THE government has amended 7 labour laws with retrospective effect from 1st July, 2001. An announcement to this effect was made by the federal labour minister on 7 October, 2001. Besides these, the West Pakistan Minimum Wages for Unskilled Workers Ordinance, 1969 has also been amended with effect from 1st August, 2001.

The salient features of these amendments are; increase in the wage ceilings for application of certain laws from Rs3,000 to Rs5,000 and introduction of “self-assessment scheme” in the Provincial Employees Social Security Ordinance, 1965 and the Employees’ Old-Age Benefits Act, 1976. Moreover, the system of employees’ share in the monthly contribution payable by the employer, has been revived in the Social Security Ordinance and introduced in the Employees Old-Age Benefits Act for the first time. The employees share in both these laws will be Rs20/- per month, per employee.

This is the third time over the last 16 years that the wage ceiling has been revised. In 1985, it was increased from Rs1,000 to Rs1,500, again in 1993 from Rs1,500 to Rs3,000 and now from Rs3,000 to Rs5,000. This revision is necessitated due to inflationary factors and increase in salary of employees in industrial and commercial establishments. The recent increase by 67 per cent in wage ceiling from Rs3,000 to Rs5,000 may appear to be high but is reasonable as it has been carried out after eight years. If this exercise is done by the government gradually after every two or three years, the employers may not feel its impact so much. Following comments on these amendments are are offered:

Workman’s Compensation Act 1923: Compensation for workers who suffer permanent disability or die during the course of employment has been increased from Rs100,000/- to Rs200,000/-. It was last revised from Rs30,000/- and Rs42,000/- respectively to Rs100,000/- in 1993. Most of the multinational companies still have higher rates for such eventualities agreed through their collective labour agreements. It’s compliance will have to be ensured especially from the contractors.

Provincial Employees Social Security Ordinance, 1965:

a) The wage ceiling has been enhanced from Rs3,000/- to Rs 5,000/.

b) A “self-assessment scheme”, has been introduced which means a scheme of social security benefits effective from the 1st July, 2001, with no intervention through checking by any staff member of the institution, in respect of employees secured under this Ordinance as on the 30th June, 2001, and the employer undertakes to pay a contribution is respect of them upto a maximum amount of Rs350 per month, per secured employee.

c) Every employee secured under this Ordinance in respect of whom the employer pays contribution shall be liable to pay through the employer an amount of Rs20 per month as his share to the Institution.

No staff member of the Social Security Institution shall visit the premises of any establishment opting for the self-assessment scheme for the purpose of checking of employer’s books, records, etc. during the period the self-assessment scheme remains in operation. There will be two rates of monthly contributions. These will continue to be paid at the rate of 7 per cent for maximum salary of Rs3,000 (maximum of Rs210, per month), on behalf of employees already secured. Those employers who opt for the “self-assessment scheme” will pay at the rate of 7 per cent for maximum salary of Rs5,000 (maximum of Rs 350 per month).

Employees Old-Age Benefits Act, 1976:

a) An industry or establishment employing less than 10 persons, may voluntarily apply for application of this Act. It shall apply from the date of submission of the application.

b) Such employers will be covered under a “self-assessment scheme”, according to which no inspection shall be made for a period of two years. The employers covered under this scheme, shall pay a maximum contribution of Rs350 per month per insured employee. No contribution shall be payable on so much of an insured person’s wages as is in excess of Rs 5000.

c) Effective 1st July, 2001, contribution shall be payable every month by an insured person at the rate of Rs20 per month.

Like Social Security Ordinance, two rates of contributions will also be applicable in EOB Act. The employers whose employees are already insured under the Act, will continue to pay monthly contributions at the rate of 5 per cent for maximum salary of Rs3,000 (maximum of Rs150 per month). Those employers who opt for the “self-assessment scheme”, will pay at the rate of 5 per cent for maximum salary of Rs5,000 (Maximum of Rs 250 per month. It is not sure how many employers employing less than ten persons will voluntarily apply for coverage under the scheme. Given an option, employers refrain from incurring additional liability on behalf of their employees, howsoever small it may be.

Companies Profits (Workers Participation) Act, 1968:

The wage ceiling for application of the Act, has been enhanced from Rs3,000 to Rs5,000. The share of a worker in the annual allocation to the Fund, has also been increased from Rs3,000 to Rs6,000. A number of workers who were ousted from purview of the Act due to wage bar, will come back within its fold and again start deriving monetary benefit.

Workers Welfare Fund Ordinance, 1971: The financing of welfare measures by the government, will also include education, training, re-skilling and apprenticeship.

The government selects the workers for disbursement of benefits. The existing system needs to be reviewed as employees of companies which contribute the most towards the Welfare Fund, are usually deprived of these benefits as they draw much higher salary than the ceiling imposed by the Welfare Board.

Payment of Wages Act, 1936: The wage ceiling of Rs3,000 has been removed. Now all workers in the industrial or commercial establishments, regardless of wage ceiling, shall have the right to seek remedy from the court of law in case of delayed or unauthorized deduction from wages.

This amendment may have adverse repercussions on companies as some of the highly paid management staff, especially those whose services have been terminated on account of misconduct, may also now go to court for their grievances. Consequently litigation in this sphere may increase. The Mines Maternity Benefit Act, 1941: The maternity benefit payable to a woman worker during the six weeks immediately preceding and six weeks following her delivery, has been increased from 12 anna per day to the last pay drawn.

There are other maternity benefits mentioned in the Act, which might have been reasonable many decades ago but now appear to be equally ridiculous, have not been amended by the government. In fact the whole Ordinance needs to be reviewed. The West Pakistan Minimum Wages for Unskilled Workers Ordinance, 1969

Minimum wages for unskilled workers have been fixed at Rs2,500 per month with effect from 1st August, 2001, which will be applicable to all establishments irrespective of the number of workers employed.

Labour leaders wanted the government to fix the minimum wage at least at Rs3,000 per month but the government had to be considerate of the difficulties expressed by employers. It has therefore been moderately increased from the existing Rs2,250 to Rs2,500 per month.