Apathy towards labour

January 27, 2014

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FOLLOWING the enforcement of the 18th Amendment, the subject of labour was transferred to the provincial governments. Since the majority of legislation relating to labour matters had been promulgated by the centre, they required being re-enacted by provincial governments by June, 2011.

However, except for the Industrial Relations Act (IRA), none of the other prominent labour laws have been provincialised, especially in Sindh. The IRA is critical as it deals with the formation of trade unions and workers’ and managements’ joint forums. Due to non-conformance with statutory provisions and the constitutional requirement by the provinces, the government may have to face litigation from employers’ bodies which will be difficult for them to defend before the courts.

For example, the secretary of labour, Sindh has, vide his notification dated Oct 28, 2013, enhanced the wage ceiling from Rs10,000 to Rs15,000 for the purpose of paying the monthly contribution of employers under Section 2 of the Provincial Employees Social Security Ordinance, 1965. Since this amount of Rs10,000 has been prescribed under Section 20 of the ordinance, such an increase should have been effected through the provincial legislature and not by an executive order.

Meanwhile, the Employees Old-age Benefits Act (EOBA), 1976, and the Workers’ Welfare Fund Ordinance, 1971, continue to remain federal laws. The huge funds collected from the employers under both these legislations are managed through the Employees Old-age Benefits Institution (EOBI) and governing body of the Workers’ Welfare Fund (WWF) respectively.

The functioning of both the EOBA and the Workers’ Welfare Fund Ordinance has started causing difficulties in implementation not only for employers but also for the EOBI and the WWF governing body.

By virtue of an amendment carried out in the EOBA in 2005, the monthly amount of contribution payable by employers on behalf of their employees was linked with the prevalent rate of minimum wages as declared under the Minimum Wages for Unskilled Workers Ordinance, 1969. Effective from July 1, 2013, the minimum wages for unskilled workers have been enhanced from Rs8,000 to Rs10,000 per month.

The Sindh government has increased minimum wages by issuing a notification dated Oct 3, 2013, under Section 4 of the Minimum Wages Ordinance, 1961. But the Khyber Pakhtunkhwa government has adopted Rs10,000 as minimum wage by promulgating the Khyber Pakhtunkhwa Minimum Wages Act, 2013. Thus the minimum wage has been increased but under different legislations from the Minimum Wages for Unskilled Workers Ordinance, 1969. This has created a dilemma for the EOBI, which has so far not issued directions to employers to pay the monthly contribution at the revised rate.

Similarly, employers are facing the issue of ensuring compliance with the provisions of the Companies’ Profits (Workers’ Participation) Act, 1968. Under this Act, all companies have to allocate 5pc of their net profit to the Workers’ Profit Participation Fund, the bulk of which goes every year to the federal government’s Workers’ Welfare Fund and part of which goes to eligible workers.

In February 2011, the Sindh High Court nullified five of the amendments carried out by the government in five of the labour statutes through the Finance Act, 2007. The court held that those amendments should have been routed through and passed by both houses of parliament as they did not relate to money matters.

One of the amendments affected by the court judgement related to the coverage of contractor workers for disbursement of their share in the companies’ profits and the extension of this share to additional employees under the Companies’ Profits (Workers Participation) Act 1968.

The appeal filed against this judgement is still pending. Meanwhile, employers are perplexed about whether or not to take the risk of paying the share in their profit to additional workers, who became eligible to receive it after the 2007 amendment.

Over the last roughly two decades, successive federal governments have given short shrift to the subject of labour. From time to time labour commissions were formed by different governments for the purpose of consolidating and simplifying labour laws.

These commissions completed their task successfully but unfortunately their efforts went waste as respective governments did not get them passed as acts by the parliament.

The devolution of labour laws to the provinces has both advantages and disadvantages. On the one hand the provinces have the opportunity to complete the job of the rationalisation of labour laws left unattended by governments at the centre.

On the other, they have to tread carefully, taking into consideration the interests of both employers and workers — any wrongful act may have disastrous consequences for industrial and commercial organisations.

The writer is an industrial relations professional.