' This is an application under section 50, I. R.
0., by the Collective Bargaining Agent in the New Jubilee Insurance Company Ltd., the respondents herein, for the interpretation of the following clause in the settlement arrived at between the applicant union and the respondent company on 25th June, 1980 :- "Demand No, 4.-House Rent Allowance.-The house rent allowance will be increased by 7%. This house rent allowance will not form a part of wages and no medical facility and 10% bonus will be payable on this allowance".
' Two-fold differences or the doubts are said to have arisen in respect of the aforesaid provision of the settlement namely :-
(i) Whether the above provision in the settlement curtails or infringes the rights of the workmen as to the quantum of statutory bonus to which they are entitled under Standing Order 10-C ; and
(ii) Whether the settlement of 1980 affects the entitlement of the workmen to receive additional bonus under the resolution of the Board of Directors of the respondent union.
3. It may be pointed out that before the present application was made by the applicant union, it had filed an application under section 34, I. R.
0., before the learned Vth Labour Court, praying that a direction be issued to the respondent company to pay bonus to its workmen under Standing Order 10-C on the basis of Wages including house rent allowance, medical allowance etc. The said application was made in view of differences having arisen between the applicant union and the respondent company on the point whether statutory bonus under Standing Order 10-C was to be paid on wages excluding allowances or on wages plus allowances. The learned Labour Court, relying upon the decision of the Karachi High Court in the case of Fauji Sugar Mills Employee? Union v. Fauji Sugar Mills Ltd., given on 13th April, 1976, held that the application of the applicant union was not maintainable as it involved interpretation of settlements arrived at between the parties, which was the exclusive function of this Tribunal. Despite this finding, the learned Labour Court proceeded to examine the issue whether workmen in the respondent company were entitled to statutory bonus on wages, inclusive of all allowances and in addition full bonus granted to the workmen under the resolutions of the Board of Directors of the Company. The applicant union appealed to this Tribunal against the decision of the learned Labour Court. In view of the fact that the learned Labour Court itself had held that it had no jurisdiction in the matter, this Tribunal was constrained to observe that in examining the merits of the case, the learned Labour Court had exercised jurisdiction and powers with which it was not vested and the appeal was accordingly allowed on that ground. It is in this background that the present application has been filed by the applicant union, as the twin questions whether the statutory bonus payable to workmen under Standing Order 10-C is to be computed on the basis of wages excluding allowances, or wages including allowances, and whether the statutory bonus payable to workmen under Standing Order 10-C is to be adjusted against the bonus to which they are entitled under-the resolution of the Board of Directors of the company still remain unresolved between the parties and hence is a potential source ofiriction between them.
4. It is in the light of the above differences between the parties that certain issues- have been raised and convassed before this Tribunal which possibly do not strictly fall within the ambit and scope of section 50, I. R.
0., but since both parties strongly urged that not only the said issues arise out of the settlements arrived at between the parties but in fact are the cause of friction and doubts, I have not only heard the learned counsel on all these issues but would proceed to briefly examine the same. The language of the disputed clause in the settlement appears to be clear enough and, while on the one hand, it provides that the house rent allowance will not form a part of wages and neither medical facility nor the bonus payable under Standing Order 10-C will be payable on the said allowance. The twin questions, however, which were raised by Mr. Choudhry Rasheed Ahmed, the learned counsel for the applicant were, whether the collective bargaining agent was entitled to negotiate and agree to such a clause, and whether by agreement the rights of workmen under the law could be curtailed or diminished. The first question is founded on the provisions of clause (a) of subsection (12) of section 22, I. R.
0., which reads as follows :- "(12) The collective bargaining agent in relation to an establishment or group of establishments shall be entitled to.
(a) undertake collective bargaining with the employers on matters connected with employment, non-employment, the terms of employment or the conditions of work; other than matters which relate to the enforcement of any right guaranteed or secured to it or any workman by or under any law, other than this Ordinance, or any award or settlement".
' The bar contained in the aforesaid clause would only operate if clause (2) of the settlement in question related to the enforcement of any right guaranteed or secured to the C. B. A., or to any workman under the law. In my humble opinion the said clause in the settlement in no wise relates to the enforcement of any right. On the other hand, it provides for an increase in the house rent allowance to be paid to workmen by 7%. The payment of house rent allowance to workmen is not a right guaranteed or secured to the workmen or collective bargaining agent under the law.
