Labour legislation

Published November 30, 2021
The writer is a consultant in employee relations at the Aga Khan University.
The writer is a consultant in employee relations at the Aga Khan University.

THE domain of labour laws was devolved to the provinces as a result of the abolition of the Constitution’s Concurrent List in 2010 through the 18th Amendment. The centre was stripped of its power to legislate labour laws for the entire country. Till 2013, the provinces (apart from Sindh) and especially Punjab adopted key legislation without making significant amendments to existing federal labour laws.

When the PML-N came to power in 2013, Sindh started promulgating its own labour laws, bringing about substantial changes in federal laws. The Sindh Terms of Employment (Standing Orders) Act, 2015, replaced the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968.

The ordinance only dealt with employment terms and conditions of those performing skilled or unskilled manual or clerical work for hire or reward. However, the Sindh Act has been applied to all persons employed in any industrial or commercial establishment, except employers and managers with the authority to hire and fire.

The definition of ‘worker’ in the Act implies that even a management employee drawing a fabulous salary and perks may simultaneously claim all the privileges guaranteed under the Act. Highly paid managers only in Sindh may now approach the labour court for reinstatement in case of the termination of services by their employer.

Many companies are in a quandary.

Similarly, under Section 79 (2) of the Sindh Factories Act, 2015, a worker is entitled to 16 days’ sick leave on full pay, which was previously half. In the other provinces, the pay for 16 days’ sick leave is half the full amount.

There are some amendments to the law in certain provinces which could be followed by the others. For instance, under the Shops and Establishments Acts of three of the provinces, the overtime limit for an employee is 150 hours a year, which is unrealistic. In this respect, the KP law allows an employee to work overtime for up to 24 hours in a week, which makes sense.

Similarly, the Sindh Companies Profits (Workers’ Participation) Act, 2015, allows benefits to workers which are not available in the other provinces. It applies to all employees in an establishment excluding those who are employed mainly in managerial or administrative capacities.

Besides this, a share in a company’s profit is also available to its contractors’ employees. The share amount from the profit distributed among eligible employees is also attractive and Sindh keeps increasing it from time to time. The other provinces are stuck in the Companies Profits (Workers’ Participation) Act, 1968, which has not been amended since devolution. Coverage of workers is limited and the profit share is low.

Following the devolution of labour laws in April 2010, industrial and commercial establishments were divided into two categories: those where the laws were confined to one province and those where they were implemented in more than one province because of the trans-provincial nature of these companies. The status of the latter was formally recognised through the federal Industrial Relations Act 2012 (IRA 2012). It applies to all persons employed in any establishment or industry in Islamabad or those carrying out business in more than one province.

Since then, the centre has been managing all union-related matters of trans-provincial companies. These include the formation of trade unions, determining collective bargaining agents, regulation of relations between employers and workers and the prevention of differences or disputes between them.

After the enactment of IRA 2012, the federal government did not update or bring improvement to the other labour laws, to the detriment of trans-provincial companies. Consequently, federal labour laws are gradually becoming redundant for companies with a nation-wide presence. As a result, the workers of such companies are being deprived of their due share of profit under the Act of 1968 and the Workers Welfare Fund Ordinance, 1971.

Besides, the status of the Employees Old-Age Benefits Act, 1976, continues to be in limbo with no lawful authority for the federal government to increase the monthly pension and the rate of employers’ contribution to this scheme.

In its judgement of 2018, in the case of the Sui Southern Gas Company Ltd, the apex court had acknowledged the authority of the federal government to frame laws similar to IRA 2012. It had held that (a) IRA 2012 has been validly enacted by parliament and is intra vires the Constitution; (b) the federal Legislature has extra-territorial authority but no such authority has been conferred on the provincial legislature by the Constitution.

Despite all these favourable circumstances, if the federal government still ignores the interest of trans-provincial companies, the latter will be constrained to implement the laws of the respective provinces, thus creating inequity in the compensation levels for employees in the same category.

The writer is a consultant in employee relations at the Aga Khan University.

Published in Dawn, November 30th, 2021

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