Industrial And Commercial Employment (standing Orders) Ordinance 1968 Pdf

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TheIndustrial and Commercial Employment (St anding Orders) Ordinance, 1968 regulate the conditions of employment of workmen in industrial and commercial establishment wherein twenty (20) or more workmen are employed, directly or through any other person, whether on behalf of himself or any other person, or were so employed on any day during the preceding twelve months.

Khalid Zafar Graduated in commerce from Hailey College of Commerce, University of the Punjab, Lahore, Pakistan and obtained his law degree from University of the Punjab, Lahore, Pakistan. He has a diversified experience of over 21 years as a litigator and corporate lawyer and has worked with leading law firms including Cornelius, Lane & Mufti; Mandviwalla & Zafar; Surridge & Beecheno; and Hassan & Hassan in the years 1999 through 2012.

Ms. Aleena Waheed Hashmi obtained her graduation in Law from Punjab University Law College, Lahore and later pursued her Masters in Social Work. Ms. Waheed holds practicing license of Punjab Bar Association. The area of expertise is corporate, banking, commercial and transactional practice. Aleena is advising and providing legal services to the clients of her law firm and represents her law firm in all sorts of commercial, corporate and banking matters. Ms. Waheed has an ability and extensive experience of drafting more complex documents like persuasive briefs and motions that require comprehension of complicated fact patterns, analysis of numerous legal issues or questions of law and review of voluminous transcripts and records. With such a broad understanding of law, she has been able to better assist every client with her variety of activities.

Hamza graduated from Punjab University Law College (PULC) and also holds a Masters degree in Political Science. He is a practicing member of Punjab Bar Association. He handles all the civil, banking and commercial litigation of the firm. Hamza has expertise in revenue and land matters and has been doing land records due diligence. He is handling the corporate matter like Intellectual Property Rights, registration of limited liability companies, partnership matters, trademarks and copyrights etc. Hamza is handling the transactional banking matters including but not limited to property opinions, structuring and execution of the transactions. He has legal acumen and skills for solving various kinds of legal propositions and issues successfully.

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Gratuity is one of three prevalent retirement benefits in private sector employment. The other two are "Pensions (approved Pensions Fund) and Provident Fund". It is a "lump-sum" amount of money payable to a worker on leaving service (through retirement, death or termination of service) based on salary (highest or the final salary) and period of service (over and above six months).

Gratuity is actually a benefit for services rendered in the past. It is a reward for good, efficient and faithful service for a substantial period of time. Before 1972, gratuity was paid by an employer either on a voluntary basis or in consequence of an award by a labour court. However, the Labour Laws Amendments Ordinance, 1972 made payment of gratuity a legal obligation. Amendments were subsequently made in the Standing Order 12 of Industrial and Commercial Establishments (Standing Orders) Ordinance 1968. Gratuity is now a statutory right for workers who have worked at least twelve months in an organization. The relevant laws governing gratuity in the private sector are:

In accordance with section 1(4) of the Standing Orders Ordinance, 1968 (and its variant in Punjab), every commercial establishment (employing 20 or more workers) and industrial establishment (employing 50 or more workers) are required to pay gratuity to a worker once he/she has met the minimum criteria. The Khyber Pakhtunkhwa Act and the Sindh Terms of Employment (Standing Orders) Act, 2015 reduce the minimum number of workers in commercial establishments to 10 workers and in industrial establishments to 20 workers. The Baluchistan Industrial and Commercial Employment (Standing Orders) Act, 2021 reduces the minimum number of workers for all kinds of establishments to 10 workers. The table below shows all the organizations liable to pay gratuity to their workers.

1. Industrial and Commercial Establishments (Standing Orders) Ordinance 1968 (or any of its variants) is applicable to that establishment (whether commercial or industrial) i.e. it must have the minimum number of workers as mentioned above

2. A person has to be a workman as defined in Standing Orders Ordinance 1968. A workman is "any person employed in any industrial or commercial establishment to do any skilled or unskilled, manual or clerical work for hire or reward".

3. He/she must be a permanent workman. Badli (replacement worker) or a contract worker are also entitled to gratuity if the length of service is more than one year. A temporary worker (whose maximum length of employment is nine months) or a probationer (three months) is not eligible for gratuity under the law.

