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 

 


TASK FORCE RECOMMENDATIONS

MADE BY THE CURRENT MILITARY GOVERNMENT


  1. That for collection of Cesses under all the Welfare schemes "One Window" system be enforced at the federal level. For this purposes, by making suitable amendments in the EOB Act, on the guidelines already given, a new federal Authority, under the name of "Workers Welfare Authority" be established and collection of levies under all the welfare schemes, on the basis of wage bill of the establishment, assigned to it, which shall reimburse such collection to the respective welfare agencies. However, the share of the pension fund etc. alongwith the prescribed collection charges be retained but it Such Authority, if entrusted with the implementation of the Benefits Scheme contemplated by EOB Act, should be free of those operational snags, for removal whereof amendments in the said enactment and its subordinate legislation have been proposed. If the proposal regarding establishment of a new Authority is not accepted than at the federal level the EOBI, WWF and the Companies Profits (Workers' Participation) Schemes may be allowed to continue to operate but after necessary improvements recommended by the Task Force. As regards the provincial levies, in such an eventuality, one window system, at the provincial level be introduced and collections under the Workers Children Education Ordinance and mines labour welfare scheme (of course after repeal of 1967 Act) be entrusted to Social Security Institution.

We support the idea of "one window" operation at the federal level, which will definitely require suitable amendment in EOB Act. However, we will suggest that Authority named "Workers Welfare Authority" should have at least 33% nomination from the Trade bodies.

 

Creation of another is seriously opposed as it will be another agency to harass the employers. The solution lies in amalgamating the Social Security Ordinance 1965, EOB Act 1976 and Standing Order 10-B (Group Insurance) in one law as all these are part of social security anywhere in the world which is the basic spirit of ILO's convention on Social Security. Thus there will be only one agency / department for all these 3 and there will be no need to create a separate authority as suggested.

 

Workman compensation Act should specifically provide that it shall not apply to the establishment/employees who are covered by this amalgamated law.

The Workers Participation Fund and Standing Order 10-C deals with profit sharing by the employees/workers and therefore, there is no justification of having these two separate, instead there should be only one law of profit sharing by the worker/employees. Under this profit sharing no agency is required as the payment is made directly to the eligible employees/workers not to any agency.

Education Cess paid separately is a Cess which may be authorized to be collected by the same amalgamated agency as explained above.

The workers contribution of 2% in S.E.S.S.I withdrawn in 1972 should be re-introduced as no where in the world workers get the social security benefits without their own contribution.

 

The Government Contribution of 5% of EOB not being paid at the moment should be paid by Federal Government and that in addition Provincial Government should also contribute some thing to this amalgamated law of social security. Thus the contribution be as under: -

 

    1. Employer 15% (7% SESSI+5% EOB+3% Group Insurance)
    2. Employee / Worker 03%
    3. Federal Government 05%} This may be re fixed between them but the total
    4. Provincial Government 02%} should be 7%

    5. 25% of the Wages


The total contribution of 25% compares favourably to the rest of world. Under this consolidated law the following benefits be allowed.

 

The benefits should not only be limited to the contingencies arising out of employment but it should cover global eventualities on employment, outside employment, old-age and unemployment. These benefits may be as under: -

  1. Sickness Benefit - Wages during sickness of the employee. This should be provided by the law to be paid through the employer on approval of the Institution in duplicate, obtaining signature of the employees on both the copies by the employer at the time of payment and forwarding one copy to the Institution and adjusting the amount so paid from the total monthly contribution paid by the employer to avoid malpractices and difficulties faced by the employees in getting this benefit

  2. Medical Benefit / care for self and dependent family members.

  3. Maternity Benefits to the secured women.

  4. Compensation for the permanent partial disability.

  5. Pension on permanent total disability.

  6. Survivors pension to the dependents of the employee.

  7. Old age pension to the employee.

  8. Unemployment benefit during unemployment of the secured employee. Care should be taken that this should no be so high as to create artificial unemployed persons as in some western countries.

