Through this appeal, the order dated 30.9.2004, passed by the Labour Court No. 3, Lahore, has been assailed, by virtue whereof, the appellant's petition, challenging the order of Respondent No. 1 dated 2.12.2002, was dismissed.
2. Briefly, the facts of the case, as stated in the petition are, that M/s Ittehad Chemicals Limited (the Company) is a manufacturing concern with the current strength of 500 workers and is running round the clock with three shifts. The appellant is a registered Union since 1995 and till the date of the impugned action, was the CBA of the workers of the Company, whereas Respondent No. 2 is the Trade Union created in 2002 and on account of the order of Respondent No. 2, impugned in this appeal, has been declared to be the CBA of the workers of the Company. In Paragraph No. 4 of the petition, it is averred that the Company, which previously was a public concern, was privatized and thereafter, had adopted, what may be termed as "Contract Labour System", the method through which, the labour force is hired from the market through the Contractor and compensation/wages are paid to the Contractor, who makes the same over to the labour/workers after deducting commission. In this manner, the Contractor, according to the appellant, assumes the character of quasi-employer (middleman), as he supplies the labour force, but in fact and reality, the real Employer of the labour remains the Company, which after hiring the labour actually employs the services of the workmen at its manufacturing unit for the purpose of his undertaking and calling. It is alleged in the petition that the appellant in the capacity as CBA tried to prevail upon the Company that the contract labour working at the factory be given the status of permanent employees after completion of statutory period of employment. This roused the Company to get registered Respondent No. 2 in April, 2002; this tactic was used as a time honored ploy in order to divide the labour and the roost. In the said scenario, the appellant served a demand notice on the Company in July, 2002 requiring the Employer to make permanent 400 workers of the Company, but in vain.
3. Whereas, Respondent No. 2 soon after its registration, applied to the Registrar Trade Union, Respondent No. 1, for holding a referendum in the establishment for determining a Collective Bargaining Agent. The new Union, Respondent No. 2, also took steps before the National Industrial Relations Commission (NIRC) to obtain a stay of proceedings relating to the demand notice aforesaid. However, on the application for the determination of the CBA, some proceedings were taken by the Registrar during which, the appellant raised the objection to the effect that the total number of the workers employed in the establishment was more than 500 out of which, 477 were the members of the appellant union, while the rival union claimed the membership of 52 workers.
The rival union, Respondent No. 2, and the management of the Company (Respondent No. 3) maintained that only 72 workers were employed in the establishment, while all others were hired through a Contractor. The Registrar, after inquiry, upheld the objection of the appellant and consequently, Respondent No. 2's application claiming referendum was rejected, as it did not have the requisite 1/3rd of the total workers as its members. But within less than two months, another application was made by Respondent No. 2, seeking the referendum, whereupon the Registrar, Respondent No. 1, initiated the proceedings for holding a referendum under the I.R.O 2002 (promulgated after repeal of IRO 1969), which had been enforced in the meantime, and asked the appellant to furnish the list of its members. The appellant, according to the petition, submitted a list of 447 workers, who were its members. The management of the Company filed a list of 71 workers claiming that only those mentioned in the list were in its employment. On 2.12.2002, Respondent No. 1 ex-parte accepted the management's list of 71 workers and contrary to his earlier order dated 23.9.2002 held that only those 71 workers were entitled to vote in the referendum. Consequently, the Registrar accepted the application of Respondent No. 2 and fixed 10.12.2002 as the date for the referendum, holding that the workers employed through the Contractor could not be deemed to be the employees of the establishment, so as to acquire a right to vote in the referendum. Regarding his earlier order, it was held that the same was passed under the I.R.O. 1969, a different law, and in different circumstances. It to be more precise, the following portion of the order dated 2.12.2002 passed by the Registrar of the Trade Unions, shall make the point "In view of the facts brought on record by all the three parties I am fortified to hold that previous order of the undersigned mentioned above has no bearing on the present proceedings particularly when I.R.O. 1969 stands repealed. It is also established fact that prior to the registration of applicant union, it was part of Employees and Labour Union and election of same were held with a membership not exceeding 70.
I would like to add that in I.R.O. 2002 the scope of definition of employer as given in Section 2(x) has been widen by placing Contractor under this provision as per Section 2(x)(f). This provision lacked in repealed I.R.O. 1969. Now under the altered statutory provision a trade union can either be registered with the factory management or contractor supplying labour which has been held a separate establishment in case of circumstances stated above."