4. The minimum qualifying employment period is twelve months or above. However, if a worker has worked over six months in a specific year, he will be entitled to a gratuity of one year. Thus, in essence, gratuity is payable for more than six months of employment when the length of employment exceeds one year.

He resigns from his service (voluntary retirement or voluntary redundancy in exchange for financial benefits like golden handshake schemes) His organization terminates his services due to reasons other than misconduct He dies while in service of his employer (it is not necessary that the employee should be on duty at the time of death) He reaches the superannuation age and retires

In the case of the death of a workman, gratuity is payable to the legal dependents of a workman. As mentioned above, death may not necessarily occur on duty but the worker should be in continuous service at that time. The amount of gratuity, in this case, is transferred to the "Workmen Compensation Commissioner" who will then allocate this amount to the dependents of a worker. The dependents of a deceased worker include "his widowed mother, his own widow, minor son and unmarried daughter".

In accordance with the provisions of law, the rate of gratuity is "thirty (30) days wages for every completed year of service or any period in excess of six months". Any employment period exceeding six months will be considered as one year. Originally, gratuity was set at 15 days' wages for every completed year of service. In 1973, the rate was revised to 20 days' wages. In 1994, it was further revised to 30 days' wages for every completed year of service or any period in excess of six months. After the 18th Constitutional Amendment of 2010, provinces have enacted necessary legislation providing for gratuity on termination of employment. Punjab and the Islamabad Capital Territory provide 30 days' wages for each year of service. Khyber Pakhtunkhwa and Sindh provide one-month wages for each year of service. Baluchistan requires two-months wages as gratuity for each year of service.

The basis for calculation of wages is "wages admissible to a fixed-rate worker in the last month of his service" or "the highest drawn pay by a piece-rate worker during the preceding twelve months". Wages for gratuity calculation are the "gross wages" including all permanent and regular allowances (like house rent allowance, cost of living allowance and conveyance allowance), however, these don't include any such contingent or unpredictable payments like temporary relief to workers (e.g. flood relief) or bonus provided by the employer. Other than wage rate, the second determining factor in gratuity calculation is the time period a worker has served with an establishment/organization. Any length of service higher than six months over the number of years of service is considered as one year for the purpose of gratuity calculation. Whereas any length of service less than six months is not included in the course of calculating gratuity.

Wages for workers are determined on a 26-day month basis as defined in the Minimum Wages for Unskilled Workers Ordinance, 1969. Minimum wage notifications, issued by the provincial governments, also determine wages for unskilled, semi-skilled and skilled workers on a 26-day basis.

Gratuity is calculated on the basis of gross wages including all those allowances and fringe benefits which are permanent, regular and non-contingent in nature. The irregular and non-contingent payments (bonus, profit, payment for annual leave etc.) are not part of wages for the purpose of calculating gratuity. In the case of fixed-rated workers, gratuity is calculated on the basis of wages payable to a worker in the last month of service. In the case of piece-rated workers, gratuity is calculated on the highest pay drawn during the last 12 months.

As mentioned before, gratuity and provident fund are two different retirement benefits under the Standing Orders Ordinance 1968. Workers don't have legal right to both of these benefits. It is rests with an employer's discretion to decide as to whether he wants to set up provident fund or provide gratuity at the end of employment or grant both of these benefits voluntarily. The law can't force an employer to provide either of these benefits or both the benefits simultaneously.

Gratuity is usually awarded in addition to other benefits payable to an employee. However gratuity is not payable during the period an employer has set up a provident fund in his establishment with at least 50% of the contribution by the employer and the remaining by employee. The sum of both of these contributions would be payable to a workman even if he resigns or is dismissed from service for any reason including misconduct (remember gratuity is not admissible in case of misconduct). However, the law does not stop an employer to provide both gratuity and provident fund to its employees. What is provided in the law is the minimum legal protection i.e. floor and not the ceiling. Both the Khyber Pakhtunkhwa and Sindh Standing Orders Acts further provide that the amount paid to the worker under provident fund must not be less than the amount of gratuity admissible to such worker.

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