Moreover, the question whether the provision in the settlement that house rent will not form a part of wages and no 10% bonus will be payable thereon can be considered to relate to the enforcement of the right of a workman if under law house rent either forms part of wages or wages for the purposes of computing the statutory allowance payable under Standing Order 10-C includes house rent allowance. Mr. Choudhry Rasheed Ahmed sought to argue that for the purposes of computing the statutory bonus under 10-C, wages not only include house rent allowance but other allowances. He submitted that the definition of wages as contained in the Payment of Wages Act, 1936, would be applicable to the term wages as used in Standing Order 10- C. He conceded that there was neither any definition of the term wages in Standing Order 10-C or in any other Standing Orders nor do His Standing Orders provide that the definition of the said word as contained in the Payment of Wages Act, 1936, would be applicable to the Standing Orders. He, however, relied upon clause (c) of the explanation to Standing Order 10-C in support of his argument that the definition of wages as contained in the Payment of Wages Act, 1936, is applicable at least to Standing Order 10-C. The said clause reads as follows := "(c) "Wages" does not, for the purpose of calculating the bonus payable to a person under clause (1), include the bonus referred to in clause (vi) of section 2 of the Payment of Wages Act, 1936 (IV of 1936)".
5. I am inclined to the view that from the mere fact that the aforesaid explanation excluded the bonus referred to in clause (vi) of section 2 of the Payment of Wages Act, 1936, while computing wages for the purpose of calculating the bonus admissible under Standing Order 10-C, no inference can be drawn that the definition contained in the said Act , would apply to the word "wages" as used in the said Standing Order. " It may be pointed out that the Payment of Wages Act is applicable to the payment of wages to persons employed, firstly, in a factory, secondly, upon the Railway, and thirdly, in an industrial establishment or in a group or class of industrial establishments to which the provisions of the said Act have been applied by the Provincial Government by notification in the official gazette. The respondent company deals in the business of insurance and admittedly, is neither an industrial establishment nor a factory, but would be a commercial establishment for the purposes of the Standing Orders Ordinance, In view of this position, Mr. Ch. Rasheed Ahmed conceded that the Payment of Wages Act, of its own force, does not apply directly to the Standing Orders, particularly Standing Order 10-C. He, however, submitted that the respondent company is undoubtedly a commercial establishment for the purposes of the Sind Shops and Establishment Ordinance, 1969 and clause (w) of section 2 of the said Ordinance provides that "wages" means wages as defined in the Payment of Wages Act, 1936. Mr. Ch. Rasheed Ahmed accordingly sought to argue that through the indirect means of the Sind Shops and Establishment Ordinance, 1969, the definition of "wages" as contained in the Payment of Wages Act, 1936, will be applicable to the respondent company even under the Standing Orders. Section 2 of the aforesaid Ordinance, however, makes it clear that the definitions given therein are applicable only for the purposes of the said Ordinance and not for the purposes of any other law. As such, the definition of wages as contained in the Payment of Wages Act. 1936, would be applicable to the respondent company for the purposes of any matter falling under the Sind Shops and Establishments Ordinance, 1969, but not for the purposes of any other law unless such law adopted the definition in the Payment of Wages Act. Mr. Choudhry Rasheed Ahmed also sought support from 2 decisions, one of this Tribunal and the other of a learned single Judge of the High Court in support of his contention that the term "wages" in the Standing Orders includes house rent allowance and other allowances. The decision of this Tribunal relied upon by Choudhry Rasheed Ahmed is reported as Karachi Pipe Mills Ltd. v. Employees' Union (1). That decision, however, involved the question whether house rent and other allowances would be included in the expression "ordinary rate of pay" for the purposes of computing extra pay for overtime under section 47 of the Factories Act. That decision was based mainly on the fact that in that section "ordinary rate of pay" was defined as all remuneration capable of being expressed in terms of money except specified items. That decision, therefore, has no application to the facts of the present case. The case before the High Court is reported as lain Packaging industries Ltd. Karachi v.
Abdul Rasheed and 2 Others (2). In that case, the question which fell to be considered by the learned Judge of the High Court was whether for the purposes of computing gratuity payable on wages under Standing Order 12, the term "wages" included house rent and other allowances. It was held by the learned single Judge, relying on the definition of wages as contained in the Payment of Wages Act, 1936, that wages for the purposes of Standing Order 12 (6) include allowances like house rent allowance, conveyance allowance and tea allowance. The learned Judge, however, has not given any reasons in support of his view that the definition of wages as contained in the Payment of Wages Act, 1936, applied to the Standing Orders. There would have been no difficulty in this behalf if the terms wages had been defined only in the Payment of Wages. Act, 1936, but the position is that this term has been differently defined in a number of Labour Laws, such as the Workmen's Compensation Act, 1923, the Provincial Employees' Social Security Ordinance, 1965, the Employees' Cost of Living (Relief) Act, 1973, and section 40 of the Factories Act, relating to extra payment for overtime. Furthermore their Lordships of the Supreme Court in the case of Pak.
