temporary and daily rated workers although courts have ruled that such holidays shall be allowed with wages even to daily rated workers. Sec 6 of the W.P. Shops and Establishments Ordinance—1969 also provides likewise.

In fact the wage period for payment of wages has to be fixed by the employer which can at the most be one month under Sec 4 of the Payment of Wages Act, 1936. And for calculating the daily rate of wages for any purpose including overtime rate or deduction on account of absence, the wages of every worker— whether skilled or unskilled— have to be divided by the number of days in the month concerned which for the sake of convenience and uniformity is taken as 30 days.

Workers Welfare Fund Ordinance—1971: Previously every industrial establishment having total income of Rs0.1 million per annum had to pay two per cent of its total income to workers welfare fund established and managed by the government. Now this limit has been raised to Rs0.5 million. This is in addition to the leftover amount under the (Workers’ Participation) Act—1968, which is also paid from this fund. Marriage grant of workers’ daughters paid out of this fund has been increased to Rs50,000.

Likewise any grant on the death of a worker paid from this fund has been increased to Rs0.2 million. This will be in addition to the similar amount payable under the group insurance scheme. The scholarship for a worker’s child has been increased up to Rs1000 per month.

Employees Old-Age Benefits Act—1976: This Act was previously applicable to every establishment employing ten or more persons. This limit has now been increased to 20 persons for all establishments to be set up after 1-7-2006. It means that the establishments employing less 20 workers which were previously covered by the Act will continue to be covered there under. Besides the minimum rate of pension paid under this Act has been raised to Rs1300 per month.