THE expense on manpower incurred by an employer is considered in the accounts book as a fixed cost. To improve his margin of profit, every employer aspires to keep this cost at a minimum. When squeezed by the principals, ie a multinational’s worldwide headquarters, even companies functioning in Pakistan tend to follow directions by reducing permanent jobs by offering employees golden handshake schemes on submission of their resignations.
The multinationals already operate at an optimal level of manpower. Under pressure from their principals, they do cut jobs, but then adopt other means to fill in the deficiency. In this process, they tend to take unethical measures and employ manpower on core jobs through contractors, which is not permissible according to the judgements of superior courts. They falsely respond in the affirmative when asked by the auditor of their principals if the country’s laws are being followed.
Employment practices in most national firms are worse. Instead of issuing appointment letters to new hires as per the law, they ask them to submit undated resignation letters. In some cases, these employees are paid salaries even less than the minimum wage for unskilled workers; are not paid on time; and are required to work for more than the statutory eight/nine hours a day.
Standing Order 1 of the Sindh Terms of Employment (Standing Orders) Act, 2015, classifies a worker into six categories: permanent, probationer, badli, temporary, apprentice and contract worker. Under this act, all employees other than the ‘occupier’ and ‘manager’ in the industrial and commercial establishment are considered ‘workers’.
There are still many unethical employment practices at play in Pakistan.
A permanent worker is defined as one who has been engaged in work of a permanent nature likely to last for more than nine months and has completed a probationary period of three months. Since permanent employees are most expensive for employers, some don’t allow them to complete the probationary period in order to deprive them of this status. They remove them from their payroll after 89 days, and continue to circumvent the law by employing the same person for 89 days repeatedly over many years.
A recent Supreme Court judgement has declared this practice illegal by pronouncing that respondent employees had been working in the establishment for three to 12 years, initially on a contract basis for 89 days, without their service being confirmed or regularised. Their contracts were renewed from time to time for a further period of 89 days with an artificial break of a few days in between. Since the respondents were in service for a long time, it clearly showed that the posts they were occupying were permanent in nature and not casual or temporary.
The ‘contract workers’ defined in the Sindh act as well as similar acts in Punjab and Khyber Pakhtunkhwa are those who are directly hired by the employer and not through the contractors. However, all three provinces have defined them differently.
In Sindh, a ‘contract worker’ means someone who works on contract basis for a specific period mentioned in the contract in any establishment, but does not include third party employment. Thus, besides permanent employees, an employer may directly employ workers on contract for any length of time. This provision has made the engagement of ‘temporary workers’ redundant as they are employed only in jobs of a temporary nature likely to be finished within a period not exceeding nine months.
In Punjab, a ‘contract worker’ means a person who works on contract basis for a specific period on remuneration to be calculated on piece rate basis. Here, the scope of hiring of contract workers by the employer is limited and is only confined to workers who are paid on the basis of the number of any specified product produced by individuals.
In Khyber Pakhtunkhwa, a contract worker may only be hired by an employer after obtaining a no objection certificate from the director labour. The duration of their employment is also limited to a maximum of six months and they can only be employed on jobs of a peripheral nature.
Despite availability under the law of so many categories of workers, employers still prefer to engage contractors to carry out most of their jobs for economy and efficiency. Contracting out of services such as janitorial, canteen, horticultural, etc, that are not directly related to a company’s core process is legally safe. Employers should therefore refrain from engaging contractors to perform jobs directly related to the manufacturing process or their main business activity, which involve constant supervision by the company’s personnel.
The provincial governments should also help entrepreneurs by introducing legislation solely dedicated to the registration of contractors’ establishments and prescribing a code of conduct to be followed by them while providing their services to employers.
The writer is an industrial relations professional.
Published in Dawn, December 13th, 2018