' The facts briefly stated are that M. Saleem son of Rehmat Khan and Sikandar Khan son of Ali Gohar and 63 other workers of the establishment, Pakistan Fisheries Ltd., claimed to recover each of them Cost of Living Allowance at the rate of Rs, 110 for each year excluded from the bonus paid to them for the years 1978, 1979 and 1980 respectively, in violation of the provisions of section 7 of the Employees Cost of Living Relief Act, 1973, as amended by Act (XXVI of 1977). They also claimed to recover as a result of non-payment of Cost of Living Allowance as above-mentioned a compensation on account of deducted wages, equal to ten times the above deductions.
Accordingly, they filed two applications Nos, 32 and 33 of 1981 before the Payment of Wages Authority under section 15 read with 16 of the Payment of Wages Act, 1936. The Payment of Wages Authority recorded evidence and since the claim in the applications involved common facts and questions of law disposed of the same by a consolidated order dated 26th February, 1983 whereby allowed each of the workers a sum of Rs, 330 as cost of living allowance for the 3 bonuses already paid to them in all amounting to Rs, 21,450. The learned Authority further allowed a compensation to the extent of five times the deducted wages in each case in all amounting to Rs, 1,07,250. Thus the Payment of Wages Authority ordered payment of total amount both towards deducted wages and the compensation as stated above, as Rs, 1,28,700 to the workers within 10 days of the passing of the order. Aggrieved by the order, the establishment filed appeal under section 17 of the Payment of Wages Act before the learned Sind Labour Court No, 1, Karachi. The learned Labour Court, by its order, dated 2nd August, 1983 maintained the order of payment of Rs, 21,450 as deducted wages on account of non-payment of cost of living allowance but vacated the order of payment of compensation, amounting to Rs, 1,07,250 as compensation, being unjustified and improper. The establishment invoked the jurisdiction of this Tribunal under section 38 (3-A), I.R.O., 1969, against the order directing payment of Rs, 21,450 as deducted wages to the workers in application No, K AR-566/83 ; whereas the workers, M. Saleem, Sikandar Khan and others invoked the jurisdiction of this Tribunal under section 38 (3-A), I.R.O. 1969, in an application No, K AR-588/83, against the order of the learned Labour Court refusing compensation of Rs, 1,07,250 to them. Since common questions of law and fact are involved in the two revision applications, they are being disposed of by this common order.
2. I have persued the relevant evidence available on the record and have also heard the learned counsel appearing on behalf of the parties, Mr. Shaukat Ali A. Nanji for the Pakistan Fisheries Ltd., and Mr. S. A. Channa for M. Saleem, Sikandar Khan and 63 others, the workers of the establishment, above mentioned. The learned counsel for M. Saleem, Sikandar Khan and other workers has contended that the aforementioned bonus should include Rs, 110 cost of living allowance per worker per year for the years 1978, 1979 and 1980 as it was not paid in, violation of the provisions of section 7 of the Employees Cost of Living Relief Act, 1973, as amended by Act XXVI of 1977. On the other hand, the learned counsel for the establishment has resisted the claim and has contended that the cost of living allowance could not be included in the wages in view of the proviso to section 7 of the Employees Cost of Living Relief (Amendment) Act, 1977.
3. In order to appreciate the contentions of the parties, it will be convenient to reproduce section 2
(e) and section 7 of the Employees Cost of Relief Act, 1973. Section 2 (e) of the Act reads as under : "Wages means remuneration for services other than cost of living allowance payable in cash to an employee without taking account of deduction for any purpose under a contract of service or apprenticeship written, oral, expressed or implied and includes any dearness allowance or other addition in respect of the cost of living payable or paid for the period preceding the first day of August, 1973, and any payment by the employer in respect of any period of authorised leave, but does not include ;
(i) any payment for overtime, or
(ii) any sum paid to an employee to defray special expenses entailed by the nature of his employment ; or
(iii) any gratuity payable on discharge ; or
(iv) any sum paid as bonus, house rent, conveyance allowance, travelling allowance or any other allowance. Section 7 of the said Act reads as under :- Cost of Living Allowance not, to form part of wages.-Notwithstanding anything contained in this Act or any other law for the time being in force the cost of living allowance shall not form part of wages of a worker for the purpose of any other law, including the purpose of contribution to provident fund, gratuity, bonus, social security scheme and calculating wages for overtime work."