In the above situation, the appellant called in question the order dated 2.12.2002 of the Registration before the Labour Court by filing an application under Section 33 of the IRO. According to the appellant's case, as the stay order was not granted by the Court, resultantly, the appellant boycotted the referendum and in this manner, Respondent No. 2 was declared successful in the polls, which took place on 10.12.2002. On 11.12.2002, a certificate of CBA was issued to Respondent No.
2. The appellant made another application for the suspension of the CBA Certificate, but without any success.
4. The learned Labour Court proceeded to fix the case for the evidence of the parties when Respondent No. 3, the Managing Director, Ittehad Chemicals, filed an application for the rejection of the petitioner under Order 7 Rule 11 CPC. The Labour Court, however, held that the case would not be rejected under the aforesaid provisions, but as the CBA Certificate has been issued to Respondent No. 2, who has taken over the charge of the office, therefore, the main petition was discarded as having become infructuous, vide order dated 11.10.2003. It was also held that the appellant had not amended the petition to meet the changed circumstances, and therefore, the same was liable to be rejected as infructuous.
5. The appellant challenged the above order dated 11.10.2003 through W.P. No. 16434 of 2003 before this Court and the order impugned therein was set aside by the Court with the direction to the Labour Court to decide the matter on merits. Again, the Labour Court No. 3, Lahore, has confirmed the order of Respondent No. 1 dated 2.12.2002 through the impugned order in this appeal dated 30.9.2004 holding that the total number of the employees of the Company is only 72. The learned Labour Court has concurrent with the view of.the Registrar Trade Unions by concluding:-- "He argued that in the instant case the workers who are performing their duties in the mills are workers employed by the contractors who have been assigned various jobs and not through the, contractors and in view of above referred proposition of law they are workers of their respective employers. Therefore, the argument of the learned counsel for the petitioner is without any substance. It will be worth mentioning that this category of employers did not exist in I.R.O. 1969. The Registrar of Trade Unions while recording his impugned order dated 2.12.2002 based his findings on the widened scope of definition of employers as prescribed in I.R.O. 2002."
6. Learned counsel for the appellant has argued that the change in the definition of the "employer" by virtue of I.R.O. 2002 has no effect upon the matter because there has been no change in the other definitions such as the "worker/workman", the "establishment" and, therefore, when it is proved that the workers employed by the contractor in fact are performing their duties in connection and concerning the calling and objects of the establishment, the company, within its precinct, thus, despite the fact that they have been recruited through a contractor, shall make no difference to their status of being the workmen and thus, shall be entitled to form a the trade union under Section 3 of the I.R.O. 2002 vis-a-vis that "establishment" where they are physically rendering their services.
7. Heard. The question, whether under the Labour Laws, the workmen whose services are procured by or through a Contractor, are the employees of the Contractor or that of the Principal, who employs the Contractor for that purpose, has arisen before the Courts in different-circumstances from time to time; the Courts have determined this issue in each case on the facts of that case and the particular labour legislation applicable. The following three judgments from the Honourable Supreme Court of Pakistan and one from. the Supreme Court of India can be referred to in this behalf:-- The Punjab Religious Book Society vs. Mst. Amanat (1974 SCM R 269); Mian Munir Ahmad vs. The State (1985 SCM R 257); Farid Ahmad vs. Pakistan Burmah Shell (1987 SCM R 1463), and Hussain Bhai Calient vs. Alakh Factory (1978 LLJ 397).
The ratio of all these judgments is that- (i) the relationship between the Employer and workmen is not merely a matter of contract alone, the other circumstances alongwith the rights arising out of legal and constitutional provisions must be kept in view;
(ii) the contract may only be a veil which can be lifted to determine the true relationship;
(iii) in Pakistan the defining provisions of I.R.Os, particularly those which explain "Establishment", "Employee and "Workman" play crucial role in interpreting the facts of each case.
Thus, keeping in view the above pronouncements, the High Courts of the country and the N.I.R.C, have laid down the principles about this relationship and in the ease reported as General Secretary Pak Saudi Fertilizer vs. Pak Saudi Fertilizer (1993 PLC 937), a Full Bench Judgment of the NIRC, it has been found that the contract labour was in fact employed by the Principal through a Contractor.