In this respect paper red by Mr. S. M. Yaqoob, (Advocate) in a seminar giving the necessary details is available with the council could be referred to if need be. --- (Anwar from MSD)

  1. For making the Social Security Scheme more meaningful and effective, the medical facility provided by the Social Security Institutions be made easily accessible and the medicines provided in their dispensaries/hospitals should be of good quality. The grievances of the workers, in this respect ought to be removed

(Chapt-5, Para iv)

We support the idea of making the Social Security scheme more meaningful and effective. The benefits should be available at the door step of the workforce and quality of medicines be ensured.

  1. Provision of medical coverage to the secured persons and their dependents is the statutory obligation of the Social Security Organization. Thus in the areas, where hospitals and dispensaries managed by the Social Security Institutions, do not operate, arrangements be made with the Government run or other hospitals in those localities for provisions of medical aid to the workers.

(Chapt-5, Para v)

All efforts should be made to increase the number of dispensaries and hospitals and at least a full fledge dispensary be set up in all the factories having 100 or more employees and at least a hospital with all latest equipment be set up in each Industrial Area. The governing body of such hospitals have at least 33% nomination from the Trade bodies.

For the interim period when such facilities as stated in Para 2 above are not available. Some special arrangements are to be made in Government hospitals by deputing special dedicated doctors and paramedical staff to look after employees covered under Social Security Scheme.

  1. In the course of meetings with the representative of employers, for the provision of better medical coverage to the latter, some of the establishments expressed their willingness to provide medical care to their employees in or in the close vicinity of their undertakings. Such an offer will be beneficial to the workers. Thus where the employers offer to furnish medical facilities at their own expense in lieu of Social Security contribution, the Social Security Institutions may enter into suitable agreements with them and also settle the type of medical care and the extent of the Institution's supervision over such arrangements.

(Chapt-5, Para vi)

We are also of the opinion that those establishments who will express their willingness to provide medical care to their employees should be exempted form the provisions of Social Security Scheme.

  1. In case where the dependents of the secured persons reside at a place not within the territorial limits of the province, in which the SSI operates, necessary arrangement for extension of medical facilities to such dependents, be made with the Institutions of the other provinces of the government hospitals/dispensaries located therein.

(Chapt-5, Para vii)

There should be a provision of exemption on joint request of CBA and employer where the employer offers to provide better benefits. -- (Anwar from MSD)

Agreed.

  1. Much criticism was leveled against the exorbitance of administrative expenditure incurred by Social Security Institutions in all the four provinces. There is a marked difference in the administrative expenditure incurred and the benefits conferred by them on the workers. The Institutions should curtail this expenditure, so that the funds available for the welfare activities, are supplemented.

(Chapt-5, Para viii)

It is a fact that administrative expenses of the Institutions have no comparison with the benefits. We suggest that governing bodies of the Institutions be re-constituted having at least 33% nomination from Trade Bodies and the Chairman should be nominated from the Trade Bodies nominated members. Their accounts be published annually.

This will be drastically reduced by having amalgamated law of Social Security and one agency for all 3 existing laws i.e. S.E.S.S.I + EOB + Group Insurance (Anwar from MSD)

 

  1. The officials of both the SSI and EOBI have been accused of misuse of power. This misuse is largely directed towards frequent visits to the establishments of the employers and the requisitioning of their record beyond a period of two years, followed by issuance of inflated demand notices. The misuse of authority of whatever type of extent, must be arrested. In this behalf some measures have been suggested by the Task Force, which inter-alia are: -

a.) That by amendment of Provincial Social Security (Contribution) Rules, 1966 a self-assessment system for payment of SSI contributions be introduced.

 

(Chapt-5, Para x(I)

b.) That the establishment of an employer be inspected by the authorized Social Security officials, once in a financial year. Any additional inspection be conducted only with the permission of the Director General (Inspection). Suitable amendments in Section 22 of the Social Security Ordinance, be incorporated. Furthermore the Commissioner Social Security should issue departmental instructions to the official inspecting an establishment that he should take alongwith him representatives of local Chamber of Commerce & Industry/Trade Body and the Trade Union.

