The Industrial Relations Advisers,
Management & Labour Laws Consultants
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Circular No. C – 130 Date: -22-07-2011
Comments on the Federal Industrial Relations Ordinance, 2011
The above Ordinance No. 5 of 2011 has been promulgated by the President of Pakistan on 18-07-2011 having come in force from the date of publication in the Gazette. In this connection our views and comments are given below.
1. The draft Bill of the Industrial Relations Act, 2011 was earlier circulated and we gave our views only on it’s legality, validity and vires in our Circular No. 129 dated 30-05-2011. It has now been promulgated as the above Ordinance.
2. In the meanwhile the decision dated 02-06-2011 of the Hon’ble Supreme Court came in the Const. Petition No. 24 of 2011, Air league of P.I.A.C. Employees Union V/s Federation of Pakistan in which the 18th Amendment in the Constitution made on 20-04-2010 abolishing the Concurrent List from the Constitution and thereby the subject Labour exclusively going to the provinces, provincial Industrial Relation Ordinances / Acts and relevant provisions of the Constitution have been elaborately discussed and it came to the conclusion about demise of IRA, 2008 on 30-04-2010 as per it’s self contained provision of Section 87(3), IRA, 2008 was not protected, the IRO, 1969 could not be revived thereby the NIRC could not function and the Federal Govt. has no Jurisdiction to legislate on the labour except as provided by the Article 144(1) of the Constitution.
3. The Article 144(1) provides that if one or more provincial assemblies pass resolution to the effect that the Majlis-e-Shoora (Parliament) may by law regulate any matter not enumerated in the Federal List (which includes labour), the Parliament may pass an Act regulating that matter accordingly and the province to which it applies it’s provincial assembly (having passed the resolution earlier) can amend or repeal such Act of the Parliament. It is learnt that the Federal Govt. got such resolutions passed by two provincial assemblies and the above Ordinance has been promulgated. The Ordinance /Act shall not apply to the province whose assembly has not passed such resolution. The words Parliament and the Act used in this Article may be noted. The question may arise as to whether it also empowers the President to promulgate such Ordinance as IRO, 2011 or only the Parliament is empowered to make Act on it. It is likely that the Ordinance may be presented in the Parliament as an Act.
4. A close perusal of the Ordinance would reveal that it contains most of the provisions of the IRA, 2008 but have been made related/connected only with the Islamabad, Industry-wise trade unions and NIRC/Commission which may be noted. It’s some significant provisions are explained in the subsequent paras.
5. Section 1(3) provides that it shall apply to all persons employed in any establishment or industry in Islamabad Federal Capital Territory or carrying business in more than one province. All other establishments outside Islamabad and confine their business only in one province, such establishments, employers and workers employed therein are excluded from the purview of the Ordinance.
6. (i) The definition of the establishment given in Section 2(x) includes those situated in Islamabad or in more than once province.
(ii) Section 2(xvii) the definition of industry excludes charitable concerns set up exclusively for charitable purposes.
(iii) Section 2(xviii) industry-wise trade union means trade union in a group of establishments owned by one employer. Section 2(xiii) defines group of establishments belonging to the same employer and the same industry i.e. not different types of industries of the same employer which has to be read with Section 2(xviii).
(iv) Section 2(xxvii) read with Section 4, provides Registrar of trade unions for the industry-wise trade unions to be notified by the Federal Government and shall be assisted by one or more Joint Registrars. The Registrar is separate from NIRC/Commission.
(v) Individual grievances of workers where the Ordinance applies shall go to the Commission as provided by Section 33 in the same manner as to the labour courts before. In other cases the same would be dealt with by the labour court of province. However as provided by Section 57(2)(b) the Commission may withdraw from the labour court of province any application, proceedings or appeal relating to unfair labour practice and Section 57(3)(c) provides Commission may refer any case to the provincial labour court for report or for disposal.
(vi) The Proviso under Section 8(1)(d) removes the condition from twenty five percent outside office bearers of union being employed in the establishment or industry and Explanation under Section 8(2)(a) provides that dismissed, terminated or retrenched worker whose such case is pending in a competent court shall be deemed to employed worker of that establishment which means they could also hold union office within the 75% internal limit of office bearers till then.
(vii) Seven days time given by Section 9(1) for registration of union is too short a period.
(viii) Section 11(1) (d) provides that the union which does not contest C.B.A. election or obtained less than 10% of the total votes polled it’s registration shall be cancelled by the Registrar. It’s sub-clause (4) is not correct as the condition of committing unfair labour practice contained in Section 11(1)(d) in the draft is no longer there.
