The Industrial Relations Advisers,

Management & Labour Laws Consultants

 

Room 3, 1st floor, Falaknuma Building, Near The Laboratory & Haroon Radio, Abdullah Haroon Road, Karachi

Phone: 2727266 & 2729770 Fax: 2729770 (S M Iqbal)  Email: iqbalblund@hotmail.com 

 


       

        Circular No. C-97                                                     Dated: 15-APR-2004

 

SOME RECENT IMPORTANT DECISIONS OF THE SUPERIOR COURTS

CONNECTED WITH THE LABOUR LAWS AND IMPLICATIONS OF THE SAME

 

  1. PAYMENT OF EOB CONTRIBUTION BY THE PRINCIPAL EMPLOYER FOR THE EMPLOYEES OF THE INDEPENDENT CONTRACTOR: -

It has been our view that since the provisions of the Provincial Employees Social Security Ordinance, 1965 interpreted by the Supreme Court in 1988 SCMR 888 are not in the Employees Old-Age Benefits Act, 1976, the same would not apply to the Employees Old Age Benefits Act, 1976 as claimed by the EOBI lately after this decision.

 

Sindh High court in the case of Attock Cement Pakistan Co. v/s EOBI on the basis of the decision of the Supreme Court in the case of the Consolidated Sugar Mills Ltd. reported at 1988 SCMR 888 on different provisions of the Provincial Employees Social Security Ordinance, 1965 held that the principal employer of the establishment is liable to pay contribution for the employees/workers of the contractor also. Against this decision and in the case of Bolan Mining Enterprises, Quetta leave to appeal and Stay Order have been granted by the Supreme Court. The employers while continuing the present practice of not paying EOB contribution for the employees of the independent contractors should wait for the final decision of the Supreme Court in the matter.

  1. PAYMENT OF ARREARS OF RS. 20/- PER MONTH EMPLOYEES CONTRIBUTION PRIOR TO THE NEW PRESCRIBED RULE: -

Section 9-B of the Employees Old-Age Benefits Act, 1976 included by the amendment of 06-10-2001 introduced Rs. 20/- per month employees contribution from 1st July, 2001 to be paid in “the prescribed manner”. Naturally the same had to be prescribed by a Rule to be made. Since the Act or any other labour law did not authorise the employers to deduct the employees contribution from their salary/wages, the employers could not do so till the amended Rule 3(4) of the Employees Old-Age Benefits (Contributions) Rules, 1976 amended on 12-12-2002 prescribed and authorised the employers to do so and the employers started such deduction from December, 2002 and paid to the Institution alongwith their own contribution. The EOBI has been insisting on the employers to pay the employees contribution from July, 2001 to November, 2002 and this matter went to the Lahore High Court in the case of Silver Fibre Spinning Mills Ltd. and in another case in which the Single Judge held that the employer was responsible to collect the employees contribution for the period from 1st July, 2001 to November, 2002 and deposit with the Institution. Intra High Court appeals against the decisions have been filed, admitted and Stay Orders granted. The employers are advised to await for the final decision in the matter.

  1. DISTRIBUTION OF INTEREST/MARKUP/PROFIT ON 5% PROFITS AMONG THE EMPLOYEES ALONE: -

It has been our view since long that the entire amount of interest/markup or any other profit accrued on the 5% profits under the Companies Profits (Workers Participation) Act, 1968 has to be distributed among the three categories of the workers given in the Schedule, there is no limit on the workers share in the interest/markup and nothing out of it goes to the Workers Welfare Fund of the Govt. Eventually this matter went to the Sindh High Court in the C.P. No. D 682/91 filed by Muhammad Ali & others v/s Pakistan Cables Ltd. & others which held the same view.

 

The National Tankers Co. (Pvt.) Ltd. on some misconceived advise, beside the leftover/surplus from the 5% profits, it also transferred interest on 5% profits to the Govt. Workers Welfare Fund from 1982-83 to 1989-90. Later on it got another legal advise as held by the Sindh High Court in the above case, it claimed either allowed to adjust or refund the said interest wrongly deposited in the Workers Welfare Fund which was refused by the Federal Govt. and the Co. filed the C.P. No. 639/95 in the Sindh High Court. Since the Co. had committed some irregularities in implementing this law, the case was decided against it and it also held that the interest/markup/profit on 5% profits be treated in the same manner as 5% profits itself. Against this decision Civil Appeal No. 1231/1998 was filed in the Supreme Court, leave to appeal granted and finally decided on 29 12 2003 in which it has upheld that the interest/markup/profit on 5% profits transferred by the Co. to the Workers Welfare Fund would be refunded on fulfilling and constituting the Board of Trustees of the Fund by the Co. as per the Act and the interest/markup/profit accrued on 5% profit shall be refunded and the same shall be distributed among the workers as per the law. The decision of the Supreme Court has not given much details of the factual back ground of the case and for proper understanding both the Sindh High Court and the Supreme Court decisions need to be studied. Thus it is now confirmed that the entire amount of interest/markup or any other profit which may accrue on 5% profit has to be distributed among the workers alone among the three categories without any limit on it and nothing out of it goes to the Workers Welfare Fund, where only the surplus/leftover above the limit prescribed (now Rs. 6,000/-) on the workers share in the 5% profits has to be transferred.

 

For more details and proper understanding the provisions of the above laws and the decisions mentioned above may be diligently studied.

 

                                    (S. M. Yaqoob & S. M. Iqbal)

                                                   Industrial Relations Advisers &

                                                      Labour Laws Consultants