CIRCULAR

Amendments made in Five Labour Laws

Through the Finance Bill,2008

The amendments have been made in five labour laws through the Finance Bill,
2008 which after passing by the Parliament as an Act and assent of the
President shall become law applicable from the 1st July 2008.Our comments and
views given below are based on amendments as proposed in the Bill and if the
Parliament while passing the Bill as an Act makes any modifications our
comments shall stand modified accordingly.

1. Increase to the Government Employees:

20% increase in Basic Pay, increases and revision in several allowances/benefits

to the Federal Government employees announced in the budget speech are
meant only for the Federal Government employees and the same are not part
of any labour law, not applicable to the workers and the same be treated
accordingly.

2. Amendments in the Provincial Employees Social Securities

Ordinance,1965:

(i). In Sub-Section 2( 8 )( f ) the word “five” occurring twice have been

substituted by the word “ten” which means that the employees now getting
over Rs.10,000/=p. m. shall not be covered by the Ordinance or any new
employee starting on wages above Rupees Ten Thousand per month shall not a
covered employee under the Ordinance but any employee covered by the
Ordinance if his wages subsequently exceed Rs.10,000 /= p.m. he would not go
out and still remain covered by the Ordinance but contribution shall be paid on
his wage of Rs.10,000/=p. m only.

(ii). In sub-Section 2(25a) pertaining to the self

assessment scheme the fixed rate of Rs.210/=p.m. contribution has been raised
to Rs.360/= p.m. and once again the self-assessment scheme has not been
made attractive.

(iii). In section 20(1) after the word “rate” the

words “not more than six percent” have been inserted making the matter clear
the rate of employer’s contribution as 6% of the wage. In the provision under it
the word “two” has been substituted by “four” and the word “four” by “ten”
and thereby 6% contribution limited to Rs.5000/= p.m. wages has been doubled
to on Rs.10,000/= p.m. wages and no contribution shall be payable on the wage
in excess of Rs.400/= per day or Rs.10,000/= p.m The burden of contribution
has been doubled on the employers which is not justified keeping in view as the
scheme is being run by the Institutions.

(iv). In Section 20-A in the self-assessment scheme

Rs.210/= p.m. fixed contribution has been raised to Rs.360/=p.m. as explained
above.

3- Amendments in W.P. industrial & Commercial Employment (Standing

Orders) Ordinance,1968:

1) The words “West-Pakistan” having become misnomer have been correctly

removed. The same should be done in the case of the W.P. Shops &
Establishment Ordinance, 1969.

2) In the standing order 15(5) of the Ordinance the words “subsistence

allowance of not less than fifty percentum of wages. If the workman is found
not guilty he shall be deemed to have been on duty during the period of
suspension and shall be entitled” have been omitted but the words thereafter
still remain which means that during the period of suspension the worker shall
be entitled to the same full wages as he would have received if he had not
been suspended irrespective of the fact whether the worker is found guilty or
not during the inquiry.
4- Amendments in the Employees Old-Age Benefits Act,1976:

I. Section 9-A was inserted in 1986 by the

Government of the Prime Minister Late Muhammad Khan Junejo and the
Federal Government started contributing equal amount collected by the
Institution. This was substituted in 1995 and no such contribution is paid by the
Federal Government. The Government should also take some responsibility
along with the employers instead of empty tall talks alone for welfare of the
workers.

II. In Sub-clause (i) of section 1(4) the word “ten”

appearing twice has been substituted by the word “five” and the provision
under it has been omitted. This is a far reaching change in the Act made
applicable where 5 or more employees are employed and it may be shops which
do not maintain records even under the Income Tax law, it is not compulsory
for them to maintain account books and may file income tax returns under the
self assessment. This amendment is going to be grossly abused by the officials
of the Institutions as such small establishments cannot meet their demand of
producing records and account books and such small establishments cannot
afford to meet the requirements of the Act. beside adding burden on them.

III. In its subsequent Sub-clause (ia) the same as above

change has been made.

IV. In Section 9(1) the word “six” has been substituted

by the word “five” thereby 6% contribution has been reduced to the previous
rate of 5% contribution, perhaps due to chaining large number of small
establishments having 5 or more employees resulting in higher amount of total
contribution collected by the Institution.

V. In section 22(2) Sub-clause (ii) a provision under it

has been added as under:

“Provided that nothing in the section shall apply to an employee insured

under the provisions of this Act on or after 1st day of July, 2008”.

This reduces the benefit to the employees.

