1. ' A common question of law arises in all the above three appeals and I therefore propose to dispose of these cases by a single order.
2. ' In all these appeals, Sind Employees Social Security Institution has challenged the orders of Sind Social Security Court No. I, Karachi, dated 5th November, 1979 holding that the respondents are not liable to pay contribution under section 20 of the Provincial Employees Social Security Ordinance (hereafter to be referred as the Ordinance) to the appellant on the amount of "production bonus" paid by them to their employees. The appellant is entitled under the law to a fixed percentage as contribution on the amount of "wages" paid by the respondents to their employees. The "production bonus" paid by the respondents, it is claimed by the appellant, is a part of the "wages" and therefore, subject to contribution under the Ordinance. The Commissioner, Social Security by his order dated 4th July, 1979 had held that the "production bonus" paid by the respondents to their employees is a part of "wages" and therefore, contribution is payable on the amount paid as "production bonus". However, on appeal filed by the respondents, the Sind Social Security Court No. 1, Karachi, held that "production bonus" is not part of the "wages" and therefore no contribution under the Ordinance is payable on the amount paid as "production bonus".
3. ' I have heard Mr. S. A. Sarwana, the learned counsel for the appellant in all the above three appeals and Mr. F. W. Vellani, Mr. Muhammad Sharif and Mr. Ismail Padhiar, the learned counsel for respondents in M. A. Nos. 94/79, 102/79 and 95/79, respectively. In all the above cases respondents are paying "production bonus" to their employees under agreements arrived at between the employees' Union and the management of respondents. In M. A. No. 102/79, the provisions regarding payment of "production bonus" is contained in the agreement dated 7th July, 1979 executed between the respondent and their employees' union and is to the following effect :- "Production Bonus.-The revised minimum target and rates for Production Bonus are agreed as follows : {{TABLE}} Period Minimum monthly target-litres Rate Ps/Litre July, 1979 to December, 1979 310,000 16 January, 1980 to June, 1980 350,000 20 July, 1980 to December, 1980 400,000 24 January, 1981 to June, 1981 450,000 28 {{TABLE}} ' Production Bonus shall be calculated in accordance with the formula as per Annexure "B" and will be distributed among the employees pro rata to the numbers of man-days to the credit of each eligible worker.
4. ' It is hereby agreed and declared that if a worker is absent without pay for more than two days in a month for any reason whatsoever he will not be eligible for a share of the Production Bonus for that month.
5. ' A committee comprising two nominees each of the Union and the Management will meet in the first week of July, 1979 with a view to decide whether the number of workers eligible to share Production Bonus should be increased and, if so, who should be included for the purpose. The Committee will submit its decision in writing, not later than 30th July, 1979."
6. ' The provision regarding payment of "production bonus" in M. A. No. 94/79 is contained in the agreement dated 29th April, 1977 executed between the management of respondent and their Employees' Union, in the following terms :- "Production Bonus and Incentive Scheme.-(i) The Union/workmen will achieve the revised minimum daily production targets in accordance with Annexure "C" hereto. There will be absolutely no change in machine speed and automatic weighers.
7. (10 Production Bonus paid to direct workmen belonging to the Incentive Grades has been increased from Re. 1 per working day to Rs. 2 per working day on achieving the minimum daily production targets as mentioned in Annexure "C" hereto.
(iii) After achieving the minimum daily targets the Union/workmen agree and undertake to continue produce, if so required, and for such production over and above the minimum daily production target, an Incentive bonus will be paid to the direct workmen at the revised rates mentioned in Annexure "C" hereto.
(iv) For the purpose of payment of Production Bonus and Incentive Bonus, the classification of the workmen would remain the same as per classification made in the agreement dated 14th March, 1974.
8. ' All the indirect workers and Junior Supervisors belonging to the Incentive Grade shall be paid production bonus and Incentive Bonus, if any, worked at an average rate in the manner prescribed in Annexure "D".
(a) Both the Production Bonus and Incentive Bonus will be calculated and paid on monthly basis and subject to other conditions mentioned in Annexure "D".
(vii) All conditions incorporated in the agreement dated 14th March, 1974, shall continue to remain in force."
9. ' Similarly in M. A. No. 95/79 though the contract relating to payment of "production bonus" is not filed but the terms and conditions for payment of "production bonus" are mentioned in paragraph 6 of the memo. Of appeal filed before the Social Security Court No. 1, which states that production bonus is paid on the basis of a formula which provides that where the workers produce more than the minimum target fixed by the parties then for such excess production the employees will be paid "production bonus" by way of incentive for giving increased productivity. The facts that "production bonus" is paid by the respondents in the manner stated above is not disputed by the appellant.