 

(Chapt-5, Para x(ii)

c.) That the increase in the contribution by way of penalty in pursuance of Section 23 of the Ordinance, which can extend upto 50% of the unpaid amount, be fixed at 24% per annum of such amount, in consonance with section 87 of the Income Tax Ordinance, 1997. Section 23 of the Ordinance be amended accordingly.

 

(Chapt-5, Para x(iii)

d.) That the adjudication of the disputes arising under the Social Security Ordinance be entrusted to the Labour Court and its orders be made appealable before the Labour Appellate Tribunal. In this behalf Sections 57 to 64 of the Ordinance will require amendments.

 

The misuse of powers by the SSI & EOBI officials is a real fact. The intimidation, coercion and threat is a daily routine, for one reason or the other they frequently visit the establishment. The proposed steps suggested by the Task Force will curtail such threats to some extent. We endorsed the below recommendations and would like to add a few more:

a. Introduction of self assessment scheme

b. Inspection once a year, having proper notice for inspection

c. A representative of local trade body should accompany during inspection

d. Inspection form be developed with the coordination and consultation of Trade bodies at Federal level

e. The penalty should gradually be increased starting from 10% to 24% based on number of defaults.

f. The adjudication power should be entrusted to Labour Courts.

  1. The agricultural sector is a very neglected sector and in any manner not covered by any of the existing labour welfare schemes. Steps ought to be taken to extend the welfare schemes to mechanized farming immediately and gradually to the entire agricultural sector.

(Chapt-5, Para ii)

The separate law be made to cover the workers in agriculture sector to avoid their exploitation and minimum benefits be granted. (Anwar from MSD)

  1. In order to achieve the object of welfare state, in so far as possible, the application of welfare schemes needs to be enlarged. Accordingly the informal sector be also brought within the net of the welfare laws.

(Chapt-5, Para iii)

Instead of extending the welfare scheme, we would suggest to first make improvements so that it attracts the employees to willingly join the schemes.

  1. That as compared with per capita expenditure incurred on the persons insured under the EOB Act, the expenditure on the administrative side is too exorbitant and needs to be brought down for diversion of more funds to the pension scheme.

(Chapt-5, Para xi)

This is an admitted fact, we will propose to increase the employer's nomination in the governing body so as the scheme may be properly monitored and employers' and employees interest may be looked after. We agree that administrative expenses may be reduced to bring more funds toward pension scheme.

This will be drastically reduced by having amalgamated law of Social Security and one agency for all 3 existing laws i.e. S.E.S.S.I + EOB + Group Insurance (Anwar from MSD)

  1. That the age limit for eligibility for grant of pension to a worker be brought down from 60 to 55 years.

(Chapt-5, Para xii)

Agreed.

  1. The minimum amount of the pension under the EOB Act has recently been increased from Rs. 425/- to Rs. 630/-. But keeping in view the high cost of living and woeful plight of the workers in the old-age, a further suitable increase in the minimum pension is essentially called for, particularly when the EOBI is possessed of sufficient funds to meet the liability.

(Chapt-3, page 32)

Pension amount may be increased suitably and it should be linked with the inflation. We always remain of the opinion that the entire welfare scheme should be participative and employee should participate in the scheme.

It should be at least 50% of the last 3 years average salary drowns per month (Anwar from MSD)

  1. On the pattern of recommendations made for introduction of self-assessment scheme in the Social Security Institution, such self assessment scheme be also introduced for the benefit of the employers who make contribution under the EOB Act, by amending Rule 3 of the Employers Old-Age Benefits (Contribution) Rules, 1976.

(Chapt-5, Para xiii)

We support the idea of introducing self-assessment scheme.

  1. It is essential to impose some restrictions on the powers of the officials of the EOBI who are authorized to conduct inspection. It is recommended that powers of inspection be exercised by official concerned once in a financial year without the permission of higher authorities and thereafter only with the prior approval of the Regional Director. Relevant provision be suitably amended. Further, on the pattern of Inspections by Social Security Institution, the official conducting inspection under EOB Act and the rules thereunder, should also take alongwith him a representative of the local Chamber of Commerce and Industry/Trade Body. The Chairman EOBI should issue departmental instructions in this regard.