Likewise, in M/s Euro Ceramics Ltd. vs. Registrar of T.0 (1996 PLC 45), the Balochistan High Court, while considering the definition of "Workman" in terms of IRO, 1969, had held "The definition quoted above visualizes that a worker or workman even if he has been engaged by the employer through a contractor, would be deemed to be a worker in the Establishment, provided the nature of his job is to remain engaged in the affairs of the establishment, however, if the worker has been engaged by a contractor for undertaking the work other than the job being carried out in the establishment, he would not be deemed worker of the establishment." In another case, Seagull Exports vs. Sindh Labour Appellate Tribunal (2002 PLC 212), the Karachi High Court examine the noted case law and the provisions of the IRO and held on the basis of un-rebutted evidence, that the workers in that case were engaged, paid, controlled and managed by the Contractor and the Principal had no control over them at all; the contractor was thus, held to be the employer. Another case reported as M/s Dawood Cotton Mills vs. Sindh Labour Appellate Tribunal (2004 PLC 348), was a matter where the provisions of the IRO 1969 and the Industrial & Commercial Employment (Standing Orders) Ordinance, 1968 were applicable and were interpreted to hold that the contract labour was in the employment of the principal as the work performed was for and the general control was by the Principal. In Fauji Fertilizer Company us. Sindh Labour Appellant Tribunal (SBLR 2005 Sindh 1121), it was held that the workers engaged through or by a Contractor to perform the duties for the Establishment of the Principal under his supervision, were the workers of the Principal.
8. From the above case law, it is abundantly clear that under the -I.R.O. 1969, notwithstanding that the workers had been employed through the medium of a contractor, ye to cater different situations, and in order to determine and enforce the rights and obligations inter se the "employee' and the worker/workman, under various Labour Law, they have been considered to be the employees of that establishment, where they were physically rendering their services for achieving the objects and the purposes of that establishment and not of the contractor through whom they have been employed.
9. In view of the above 'and while considering the facts and circumstances of this case, the question, therefore, which arises for the determination is; whether after the enforcement of the I.R.O.
2002, which mainly has brought a change in the definition of the term "employer" whereby the "contractor" has also been included in that category, thus the workmen/workers, who though are working in an "establishment", but as their services are, procured through the medium of the contractor, resultantly such labour shall have no concern with the "establishment" for which they are rendering their services, rather shall be the employees of the contractor alone?
10. Before dilating upon the above proposition, it shall be relevant to briefly state the expediency, which has necessitated the promulgation of various Labour Laws, because this in my view, may be, to an extent, but this shall definitely be helpful in resolving the issue, while interpreting the relevant provisions of law. The historical backdrop of the relationship and interaction of the "employer" and an "employee" indicates that they have never enjoyed the equal status and the position. The employer has always been on a higher pedestal, reflecting an "unequal bargaining" position of the parties, such as, the employer had the pregative Hof hiring and firing his employees according to his own need, choice and the desire. The terms and conditions of "employment" usually were cut to suit the interest of the employer; this roused a cause of concern, a sense of deprivation, anguish, dissatisfaction amongst the labour class, who were of the strong impression, that it is they who on account of the dint of their physical and skillful hard work, are instrumental in enabling their employer to achieve his financial and business goals. But unfortunately, they are not meted with the rewards to which they deserve. In the circumstances, even before any statute was enforced, regulating the relationship of the employer and the employee or permitted the formation of the trade unions, in the international context, such unions in reality existed and were endeavoring for the better rights of the labour class. The trade unions, therefore, when viewed in the .above perspective, should always be understood and examined as a part of a wider concept i.e, the labour struggle and the movement as a whole; the movement which is a combined and a united action of the workers community to seek and secure favourable conditions for the labour, such as to the wages, hours of a labour, safety measures at the job sites, pensionery benefits, holidays, insurance, job security etc. etc. It is in pursuance of the labour movement and in recognition of their rights at the political, social and economic levels of the state, which compelled the legislature to take measures for the purposes of the regulation and the protection of the rights and obligations of the employer and the workers.
11. In Pakistan as well, with the same object in view and in order to deter the whimsical and capricious actions of one class against the other and for the settlement and resolution of their disputes, inter alia, the Industrial Relations Ordinance, 1969 was enforced. In this law, one of the significant and conspicuous rights conferred upon the two classes is, the legal sanction provided by Section 3 thereof, making lawful formation of the "trade union" and the "employer association".