4. So far the contention of the learned counsel for the workers had force, but sections 2(c) and 7 of the said Act were amended by the Employees Cost of Living (Relief) (Amendment) Act 1977 (XXVI of 1977), which was gazetted on 25th May, 1977. Section 2(c) after the amendment reads as under : "Wages means remuneration for service payable in cash to an employee without taking account of deduction for any purpose under a contract of service or apprenticeship, written, oral, expressed or implied and includes any dearness allowance or other addition in respect of the Cost of Living payable or paid for the period preceding the first day of August, 1973, and any payment made by the employer in respect of any period of authorised leave, but does not include
(i) any payment for over time ; or
(ii) any sum paid to an employee to defray special expenses entailed by the nature of his employment or
(iii) any gratuity payable on discharge ; or
(iv) any sum paid as bonus, house rent, conveyance allowance, travelling allowance or any other allowance. Section 7 now reads as under :- ' Cost of Living Allowance to form part of wages.-Notwithstanding anything contained in this Act or any other law for the time being in force, the cost of living allowance shall form part of wages of a worker for the purpose of any other law including the purpose of contribution to provident fund, gratuity, bonus, social security scheme and calculating wages for overtime work.
' Proviso to the above section reads as under : Provided that, for the purposes of the 'Workmen's Compensation Act, 1923 (VIII of 1923), except section 4 thereof, the Payment of Wages Act, 1936 (IV of 1936), the Companies Profits (Workers'
Participation) Act, 1968 (XXII of 1968), or the Industrial Relations Ordinance, 1969 (XXII of 1969) the cost of living allowance shall not form part of the wages of a worker."
5. From the above, it is clear that prior to the amendment, cost of living allowance was not to form part of wages, but after The amendment, it is to form part of wages. Now, the point for determination would be as to what is the effect of the proviso to section 7 of the Act.
6. On the admitted facts of the case of the parties, the bonus was being paid to the workers as a practice, usage and custom, and was not a statutory bonus. Under the law, there are two kinds of bonuses ; firstly, profit bonus under Standing Order 10-C, which is fixed by law and secondly, negotiable bonus which may be payable in accordance with the terms of employment or usage or settlement or an award of a Labour Court established under the Industrial Relations Ordinance, 1969. I am fortified this view by a simple reference to Standing Order 10-C (1) and (4) of the West Pakistan Standing Orders Ordinance, 1968. It has been very clearly provided therein that profit bonus shall be claimed by the workman in addition to the wages payable to him under clause (1) of the Standing Order 10-C, whereas the rest of the bonuses shall be payable to the workmen as a result of negotiation in accordance with the terms of employment or any usage or settlement or as a result of an award of a Labour Court in accordance with the provisions of the Industrial Relations Ordinance, 1969.
7. The plain reading of section 7 and the proviso to it, of which the Payment of Wages Authority as well as the learned Labour Court have lost sight of, would make it clear that the bonus paid under the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 is a statutory bonus and the wages for this purpose may include the cost of living allowance, provided no part transaction or vested rights or obligations are impaired because the Cost of Living (Relief)
(Amendment) Act, 1977 is only prospective and not retrospective. The bonus paid under practice usage or a settlement is, however, negotiable as provided in the Industrial Relations Ordinance, 1969. It is left to the parties to decide the issues in the manner they think fit. The proviso to section 7 of the Employee's Cost of Living {Relief) (Amendment) Act, 1977, makes it clear that for the purposes of the Industrial Relations Ordinance, 1969, the Cost of Living Allow-ance was not to form part of wages. Further, the proviso to section 7 clearly shbws that where the Legislature wanted to exempt any particular section of the enactments from the operation of the proviso as in the case of the Workmen's Compensation Act, it was specifically so stated in the proviso. In the Workmen's Compensation Act the cost of living allowance has been part of the wages in so far as the operation of section 4 of the Act is con-cerned, whereas the proviso does not apply to the rest of the Act. But there is no such exemption in the case of Industrial Relations Ordinance, 1969, or Payment of Wages Act. It would, therefore, be clear that the Cost of Living Allowances could not be included in the wages which were paid as bonus as a practice, usage and custom. I am fortified in this view by the decision of Punjab Labour Tribunal in the case of Employees Union, Pakistan American Fertilizers Ltd. v. Management P. A. Fertilizers Ltd., Mianwali . This decision was subsequently followed by this Tribunal in the case of General Manager, Larkana Sugar Mills v.
Larkana Sugar Mills Employees' Union .1 2
8. In view of my above discussion, I accept the contention of the learned counsel of the establishment of Pakistan Fisheries Ltd. And hold that the Cost of Living Allowance could not be included in the wages which were paid as bonus as practice, wage and custom.
9, The result is that the order of the two Courts below awarding Rs, 21,450 as a deducted wages to the workers M. Saleem, Sikandar Khan' and 63 others, is set aside and the Application No, KAR- 566/83 is allowed accordingly. Consequently, Application No, KAR-588/83 is dismissed. 1979 PLC 40 1981 PLC 636