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July 12, 2016

Terms of employment


July 12, 2016

The Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 was one of the best ever labour laws promulgated in Pakistan. It was considered as the magna carta of labour legislation in Pakistan by the then policymakers.

The ordinance provided guidelines to employers relating to the terms and conditions of employment in respect of the workers employed to do any skilled or unskilled or clerical work for hire or reward in an establishment. It also covered comprehensively the disciplinary process to be invoked by an employer in case a worker was accused of committing misconduct as prescribed in the ordinance.

The subject of labour legislation was devolved to the provinces by virtue of the 18th Amendment carried out in April, 2010. Although the process of devolution was to be completed by June 30, 2011, the Sindh government initiated it quite late has so far devolved all the critical labour laws. This includes the ‘Sindh Terms of Employment (Standing Orders) Act, 2015’, which repeals the above-mentioned ordinance of 1968.

The Punjab government had promulgated ‘The Punjab Industrial and Commercial Employment (Standing Orders) (Amendment) Act, 2012’ but besides the name of the law, had not made any change in provisions of the law as it did not consider them necessary.

On the other hand, the Sindh government has made significant amendments in the ‘Sindh Terms of Employment (Standing Orders) Act, 2015’. These amendments will hamper the smooth functioning of industrial and commercial establishments as mentioned hereunder. This act has been extended to a number of commercial establishments, which were previously excluded from its ambit including schools, colleges, private educational institutions, hospitals, private health centres, clinical laboratories and private security agencies.

In the Sindh Act, all employees working for an establishment have been declared as ‘worker’ except the occupier and manager having the hiring and firing authority. This implies that the distinction between the management and non-management has been removed and even the general managers and department heads working for an organisation will be considered as workers under this law. They will no longer be bound by the terms of employment as given in their letter of appointment but by the provisions of the Sindh Act. Consequently the flexibility so far available to employers to terminate the services of their management staff with immediate effect by paying them salary in lieu of the notice period as stipulated in the appointment letter stands withdrawn.

One wonders how the mechanisms of supervision, exercising authority and administrative control will function when everyone in an organisation is considered as a worker. A further ambiguity is generated by giving the status of worker to this class of employees when no change has been made in the definition of ‘worker’ as given in another equally important law, the Sindh Industrial Relations Act, 2013 (SIRA), under which workers’ unions are formed. This act provides that a person, who is employed mainly in managerial or administrative capacity, will not be considered as worker.

That means that persons who will now be considered as workers under the Terms of Employment Act will continue with the status of ‘management’ under the SIRA. This confusion is inevitable when drastic changes are unnecessarily made in laws in isolation without advance planning and without formulating any labour policy with consensus of the stakeholders.

The Sindh Act requires that its text, periods and hours of work, pay days and holidays allowed and rates of wages payable to all classes of workers will be prominently displayed in English, Urdu and Sindhi on special boards to be maintained for the purpose at or near entrance to the establishment and in all the departments.

Instead of making it a forward-looking law, the legislature has made retrogressive amendments as mentioned above, which could have been relevant in 1930s when most of the labour laws were enacted, but not in an era in which the majority of employees have access to the internet and the workers are fully aware about the terms of their employment through the appointment letters and collective labour agreements.

Barring private schools which operate for the elite, in most of the schools catering to other people in the province children are forced to attend classes under trees or inside dilapidated buildings. Where will they display the text that asks for compliance with the act. The latter types of schools face innumerable problems including lack of teachers to teach critical subjects. How does the Sindh government expect them to pay profit bonus to the teachers and comply with other provisions of the Act when they don’t have the funds even to pay teachers’ salaries?

Excessive absenteeism by employees of an organisation is a major obstacle to improvement in productivity. Despite this fact, the following proviso has been added to clause 3 (5) of Standing Order 21 of the Sindh Act, prescribing as to what acts or omissions constitute a misconduct;

“Habitual absence without leave or absence without leave for more than ten days; provided that where a worker is barred by the employer to enter the factory (gate-bandi), the period of ten days shall not apply, subject to the condition that the worker reports the incidence to the concerned Labour Office within seven working days of the gate-bandi”. The concept of gate-bandi introduced in the act will make the control over absenteeism more difficult for the employers. A worker absenting himself from work due to personal reasons may level the allegation of gate-bandi against his employer. This could boost absenteeism.

The writer is an industrial relations professional.

Email: [email protected]


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