Outsourcing

June 25, 2018

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IN the last few years, all superior courts’ judgements related to outsourcing or contracting out of jobs have gone against employers, thus making them question whether it is safe to continue with such employment practices.

Since joining the industry in 1972, I have experienced two categories of factory workers: those with higher salaries, benefits and job stability, and those with lesser or even meagre salaries, no benefits and at risk of termination without notice, ie daily wage workers. It is ironic that employers have always preferred daily wage workers for economy and efficiency. In the 1970s, employers were not quite familiar with the terms ‘outsourcing’ and ‘contracting out’, but these types of workers did exist.

For instance, the light engineering factory where I worked had three workshops, a re-rolling mill, furnace shop and a foundry. Although the foundry would operate year round, many of its workers, who were mostly from the then NWFP, were seasonal/temporary, working only during the winter months and returning home in the summer. This would cause difficulty for the employer, who needed temporary replacements, but the employer would still prefer to take them back because of their high energy levels and work commitment. This was a form of contract employment, as the workers and their employer had no obligation towards each other for job continuation.

When I joined a multinational fertiliser plant in Daharki, I noticed that there was one manpower contractor, who would keep a pool of technicians with him who also worked at the plant against permanent jobs. Managers would often ask him to lend them his technicians’ services when their regular technicians were on leave or absent. The technicians so hired on a temporary basis would include fitters, welders, electricians, instrument technicians, etc. They would work along with the permanent technicians under the supervision of the company’s managers. Since the same persons were hired from time to time, the total period of their intermittent employment could give them the status of permanent employment if they had approached the court.

Employers can no longer exploit workers’ status.

More than three decades later, the Supreme Court gave a landmark judgement in May 2013, declaring 112 workers of the Fauji Fertiliser Company, employed in their plant at Mirpur Mathelo just 10 kilometres away from Daharki, as the company’s employees and not contractors. The court relied heavily on the fact that their work was supervised, controlled and looked after by the FFC in-charge (and his subordinates) of the department they worked in.

In another recent judgement, the apex court regularised the services of 210 employees of Pakistan State Oil, who were employed by various contractors. The court has based its judgement on the fact that these employees worked in jobs of a permanent nature and that some of them had been working since 1984.

Fertiliser plants need to be shut down for maintenance and repairs every two to three years as they are kept in constant operation for that long. Since production activity comes to a standstill, hundreds of workers employed through contractors are engaged on two 12-hour shifts to finish all the required jobs within 10 to 12 days, in order to get the plant’s operations started without further loss of time.

Another multinational company that I joined in 1983 had one plant in Karachi, two in Lahore and one soda ash manufacturing unit in Khewra. The latter was the most profitable and employed the largest number of workers among all four plants. While its regular workers were around 400, the number of workers employed through contractors or employed on daily wages was more than 1,000. Most would be hired on work orders and worked along with regular employees under the supervision of the company’s managers.

These work practices had been en vogue for many decades. Six of the daily wage workers approached the court to get the same status as regular workers. When the company appealed against the order of their regularisation in employment passed by the high court, the Supreme Court upheld its judgement. Even a prominent lawyer could not save the company from losing the case.

Looking at so many judgements by the superior courts favouring the workers, the alarm created among employers against employment of workers through contractors appears justified. Outsourcing of services, such as janitorial, gardening, canteen or security, may be legally safe.

However, most employers get workers through contractors on jobs of a core nature for filling in the posts of regular workers, who are absent/on leave, or in order to save costs and other liabilities. Such practices get them into trouble, especially if the workers employed through contractors have been doing such jobs since a long time and they approach the court for regularisation of their services by the principal employer.

The writer is an industrial relations professional.

Published in Dawn, June 25th, 2018