(ix) Section 18 provides a person who has been convicted
(x) and sentenced imprisonment of two years or more for an offence involving moral turpitude under Pakistan Penal Code shall be disqualified to hold any union office till lapse of 5 years after completion of the sentence.
(xi) Section 19(11) the term of CBA wining CBA election remains two years but it will be enhanced to 3 years for a trade union having membership of more than five thousand and is having presence in more than one province.
7- (i) The Commission shall deal with unfair labour practices and act same as the labour court for redress of individual grievance in respect of the workers/employers in Islamabad and in the establishment functioning in more than one province. In other establishments confined only to one province the same shall be dealt with by the labour court of the province. Since Provincial Industrial Relations Commission has been created by the Balochistan law, the unfair labour practices shall also be dealt with by it.
(ii) Section 62 provides that the Commission shall still determine collective Bargaining unit as before.
(iii) Other functions of the Commission remain the same as provided by IRA, 2008 and other previous such laws. The area of jurisdiction of the Commission has been drastically reduced yet the number it’s members has been increased from seven to ten members.
8- The Registrar shall do registration of the industry-wise trade union, federation of trade unions determine such union as CBA and do other functions related with such unions. The Registrar in the Ordinance is separate from the Commission unlike the previous laws under which the Commission had also the functions of the Registrar. Section 54(b) & (c) provide registration of trade union in Islamabad and federations of such trade unions and determination of CBA of such union in Islamabad shall be done by the Commission inspite of providing separate authority of the Registrar is not proper and this function too should have been given to the Registrar.
9- Section 23 provides for shop stewards in establishment where 25 or more workers are employed for a term of one year, Sections 25 & 27 provide for Works Council and Workers Participation in Management with 2 years term for workers representative, where 50 or more workers are employed, Section 28 provides for the Joint Management Board having same number of workers and now employer’s representatives have to be from amongst the Directors or senior executives. Section 28(3)(e) is a new provision regarding provision of minimum facilities for the workers employed through contactors not covered by laws relating to welfare of workers which would open door for controversies regarding “employed through contractor” like labour supply contractor and “employed by independent contractor”. These provisions are paper provisions except for shop stewards and works council and are exercise in futility having over lapping functions which could be included in one single body of the joint works council as was provided by Section 24, IRO, 2002.
10- Section 33(6) and Sections 67 to 79 deal with the penal provisions. The workers and employers cannot be treated as criminals. They do some time make mistakes by violating some provisions of law which are technically regarded as offences requiring appropriate corrective measures, Section 46(6), IRO, 2002 provided in case of non-implementation of order of labour court or order in appeal only fine upto ten thousand rupees which was modified in Section 41(6) IRA, 2008 by one year imprisonment or fine of one thousand rupees or both but now Section 33(6) of the Ordinance for non-compliance of Order of the Commission provides one year imprisonment or fine of seventy five thousand rupees or both. The ordinance has again reintroduced imprisonments from 15 days to 90 days and fantastic high fines mostly ranging from thirty thousand to one lakh rupees. Section 86(2) provides any contravention of the Rules to be made may provide fine upto ten thousand rupees as if such high fines in tens of thousand have no value. It appears as if funds are intended to be collected by such high fines which are exorbitant, objectionable and require to be reasonably reduced in the coming Act.
11- New Section 80 has been added in the Ordinance regarding conformity with the ratified International Conventions which may be perused. ILO Conventions 87 & 98 ratified by Pakistan have also been mentioned in the preamble. Sections 88 & 89 are the saving clauses as in the other laws and Section 90 is for Removal of difficulties given to the Federal Govt. which cannot be exercised after expiry of 6 months. The list of public utility services in the Schedule – I remains the same as in IRA, 2008. Rights and duties of employers and workers have been provided by Section 91 as guide line in the Schedule – II as was in IRO, 2002 but the same are not compulsory and enforceable.
12- The Federal Govt. is keen to retain with it the Workers Welfare Fund created under the Workers Welfare Fund Ordinance 1971, the Employees Old-Age Benefits Act, 1976. The Companies profits (Workers Participation) Act, 1968 has been with it. All these three laws have gone the provinces after the 18th amendment but legal and constitutional position as explained above remain the same and it would also require similar measures under the Article 144 (1) of the Constitution for the Federal Govt. to retain these with it.
Please go through the Ordinance diligently and in case of any doubt consult your labour laws consultant.