VI. Section 47(e) has been omitted to cover banks under the Act.

VII. In the Schedule, the paragraph (2) has been substituted as under:
 “(2) The monthly wages of an insured person, referred to in paragraph
(1) shall be

calculated on the basis of wages on which contributions were

paid in respect of

Twelve calendar months immediately proceeding the date on

which insured

Person fulfils the conditions for entitlement to any benefits

under this Act:

Provided that the old-age or invalidity pension payable to an

insured person

and survivor’s pension payable to the survivors of the deceased insured person
shall not be less than two thousand rupees per month for pension

commencing on or after 1st day of July, 2008”. The pension starting on or

after 1-7-2008 has been raised to Rs.2,000/=p. m.

VIII. In paragraph (3) the pension being paid on or before 1-7-2008 has been
increased

by 15% as before but not 20% as done by the Federal Government for its

employees.

5- Amendments in the Workers Welfare Fund Ordinance, 1971:

I. After Section 2(f)(iv) a new sub-clause (iv-a) has been

added as under:

“(iv-a) any establishment to which the West Pakistan Shops & Establishment
Ordinance for the time being applies”. The application of the Ordinance has
been further extended.

II. In Section 4 (1) the words “of so much” and “as is assessable
under the

Ordinance” have been omitted to collect more fund.

 III. In Section 4(4) the words “At the time of making an assessment
under the

Ordinance or as soon thereafter as may be the” and “on the

basis of the

income so assessed” has been omitted for the same purpose as

above.

IV- In Section 4(5) the word “assessed” has been substituted by the
word “total”

and the words “Subsequent to the assessment made under the

Ordinance”

have been omitted.

V- In section 11-B (3) after the word “sanction” at the end the
words “with

Previous approval of the Governing Body” has been added.

6- The Minimum Wage of Rs.6,000/= p.m. under the Minimum Wages

for

Unskilled Worker Ordinance, 1969

I- By amending the Column 2 of the Schedule to the Ordinance the rate

of the

Minimum wages of Rs.4,600/=p. m. for unskilled workers has

been raised to

Rs.6,000/=p. m. w.e.f 1-7-2008.

II- The Ordinance and the amendment apply to all industrial and
Commercial

establishments irrespective of the number of workers

employed. Now Rs.6,000
 p.m. is the National Minimum Wage for the lowest category
workers in Pakistan.

III- The deductions from the minimum wages for providing housing

accommodation and transport by employers have once again

not been

revised.

IV- The “wages” has been defined in Section 2(g) of the Ordinance.
The minimum

Wages includes basic wage, any dearness allowance, house

rent, house rent

allowance, conveyance allowance, statutory cost of living

allowances

admissible till the date of amendment, Statutory Special

allowances

admissible till the date of amendment and any other fixed

allowance but does

not include traveling allowance, gratuity and bonus. The

Ordinance or the

amendment does not change the system of wages paid by the

employer. Taken

all together should make the gross of Rs.6,000/=p. m. but the allowances are
not merged with the basic wage and shall continue to remain separate as
before where the same are so paid separately. Naturally wages of semi-skilled
and skilled workers are to be fixed by the employers of their own more than
Rs.6,000 /=p.m.

V- The above wages are the minimum wages. If the minimum wages
for the unskilled workers in any commercial or industrial establishment is more
than the minimum wage now fixed at Rs.6,000/= p.m., the same shall continue
and cannot be reduced. This minimum wage is now the starting minimum wage
for the unskilled workers. Future increases, annual increments, increases under
settlements, statutory cost of living allowance, statutory special allowance
etc. which may be given in future would be in addition and over this minimum
wage. Apprentices are not included as unskilled workers who are governed by
the Apprenticeship Ordinance, 1962.

VI- This minimum wage for unskilled workers is for all unskilled workers
whether they are permanent, temporary, badli, monthly rated, piece rate or
daily wage rated. For daily wage rate, the daily wage may be arrived at by
dividing 6,000by 26. Normally piece rated workers are above the unskilled
workers except certain manual labour on piece rate such as loading and
unloading of goods and in such a case the piece rate for unskilled workers be so
fixed that such a worker gets normally Rs.6,000/- p.m. wages.

Thanks and Best Regards,

Muhammad Imran

Dear Fellows

Kindly send me the copy of notification/ circular etc for fixing of minimum wage rate from Rs4, 600
to Rs 6,000. It is urgent

Regards

Abdul Basit
A Well reputed organization is required a talented, motivated person
for the following position based in Karachi.

Position: Account Officer

Education: B-Com/ICMA or ACCA part 1 qualified
Experience:2 years Articles + 1 to 2 years in manufacturing industry

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Last date of submission is 31st July 2008.