THERE has been no respite for workers from the monetary losses they have suffered on account of the confusion and complications caused by the flawed application of labour welfare laws in the provinces. The situation is getting worse, and there is no end in sight.

After the passage of the 18th Amendment, the provinces were asked to devolve labour laws by June 30, 2011, but the deadline lapsed. Meanwhile, a bench of the Sindh High Court gave a landmark judgement on Feb 26, 2011, holding five amendments made to the labour laws by the then government through the Finance Act, 2007, as ultra vires. This affected two of the most beneficial welfare laws: the Companies Profits (Workers Participation) Act, 1968 and the Employees’ Old-Age Benefits Act (EOB act), 1976.

Based on the amendments of 2007 in the 1968 act, the workers had benefited from the following; (a) definition of ‘worker’ was amended to include workers employed by or through contractors. Therefore, the number of workers eligible for shares in a company’s profit had increased substantially; (b) the maximum allocation of a worker’s share in the profit was increased to three to four times the minimum wage; (c) there were increases in the wage ceiling of three slabs prescribed to calculate each worker’s share in the profit: (i) from Rs5,000 to Rs7,500, (ii) from Rs7,500 to Rs15,000, and (iii) from Rs10,000 to Rs15,000 or more.

Eligible workers had been getting these benefits at the enhanced rate for four years at the time of the Sindh High Court judgement. Since they were declared ultra vires, the benefits went back to what they were prior to 2007. In November 2016, the Supreme Court also endorsed the high court’s judgement.

The failure to devolve labour laws has caused confusion.

This matter could have been resolved by the provincial legislatures had they passed their own respective acts. But none had done so, which resulted in further complications especially for companies with factories and business houses in more than one province.

However, the Sindh government took the initiative and promulgated the Sindh Companies Profits (Workers’ Participation) Act, 2015. Under this act, the provincial government has restored all the benefits discontinued on account of the court’s judgement, although a change in the definition of ‘company’ under this act has created difficulties for trans-provincial companies. Due to this change, a company whose registered office is situated in Sindh, but that has establishments in other provinces — all share a common balance sheet — is required to deposit its contribution to the government’s share in the profit in Sindh.

The profit slabs of its disbursement to workers have been revised for the following category; (i) workers drawing the minimum monthly wages as fixed by government, (ii) workers drawing monthly wages exceeding the minimum wages as fixed by government but not exceeding Rs20,000, and (iii) workers drawing average monthly wages exceeding Rs20,000.

Because of the absence of a uniform law in the country, companies are divided over payments. Some trans-provincial companies are paying the workers’ profit share at the rates applicable prior to the 2007 amendment. Workers of such companies are consistently losing money on this account. Some other companies are taking risks by paying the profit share at the revised rates under the Sindh act of 2015 to their workers all over Pakistan. However, most of the companies are not paying the huge amount of the government’s share to either the federal or Sindh revenue boards.

The minimum pension was increased from Rs1,300 to Rs1,500 a month in July 2007 under the EOB act. A year later, the employers’ monthly contribution to EOBI was decreased from six to five per cent of the minimum wage. The 2007 amendment was beneficial to pensioners in that their amounts were not decreased, while that of 2008 benefited employers because the EOBI contribution was reduced. Although both of these were declared ultra vires by the courts, the EOBI did not make any changes — to the detriment of pensioners and employers alike.

The Sindh government also enacted the Sindh EOB act in 2014. None of the other provinces have devolved this law, and the institution formed under the 1976 act continues to function throughout Pakistan. Nevertheless, hundreds of companies in Sindh have not been paying their monthly contribution to EOBI for over a year, in the belief that the Sindh government might claim it from them retroactively at any point in the future. This state of confusion — bordering on absurdity in the application of two of the most beneficial welfare legislations — is adversely affecting workers’ already meagre incomes.

In its own interest, as well as that of workers, the federal government should quickly intervene to rectify this situation.

The writer is an industrial relations professional.

Published in Dawn, November 23rd, 2017