Moreover, upon the enforcement of the Constitution of the Islamic Republic of Pakistan, 1973, which contains Article 17, the formation of an association has attained the status of a fundamental right, which is a most sacred and valuable right, conceivably available to a citizen; this article has been specifically referred to in Section 3 of the LR.O 2002, and I have no doubt in my mind that the section ibid. is primarily structured on the foundation of the Article.
12. Therefore, the right to form a trade union by the workers of an "establishment" is a right of its own nature, which altogether has different dimensions and amplitudes; embedding therein, the continuity of the workers struggle in a united manner for seeking better working conditions for the labour class, obviously from that "establishment", where they are physically employed to render services for the purposes of achieving and - carrying on the business of the said establishment.
This right, in its concept signifies the objective of its own special kind and the status, and by no rule of interpretation or the application it can be equated with the ordinary right of a workman about his salary/dues, leave, dismissal etc; which the individual workman may enforce according to the nature of his personal grievance against any of the persons, fictionally included in the definition of "employer" as contained in Section .2 (x) of the IRO, 2002,. However, for the purposes of effective exercise of the right of a worker under Section 3 ibid., the definition of the "employer" has no such significance, rather the terms "establishment" and' "worker/workman", as defined in law, are germane for the true interpretation of the said provision.
13. Thus, while considering the present case in the context of the above, and in order to answer the question posed in the preceding Paragraph No. 7, I am of the firm view that in apply the definition of the "employer" in the present matter, shall be quite inappropriate and a narrow approach towards the issue. Because, the above definition, by fiction of law, includes within the category of the "employee" even such person who otherwise does not quality to be so in the ordinary parlance.
This is for the reason, that the legislature in its wisdom has provided a comprehensive definition, with a clear object to meet different situations and to resolve carious issues and dispute which may arise between an individual worker on the hand, and its employer, on the other.
Whereas, the issue in hand is covered and governed by Section 3 of the Ordinance, 2002 read with Section 2(xi) and (xxx), which, for the facility of the reference, are reproduced below:-- "Trade unions and freedom of association:--
(1) Subject to the provisions of Article 17 of the Constitution of Islamic Republic of Pakistan, this Ordinance and any other law for the time being in force:--
(a) the workers shall, without distinction whatsoever, have the right to form and subject to the constitution or rules of a trade union, join any trade union of their choice within the establishment or industry they are employed in."
In this section, which is somewhat different from Section 3 of the IRO, 1969, the most important and fundamental aspect and feature is, that the worker has a right to form and join a trade union of his own choice within the "establishment" or the industry where he is employed. The term of "establishment" in Section 2 (xi) of the IRO, 2002, has been defined to mean "any office, firm, factory, society, undertaking, company shop, premises or enterprise which employs workmen directly or through a contractor for the purpose of carrying on any business or industry and includes all its departments and branches And the "worker/workman" means "any all persons not falling within the definition of employer who is employed in an establishment or industry for remuneration or reward either directly or through a contractor, whether terms of employment be express or implied, Thus, from the collective reading and interpretation of these provisions, it is clear that the trade union has to be formed vis-a-vis the establishment where the worker is employed and not against the "employer". The expressions "employ" "employed" therein undoubtedly shall mean, the physical engagement of a worker in an "establishment" where he renders his services for the purposes of achieving the objects and for carrying on the business of that "establishment", may be he has been recruited there, either directly or through the medium of the contractor; the fact as to how the workers/workmen have been engaged to work in the establishment, shall not be relevant, rather what important is, where is he employed to work. Even if the employment is through the contractor, it is the "establishment" in which the worker is performing his duties, the primary and the principal employer of the worker. It is not denied by the Ittehad Chemical Ltd. the company, that the workers, regarding whom the forums below have given the decision, are not working for it. Therefore, I have no hesitation to hold that for the exercise of their right under Section 3 ibid, such worker shall and are the workers of the company and the impugned orders declaring them otherwise are illegal and unlawful.
14. As regards the factual questions involved in the matter. such as to what is the number of the workers; whether the respective trade unions have the requisite membership enabling it to contest for being "collective bargaining agent's, obviously are the issues, which should be decided by the Registrar Trade Unions, after the answer has been provided that the workers even employed through the contractor, but for the purposes of trade union, are the workers of the establishment, where they are rendering their services and thus, are entitled to participate in the union activities.
The appeal is according allowed.