Cigarette Labour Union v. Pakistan Tobacco Company Ltd. And another (3) have expressly {{FOOT NOTE}}
(1) 1981 PLC 19 (2) 1981 PLC 800
(3) PLD 1980 SC 495 {{FOOT NOTE}} ' repelled the contention that the Payment of Wages Act, 1936, is a law in pari materla with the Sind Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, and referred to the definition of wages as contained in Halsbury's Laws of England that wages mean "that part of pay which was intended to remain permanently". Although the Supreme Court was dealing with the question of bonus, yet the observations made by it seem to clearly exclude the application of the definition of wages contained in the Payment of Wages Act, 1936, to the Standing Orders. The relevant observations of the Supreme Court in this behalf are as follows :- "Mr. Minto then attempted to defend the view taken by the learned Judges of the Peshawar High Court on the basis of the definition of wages in the Payment of Wages Act, because the definition of wages in clause (vi) of section 2 of this Act expressly states that wages mean "all remuneration...And includes any bonus.. " And, the learned counsel placed great reliance on this definition, because this statute was, so to say, part of our Labour Code. Now although the definition of wages in this statute has been extended to include bonus, this is by an express provision.
Secondly, this statute is not in pari mated with the Ordinance, and, on the other hand, the definition of wages in some of the other statutes in our Labour Code, such as the Social Security Ordinance and the Minimum Wages Ordinance, expressly clarify that wages do not include any bonus p aid to wo-kmen. Obviously, therefore, the definition of wages in the various statutes constituting our Labour Code have reference to the objects of those statutes, and the definition of wages in one statute should not, so to say, be transplanted into another statutes unless the Legislature has so prescribed. And, for example in the West Pakistan Shops and Establishments Ordinance, 1969, the Legislature has made an express provision that wages under this Ordinance mean wages as defined in the Payment of Wages Act. But, as there is no such provision in the Ordinance, I am unable to accept Mr. Minto's submission, and, as pointed out by Lord Halsbury long ago, wages mean "that part of pay which was intended to remain permanently". Therefore, with respect, I am not able to agree with the view of the learned Judges of the Peshawar High Court that bonus is a part of wages."
6. Mr. Mahmood A. Ghani, the learned counsel for the respondent company, has referred me to 2 decisions, one of this Tribunal and the other of the Peshawar High Court in support of his contention that "wages" as used in the Standing Orders do not include allowances. In the case reported as Mohammad Rafiq v. Pakistan Industrial .Development Corporation. Karachi (1) my learned predecessor held that bonus under Standing Order 10-C was not payable on allowances but only on basic salary, custom usage and settlement, of course being excepted. In the case reported as Abdul Jabbar Amin v. Siegrried Becon (Pakistan) Ltd. (2), the Punjab Labour Appellate Tribunal held that even for the purposes of Payment of Wages Act, 1936, house rent was not a part of wages.
7. For the reasons discussed by me above, I am of the view that wages for the purposes of computing the bonus payable under Standin Order 10-C do not include house rent allowance and that therefore, clause (2) of the settlement in question neither curtails the statutory {{FOOT NOTE}}
(1) 1977 PLC 262 (2) 1980.PLC 114 {{FOOT NOTE}} ' right of the workmen to receive bonus under Standing Order 10-C nor is the aforesaid clause made in violation of the provisions of clause (a) of I subsection (12) of section 22, I. R.
0.
8. It only remains to be considered whether the settlement arrived at between the parties in 1980 or the earlier settlement prejudicially affect the entitlement of the workmen to receive additional bonus under the resolutions of the Board of Directors of the company. It may at the outset be pointed out that this issue does not directly flow from the provisions of the settlement of 1980, but in view of the decision of the Supreme Court in the case of Pak Cigarette Labour Union the question which has arisen between the parties is whether the bonus to which the workmen are entitled under the resolution of the Board of Directors is of the same category or kind as the bonus payable under Standing Order 10-C, regarding which provision has been made in the disputed clause (2) of the settlement. It was contended by Choudhry Rasheed Ahmad that the other bonus is in fact a customary bonus and, therefore, of a different kind from the bonus to which the workmen are entitled under Standing Order 10-C and consequently, the workmen are to receive the statutory bonus in addition to the other bonus payable under the resolution of the Board of the Directors. The various resolution of the Board of Directors of the respondent company in this behalf, however, does not support the contention of Mr. Choudhry Rasheed Ahmed. The earliest such resolution which has been brought on rec3rd, is dated 30th June, 1970 and the office order in this behalf reads as follows :- "The Directors were pleased to approve the payment of a bonus to all employees who were in the service of the company as at 31st December, 1969, and had at least six months service to their credit. The rate of bonus to be equivalent to two and half months basic salary in respect of those employees who were in the service of the company for the entire year ending 31st December, 1969 and on a pro rata basis for all employees with less than a full year's service subject to the limitations mentioned above regarding minimum period of service and being in service as at 31st December, 1969."