(Chapt-5, Para xiv)

We support the idea to curtail the powers of the inspection officials and inspection should be once a year. A representative of local trade body be accompanied during the inspection (other suggestions be same as stated in Para 7 above).

  1. That the exercise of the discretionary powers available to the EOB Institutions to make an increase by way of penalty upto 50% of the unpaid amount of the contribution, in case there is a persistent default, needs to be controlled. The Task Force recommends that such increase be fixed at 24% per annum, in line with the amendment sought to be made in section 23 of the Social Security Ordinance. In this behalf Rule 4 of the EOB (Contributions) Rules, 1976 read with Section 13 of the Act would require a suitable amendment.

(Chapt-5, Para xv)

The discretionary power under EOBI should also be curtailed. The penalty be gradually increased starting from 10% to 24% based on number of defaults.

  1. That by amendment of Regulation 5(2) of EOB (Regulations), 1980 an obligation be cost on the EOBI to issue PI-03 cards to the person concerned within 60 days from the date of receipt of communication from the employers or the insured person, as the case may be, in contemplation with Rule 3 of the EOB (Registration of Employees and Insured Person) Rules, 1976. Further more, an amendment needs to be incorporated in the proviso to Regulation 5(2) casting a duty on the institutional authority to give reasons for requiring the employer to preserve the record, for a period beyond two years.

(Chapt-5, Para xvi)

No comments.

  1. That determination of disputes under section 33 of the EOB Act be assigned to the Labour Court of the area and power to hear appeal against its orders, conferred on the Labour Appellate Tribunal. This would bring the resolution of disputes under the EOB Act in conformity with the powers of adjudication intended to be introduced in the analogous provision of the Social Security Ordinance. In this behalf necessary amendments shall have to be incorporated in Section 33, 34 and 35 of the EOB Act.

(Chapt-5, Para xvii)

The adjudication power should be entrusted to Labour Courts.

  1. A contribution by an employee in the pension scheme is bound to inculcate a sense of participation in him which would be highly conducive for the success of the pension scheme put lamentably he has always been reluctant. To give him an incentive to make contribution, the Task Force recommends that a provision be incorporated in the EOB Act that in case a matching contribution alongwith employer, is made by the employee the amount of benefits available to him otherwise, would be doubled. If this proposal is successfully implemented a higher amount of pension would be earned by the worker enabling him to combat the misfortune of the old-age.

(Chapt-5, Para xviii)

We reiterate that all the Welfare Schemes should be participative and employee has to contribute in the same manner as the employer is contributing. We strongly support the recommendation.

  1. Corruption in the system is perilous for the viability of the welfare schemes which needs to be sternly controlled by adopting the measures stated in Para 19 of Chapt-4 or through other means.

(Chapt-5, Para xviii)

We cannot comment in detail as the contents of Para 19 of chapter 4 has not been provided. However, no one can deny about the corruption in these schemes.

Education Cess be transferred to Ministry of Education and kept separately for spending on separate education institutions of workers and their families. Annual report of expenditure be published. -- (Anwar from MSD)

  1. It is incumbent that uniform administrative structure and scale of benefits in the children education scheme be introduced. These measures will be helpful for successful functioning of the Scheme and proper utilization of funds.

(Chapt-5, Para xx)

We endorse the uniform administrative structure and scale of benefits in the children education schemes in all the 4 provinces.

  1. A coordination between the Education Department and the organizational set up of the Social Security Institutions dealing with educational affairs is the dire need of the day. The facilities for the education of the children of the workers should be enlarged and grant of stipend to the them liberalized.

(Chapt-5, Para xxii)

We would further like to add that coordination between Skill Development Council in terms of the fulfillment of industry needs would give more beneficial results.

  1. For the reasons recorded in Chapt-3 at page 39 of the Report the "Excise Duty on Minerals (Labour Welfare) Act, 1967, be repeated and mines labour be given coverage under the Social Security Scheme. Contribution relating to mines labour welfare, be collected from the owner of mines on the basis of their wage bill.

