The Industrial Relations Advisers,

Management & Labour Laws Consultants


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                No. C-81                                                      Date: 09-10-2001



Amendments in Seven Labour Laws

by the Labour Laws (Amendment) Ordinance, 2001.


While the talk of consolidating, amalgamating and reducing the number of Labour Laws has been going on and Views/Comments on such draft Labour Laws from various sections are being obtained by the Federal Labour Ministry, the Labour Laws (Amendment) Ordinance, 2001 amending Seven Labour Laws has been promulgated by the President on 07-10-2001 which has come in force at once but the same shall be effective from 01-07-2001. Various implications of these amendments are given in the subsequent paras.

1-   The Workmen’s Compensation Act, 1923: -

The Schedule IV to this Act has been amended and the amount of compensation in Case of death and permanent total disablement of a worker has been raised from Rs. One Lac to Rs. Two Lakhs. It may be noted that since the Group Insurance Compensation amount under S.O. 10-B has to be the same as under this Act, the Group Insurance amount has also been automatically raised.

2-   The Payment of Wages Act, 1936: -

i-     Section 1(4) has been amended as under: -

(a.)    The words “in the first instance” has been omitted and after the word “factory” industrial establishment or Commercial establishment have been inserted which means that the Act now applies on factories, industries and Commercial establishments.

(b.)    Subsections (5) & (6) have been omitted which means that the Act is now applicable to all establishments without any wage limit i.e. irrespective of wages of the employee/worker.


(c.)    Section 2(i) is renumbered as 2(ia) and before it so renumbered a new Subsection 2(i) has been inserted which says that Commercial establishment shall have the same meaning as defined in the W.P. Industrial & Commercial (S.O.) Ordinance, 1968 which is quite wide to include all Commercial organisations.

3-    The Mines Maternity Benefit Act, 1941: -

Section 5(1) has been amended and the words “Twelve annas a day for every day” have been substituted by the words “Last pay drawn” which means that now the maternity benefit under this law is to be paid at the rate of the last pay drawn.

4-   The Provincial Employees Social Security Ordinance, 1965: -


(a.)    In Section 2(8)(f) the present Wage Limit of Rs. 3,000/- p.m. has been substituted by Rs. 5,000/- p.m. to cover the employees who join on wages upto Rs. 5,000/- p.m. and to cover the employees not covered so far getting wages between Rs. 3,001/- p.m. and Rs. 5,000/- p.m.

(b.)    The Wage Limit of Rs. 3,000/- p.m. given in its Proviso has been raised to Rs. 5,000/- p.m. which means that the employee who is covered by the Ordinance would not go outside it on exceeding his wages Rs. 5,000/-

However please note that Section 20(1) has not been amended and as provided by the present Proviso under Section 20(1) no contribution shall be payable on so much of the wages of the employee as is in excess of Rs. 120/- per day or Rs. 3,000/- p.m. i.e. maximum Contribution still remains Rs. 210/- p.m. for a covered employee paid over Rs. 3,000/- p.m. wages.

ii-     After Section 2(25) a new Section 2(25-a) has been inserted as under: -

“(25a) “self-assessment scheme” 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 in respect of them up to a maximum amount of three hundred fifty rupees per month per secured employee.”

By this new sub-section self assessment Scheme has been introduced to avoid harassment under the pretext of checking of records by some staff of the Institution but it is at a high premium.

iii-    After Section 20 a new Section 20-A, with its sub-clauses (1)(2) & (3) have been inserted. According to its sub-clauses (1) & (2) irrespective of other provisions of the Ordinance the employer who opts for the self-assessment scheme is liable to contribution to the Institution upto maximum amount of Rs.350/- p.m. per secured employee and the liability to pay contribution is for those employees who were secured under the Ordinance on 30-06-2001.

It’s sub-clause(3) has reintroduced payment of contribution by the covered employee which is now Rs. 20/- p.m. as his share to be paid to the Institution through the employer.

iv-    After Section 22(3) a new section 22(4) has been added which prohibits the visit of the staff of the Institution to the establishment of the employer for checking of records, books, etc., during the period the self-assessment scheme remains in operation.

5-   The Companies Profits (Workers Participation) Act, 1968: -

(i)    In Section 2(f) the wage limit of Rs. 3,000/- p.m. in the definition of worker has been raised to Rs. 5,000/- p.m. thereby increasing the coverage of workers.

(ii)    (a.) In the Schedule to the Act three categories given under the present Paragraph 4(a) has been substituted by new three categories viz

Category 1 – upto average wages not exceeding Rs. 2,200/- p.m.

Category 2 – average wages exceeding Rs. 2,200/- p.m. but not exceeding Rs. 3,200/- p.m.

Category 3 – average wages exceeding Rs.3,200/- p.m. but not exceeding Rs. 5,000/- p.m.

(b.)    By amendment in its Sub-para (d) the present limit of maximum payment Rs. 3,000/- from the 5% profits has been raised to Rs. 6,000/-

6-   The Workers Welfare Fund Ordinance, 1971: -

Section 6(b) has been substituted by a new Section 6(b) as “the financing of other Welfare measures including education, training, re-skilling and apprenticeship for the welfare of the workers”.

7-   The Employees Old-Age Benefits Act, 1976: -

(i)    After Section 1(4)(i) a new sub-clause (ia) has been inserted and by it any employer where less than 10 persons are employed may voluntarily apply for application of the Act to his industry or establishment and the Act shall apply from the date of submission of such application.

(ii)    After Section 2(o), a new Section 2(oa) has been inserted which defines the self-assessment scheme according to which no inspection shall be made under Section 12(1) for a period of two years.

(iii)    In Section 9(1) after the Second Proviso a new third Proviso has been added according to which the employer who opts for the self-assessment scheme no contribution is payable on so much of wages of the insured employee as is in excess of Rs. 5,000/- p.m. i.e. no contribution is payable on the part of wages of the employee in excess of Rs. 5,000/- p.m. but this is for under the self-assessment Scheme. This self-assessment scheme is also at a high premium.

Please note that the first Proviso under Section 9(1) has not been amended and, therefore, no contribution is still payable on so much wages of an employee as is in excess of Rs. 3,000/- p.m. i.e. maximum contribution still remains Rs. 150/- p.m. in case of employees other than under the self-assessment scheme.

(iv)    A new Section 9-B has been added and now the covered employee has to pay Contribution at the rate of Rs. 20/- p.m. from 01-07-2001 in the prescribed manner.

(v)    In Section 12(1)(c) a Proviso has been added according to which the staff of the Institution shall not enquire into or inspect any establishment which has opted for self-assessment Scheme for two years from the date of submission of application for ascertaining the amount of payment of the contributions.

For proper understanding of these amendments, the amendments should first be incorporated in the main provisions of the laws and then be read and understood and feel free to seek clarification in case of any doubt.

The text of the amendment Ordinance and this Circular are also available on our above Website.


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

                                                                    Industrial Relations Advisers &

                                                                        Labour Laws Consultants