Compensation to victims

In case of the Baldia fire, heirs of the victims are receiving a compensation higher than the global average.

Compensation to victims

The heirs of the victims of Baldia factory fire were the first in the country’s history to receive adequate compensation including a long-term monthly pension. This was the result of local and international advocacy.

On September 11, 2012, more than 250 workers had lost their lives in a deadly fire in a garments manufacturing factory in Karachi. Aside from the involvement of a political party, there was a failure by the owners to provide a safe working environment.

The owner was asked by the court to pay a death grant of Rs 500,000 for each deceased. Generous compensation was also paid by the German company that had been importing garments from Ali Enterprises.

Surviving family members of the deceased workers are now receiving over Rs 25,000 a month, which is more than the minimum wage for unskilled workers in Sindh.

The Baldia fire case is unique in the sense that heirs of the victims are receiving a compensation amount exceeding the global average. The German buyer of Ali Enterprises had paid an amount of $1 million as immediate relief after the incident. The amount was distributed through Sindh High Court’s special commission in 2012-13.

Clean Clothes Campaign (CCC), an international labour support organisation, had identified the main buyer of the products of Ali Enterprises in Germany, KiK Textilien. The buyer was convinced to acknowledge responsibility and pay compensation to the affected families. Pakistan Institute of Labour Education and Research (PILER), a Pakistani labour support organisation, signed a memorandum of understanding (MoU) with the German company Kik Textilien to pay compensation to the workers’ heirs.

The long-term compensation in the form of a pension was a part of the agreement reached with support from the International Labour Organisation (ILO) and some international trade unions’ organisations. The ILO, under its Conventions C-121 - Employment Injury Benefits Convention - intervened to calculate the compensation. Even though Pakistan has not ratified this important convention, the ILO extended support for determination of the compensation rate.

The ILO’s financial experts calculated the amount for payment of the pension to the victims’ families and received an amount of $5.15 million from the German buyer for long-term compensation. After a lengthy process and consultations with the family members and Pakistani labour support organisations, the ILO entered into an agreement with Sindh Employees’ Social Security Institution (SESSI) in 2018 to disburse the amount in the form a monthly pension. The SESSI now distributes the amount every three months. A national oversight sommittee comprising representatives of all stakeholders including the ILO, Sindh government, the affected families and labour support organisations is looking after the smooth disbursement of the pension amount.

Pakistani laws allow the family of a deceased to receive a maximum compensation of Rs 1 million (Rs 500,000 as group insurance under the Workers Compensation Act, 1923 (read with Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968) and another Rs 500,000 as a death grant from the Workers’ Welfare Fund (WWF).

The colonial era law, Workers’ Compensation Act, 1923, has remained the major legislative provision for compensation in case of injury and death (except for the employees of the government organisations). In case of death or permanent and total disablity of a worker an employer has to pay the victim’s family a sum of Rs 200,000 (the amount has been raised to Rs 300,000 and Rs 400,000 in the Punjab and R .500,000 in Sindh). The latter payment is made on account of group insurance.

Legal heirs can also receive a family pension from Employees’ Old age Benefits Institution (EOBI), if the worker was registered. In case of an unregistered worker, the family can receive a funeral grant of Rs 15,000. Unfortunately, most workers are not registered with social security institutions as they are hired under a contract or third-party contract system, in which the employers seldom register the workers.

“The family members of a deceased have to apply to the commissioner for workers’ compensation, working under the Labour Department for receiving a compensation,” says Syed Athar Ali Shah, the joint director in Labour and Human Resource Department.

According to him, the compensation commissioners (mostly deputy directors in the Labour Department) can order the employer to pay the compensation. In case of default they can write to the deputy commissioner of that district for taking action against the employer.

In most cases, the victim families receive the compensation, Shah adds.

The West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, which was later adopted by the provinces after 18th Amendment, the Sindh Terms of Employment (Standing Orders) Act, 2015, the Khyber Pakhtunkhwa Industrial and Commercial (Standing Orders) Act, 2013 and the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 (adapted by the province of Punjab through Amendment Act of 2012) are the relevant provincial laws.

The Standing Orders Ordinance requires all the industrial and commercial establishments with 50 or more employees to have all their permanent workers insured against natural death, disability or death and injury arising out of the contingencies not covered by the Workers Compensation Act, 1923 and Provincial Employees Social Security Ordinance, 1965 (provision of group insurance).

The Sindh Terms of Employment (Standing Orders) Act, 2015 and similar laws are effective legal instruments, which also cover other important aspects of the employment terms including benefits like leave, bonuses, gratuity, provident fund, compulsory group insurance etc. The heirs of a worker dying at the workplace are entitled to receive group insurance benefits under these laws.

“It is unfortunate that a majority of the workers’ families are unaware of the availability of these compensation laws and do not receive group insurance and death grants” says Shafeeq Ghauri, the Sindh Trade Union Federation general secretary.

He says the main reason for non-payment of the compensation in case of death of a worker is that most of the workers are not registered with the social security institutions or Labour Department. The employers also don’t pay their contributions for all the workers of the Social Security Institutions to the EOBI. In case of an accident of injury or death at the workplace the workers’ families are unable to file a claim due to non-availability funds.

The author is a senior journalist, currently working as development communication professional in Karachi

Compensation to victims