9. The subsequent orders, sometimes described as circulars, are similarly worded. A perusal of these circulars shows that originally the company was paying bonus equal to the basic wages of workmen for 2 months. Thereafter, from 1973 to 1976, such bonus was being paid at the rate equal to basic wages of workmen for 21 months. Finally, from 1977, onwards the bonus is being paid at the rate of basic wages of workmen for 3 months. The important fact which emerges from this resolution is that this additional bonus was being paid under the orders of the Board of Directors and was not a right or entitlement of the workmen. This position has been made crystal clear in the settlement arrived at in 1963 between the respondent company and the then workmen's union.
Clause 19 of the said settlement reads as follows :- "Demand No, 19-Bonus -The Board of Directors in case of sufficient profits after meeting the prior necessary charges, will declare a suitable bonus each year. The management agrees that confirmed employees with more than six months service at the end of the bonus year will be paid pro rata bonus even if subsequently he has left service by resignation or retrenchment but not by dismissal."
10. The position has been made further clear by the letter dated 3rd April, 1973, addressed by the President of the respondent company to the President of the applicant union, which letter was admittedly received by the applicant union. The said letter reads as follows:- "We thank you for your letter dated the 17th March, which has received our full consideration. In compliance with your request, Statutory Bonus at the rate of one month's wages is being paid to all Members of your Union. Disbursement of this amount is being made immediately.
' After the accounts are finalised and audited, the Board of Directors will consider, in the usual way, the bonus to be paid to employees. Employees, of course, will be informed of this in due ,course.
Please note, however, that the declaration of such bonus is, as usual, in the entire discretion of the Board of Directors."
11. Mr. Mahmood A. Ghani also referred me to the Charter of Demands made by the applicant union from 21st December, 1973 upto 1st March, 1980, and the settlements arrived at between the parties in respect of those demands, up to the settlement, dated 25th June, 1980 (pages 167 to 237 of the record), and submitted that though repeatedly the applicant union had been making a demand for bonus, this demand was dropped by it in the settlements reached between the parties. In fact in the 1980 settlement, it is stated that other demands have been withdrawn by the union and the management unconditionally.
12. Mr. Choudhry Rasheed Ahmed, however, sought to rely on 2 pieces of evidence in support of his contention that the bonus payable to workmen under the resolution of the Directors of the company was in fact customary bonus. The first is the affidavit of Hashim Shamim, Personnel and Administration Manage r, in the respondent company which affidavit was filed by him before the learned Labour Court. In paragraph 13 of that affidavit, there is reference to bonus under Standing Order 10-C and customary bonus. The reference, however, is in the heading of Schedule and does not affect the position that the bonus payable under the orders of the Directors of the company was in fact not a customary bonus. Mr. Mahmood A. Ghani further submitted that an application was submitted to the learned Labour Court for the amendment of this error in this affidavit which had inadvertently crept in. A copy of that application, however, was not brought on the record of this case. The non-production of that copy does not affect the legal position which appears to be very clear. I am supported in my view by 2 decisions of the Karachi High Court. The first is a Division Bench decision reported as American International Underwriters (Pak) Ltd , Karachi v. The Presiding Officer, Vth Labour Court, Karachi and another (1). In that case, it was held that bonus payable on profit basis in terms of the settlement cannot be treated as customary bonus. In that case bonus was paid ex gratia for 3 years, subsequently for 13 years bonus was paid at different rates according to profit and from 1972 onwards it was paid on profit basis in terms of settlement. In the earlier case reported as Eastern Federal Union Insurance Workers' Union, Karachi v. Vth Sind Labour Cart, Karachi and another (2), it was held by a learned single Judge of the Karachi High Court that the amount paid to workers every year on {{FOOT NOTE}}
(1) 1978 PLC 87 (2) 1976 PLC 256 {{FOOT NOTE}} ' Eid occasion was not proved to have been paid as bonus but was proved to-have-been paid as advance and the mere fact that such amount was never recovered from the employees, did not make the payment of such an amount as a customary bonus and accordingly the employees could not demand continuance of such practice.
13. Mr. Mahmood A. Ghani also cited some authorities from the Indian Jurisdiction as to what are the requirements of a customary bonus, but I find it unnecessary to refer to those authorities, as I am satisfied from the material on record that the other bolus being paid to the workmen of the respondent company was solely within the discretion of the Directors of the company and was dependent upon the profits being made by the company, a principle which was agreed to between the respondent company and the union therein as early as in 1963.