(Chapt-5, Para xxi)

No comments can be given, as the contents of chap. 3 at page 39 of the report have not been provided.

  1. Presently a worker earning Rs. 3,000/- per month is excluded from receiving the benefits under the Companies Profits (Workers Participation) Act, 1968 which in face of the inflation and rising prices of bare necessities of life is too harsh. The Task Force recommends that limit of Rs. 3000/- per month be raised to Rs. 6000/- per month, and the category of workers falling in low income slab be relatively compensated more.

(Chapt-5, Para xxiii)

We would suggest that all employees irrespective of salary ceiling be included in the Companies Profit (Worker Participation) Act 1968 as all the employees are equally contributing towards making company profitable.

Till this law remains separate the wage limit be eliminated and more groups of different wage slab be introduced to increase the scope of benefits. (Anwar from MSD)

  1. That in view of the discussion appearing in Para 24 of Chapt-5, assimilation in the Federal Consolidated Fund of the contributions under the Workers Welfare Fund Ordinance and the left over amount under the Companies Profits (Workers Participation) Act, 1968, is against Constitutional sanction. This should be discontinued. The Task Force recommends that without being routed through the budgetary machinery, the collection by the Income Tax Department and the leftover amount under the Companies Profits (Workers' Participation) Act be directly transmitted to the WWF. A sum of Rs. 6679 million as on 30.6.1999 of the said "Funds" is reportedly lying interest free with the Federal Government as part of the Federal Consolidated Fund. This ought to be released to the WWF to enable it to accomplish its welfare schemes speedily.

(Chapt-5, Para xxiv)

The amount lying ideal in the fund should be transferred to Workers Welfare Fund so as the same may be used for the welfare of employees. The Government controls should be eliminated and employers / employee may be made responsible to collectively decide the use of the fund.

No transfer of funds to Welfare fund. -- (Anwar from MSD)

  1. Under the WWF Ordinance, the approval of schemes and financing of the welfare measures are the obligations of the Governing Body. The practice, in vogue, of limiting the expenditure in respect thereof, to the amount, provided in the federal budget, as the spending limit of WWF, is not countenanced by the Ordinance and therefore, be discontinued.

  1. The Task Force has noticed that in the past releases to WWF were not authorized in time and at occasions the entire year's releases were made on the last day of the financial yea. It is strongly recommended that such releases be made well in time. Further, the supplementary grants requested for adjustment of the outstanding balances, in the year, when routed through the requisite mechanism ought to be allowed.

It is rightly pointed out. Results cannot be produced until proper control and representation in the schemes is not given in the hands of each user and contributor.

  1. For saving the Workers Welfare Fund from political influence and to lend it an independent character, it is imperative that its governing body be chaired by a person who is not a public functionary but a representative of the employers.

(Chapt-5, page 97)

We strongly support that the Workers Welfare Fund should be headed by a representative of employers and number of participants in the governing body should be 33% for each employer and employee.

Separate fund from workers welfare fund be created and its expenditure be controlled by a tripartite body which should publish its annual report.

The present definition of wages in the EOB and S.E.S.S.I give rise to the various controversies and litigation. Therefore, the definition of the wages in the proposed amalgamated law or EOB or S.E.S.S.I scheme or in the existing law should clearly and specifically mention beside basic wage/salary what other monthly unconditional regular allowances would be included in the wages for contribution.

Similarly the definition of Employee should be clear and unambiguous and part time employees be excluded from employee. Likewise, casual, temporary employees working for less than 4 days in a week should also be excluded from employee due to their mobility and where-about not known. (Anwar from MSD)

  1. The proposal of collection of contribution from the exporters, in respect of all welfare schemes, on the pattern of withholding tax be got processed and enforced, in case the collection on uniform basis, rested on the wage bill is not implemented or the implementation is delayed.

(Chapt-4, Pages 47 - 48)

We suggest obtaining the views of export representatives' bodies before taking any action.

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