10. ' It is, however, contended by the learned counsel for the appellant that "production bonus" is part of the "wages" as it has come to be paid almost regularly and therefore the respondents are liable to pay contribution under section 20 of the Ordinance. Section 20 provides that every employer shall in respect of every employee whether employed by him directly or through any other person pay to the institution (appellant) contribution at such time and at such rate and subject to such conditions as may be prescribed. Subsection (5) of section 20 of the Ordinance provides that the amount of contribution payable on daily wages is to be calculated in such manner as may be prescribed by regulations and subsection (6) of section 20, provides that where the mode of payment or remuneration, whether in cash or in kind, makes it difficult to determine the amount of "wages" for computing the contribution, the Commissioner may, subject to regulations and in consultation with the representatives of employees, determine such wages. It is not disputed that subsection (6) of section 20 of the Ordinance has no application in the present case as the amount of "wages" paid by the respondent to the employees is ascertained sum of money. The Provincial Employees Social Security (Contribution) Rules, 1966, prescribe the rate at which the contribution is to be recovered from the employer in respect of every employee. The term "wages" has been defined in section 2(30) of the Ordinance as under :- "Wages" means remuneration for service paid or payable in cash or in kind to a secured person, not being less than remuneration based on the minimum rates of wages declared under the Minimum Wages Ordinance, 1961 (XXXIX of 1961), without taking account of deductions for any purpose, under a contract of service or apprenticeship, expressed or implied, and shall be deemed to include any dearness allowance or other addition in respect of the cost of living and any payment by the employer to a secured person in respect of any period of authorised leave, illegal lock-out or legal strike; but does not include-
(a) any payment for overtime ; or
(b) any sum paid to the person employed to defray special expenses entailed by the nature of his employment ; or
(c) any gratuity payable on discharge ; or
(d) any sum paid as bonus by the employer."
11. ' From the above definition of the term "wages" it would appear that all remunerations paid for service or apprenticeship under a contract which is either expressed or implied are treated as "wages". "Wages" also include any dearness allowance or other addition in respect of the cost of living and any payment by the employer to the secured person in respect of any period of authorised leave, illegal lock-out and legal strike. However, payments for overtime, sums paid to defray special expenses entailed by the nature of employment, gratuity payable on discharge and any sum paid as "bonus" are excluded from being treated as payment of "wages". Therefore all payments made to a secured person in connection with the performance of his service are treated as wages except those expressly excluded by sub-clauses (a) to (d) of section 2(3). Therefore any payment made by an employer as "bonus" to a secured person is not to be treated as "wages". The fate of these appeals, in my humble opinion, will therefore, depend entirely on the construction and interpretation of the expression "bonus" used in section 2(30) (d) of the Ordinance. The term "bonus" is not defined in the Ordinance. It is contended by the learned counsel for the appellant that the expression "bonus" used in section 2(30) of the Ordinance relates to the "profit bonus" which is mentioned in section 10 (c) of the Standing Orders Ordinance, 1959 and therefore, "production bonus" paid by the respondent a ill not fall within the meaning of "bonus" under section 2 (30) of the Ordinance. It is contended that all payments made by an employer to the employee in terms of employment and all other payments which are relatable to the performance of work by an employee are to be treated as "wages" and therefore, "production bonus" paid by the respondents to their employees will fall within the definition of "wages" and will be subject to payment of contribution thereon under section 20 of the Ordinance. As the expression "bonus" is not defined under the Ordinance, therefore it will be necessary, first to look into the ordinary dictionary meaning of the word. In Black's Law Dictionary (Fifth Edition) bonus is defined as follows :- "A consideration or premium paid in addition to what is strictly due. A gratuity to which the recipient has no right to make a demand. A premium or extra or irregular remuneration in consideration of offices performed or to encourage their performance. An extra consideration given for what is received, or something given in addition to what is ordinarily received by, or strictly due to the recipient. An addition to salary or wages normally paid for extraordinary work. An inducement to employees to procure efficient and faithful service."
12. ' In Webster's Third New International Dictionary the word bonus is defined as follows :- ' Anything given in addition to the customary or required amount, extra payment over and above salary given to an employee as an incentive or reward, anything given over and above the regular wages, salary, remuneration etc."
13. ' In Shorter Oxford English Dictionary (3rd Edition) the word bonus is defined as under :- " A boon or gift over and above what is normally due. A premium for services rendered or expected.
14. An extra dividend paid out of surplus profits, a portion of the profits of an insurance company distributed to the policy holder."
15. ' Now, whether a payment is "bonus" or not will in my opinion depend on the nature of its payment by the employer to the employee. It would appear from the above definitions that in order to qualify a payment as "bonus" it should have the following characteristics:-
(i) it is irregular in its character,
(ii) it does not bear direct nexus with the actual performance of the work,
(iii) it is in the nature of reward, gift or a gratuitous payment, and
(iv) the person receiving it has no right to claim it.
16. As a corollary to the above it follows that a payment made by the employer to an employee under a contract made on the basis of attainment of certain standard of work and which the employee is entitled to claim as a right on its performance cannot be treated as "bonus" irrespective of the fact that such payment is described by the employer as a "bonus".
17. ' In the present cases it is an admitted position that "production bonus' is paid by the respondents in the above appeals to their employees on condition of their producing the goods over and above the agreed minimum limit of production and such payment is claimed by the employees as of right on attaining the set-standard. The payment of '"production bonus" by the respondents in these appeals, therefore, does not fall within the meaning of "bonus". I accordingly accept these appeals, set aside the order of Social Security Court No. 1 and hold that the respondents are liable to pay contributions on the amount of "production bonus" paid by them to their employees as it falls within the definition of wages in the circumstances of these cases. There will be however, no order as to costs. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.