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Industrial Relations Advisers,
Management & Labour Laws
Circular No. C – 162 Date: - 20-04-2016
Amendment by the Federal Government increasing the Minimum Wages and thereby increasing the EOB contribution without corresponding increase in benefit to the employees
1. The Federal Government has issued the Minimum Wages for Unskilled Workers (Amendment) Act, 2016 amending the Minimum Wages for Unskilled Workers Ordinance, 1969 as applicable to the Federal Capital of Islamabad which has already received assent of the President of Pakistan and published in the Gazette of Pakistan Extra-ordinary dated 17-02-2016 pages 69-70.
2. The amendment of the Schedule to the above Ordinance, 1969 amending and substituting entries in the Column (2) of the Schedule to the Act are rupees as under:-
“8000 pm (w.e.f. 1st July, 2012 till 30th June, 2013)
10000 pm (w.e.f. 1st July, 2013 till 30th June, 2014)
12000 pm (w.e.f. 1st July, 2014 till 30th June, 2015)
13000 pm (w.e.f. 1st July, 2015)”
3. Giving four rates of Minimum Wages effective from four different back dates will add to controversies, conflicts and confusion.
4. On the said amendment, EOBI by its vastly circulated circular throughout Pakistan and demanding from employers contribution on the wages of Rs. 13,000/= p.m. as well as arrears of contribution from 1-7-2012 till 30-6-2015 (Rs. 8,000/= p.m. to Rs. 12,000/= p.m.).
5. Raising by four rates of wage limits for contribution as back as from 1-7-2012 to 1-7-2015 is one way traffic as contribution by the employers and employees have been increased without increasing corresponding benefits to the employees amount to be illegal as contribution is not a tax but a levy against the benefits provided under the Act.
6. EOBI circular and demands have been challenged in High Courts by employers throughout Pakistan and stay orders granted after admission of the petitions. Some of the details of the stay orders are as under:
i. In C.P No. 11157/2016, Bulleh Shah Packaging (Pvt. Ltd. v/s Federation of Pakistan, etc stay order dated 7-4-2016 passed by Lahore High Court.
ii. In C.P No. D-2085/2016 filed by Employers Federation of Pakistan and 101 other establishments v/s Federation of Pakistan & another, stay order dated 14-4-2016 passed by Sindh High Court.
iii. In C.P. No. D-2154/2016, Anwar Textile Mills Limited & 39 other establishments v/s Federation of Pakistan & others, stay order dated 16-04-2016 passed by the Sindh High Court.
iv. In C.P No. 5439/2016, Masood Spining Mills Ltd. and 18 other establishments v/s Federation of Pakistan and others, stay order dated 11-4-2016 passed by the Lahore High Court, Multan Bench.
7. Please note that Hon’ble Lahore High Court in the above C.P No. 11157/2016 has suspended the circular of the EOBI which was based on the Minimum Wages for Unskilled Workers (Amendment) Act, 2016 amending the Minimum Wages for Unskilled Workers Ordinance, 1969.
8. In view of the above, employers shall not pay any arrears of contribution nor current contribution on the wages of Rs. 13,000/= p.m but continue to pay contribution as before till the matter is resolved by the Superior Courts.
For M/s S. M. Yaqoob
Industrial Relations Advisers
& Labour Laws Consultants