This is an application under section $5-A, Industrial Relations Ordinance, 1969.
2. P.I. A. Shaver Employees Union C. B. A. Has brought this application against P.I.A. Shaver Poultry Breeding Forms Ltd: for seeking redress of the grievance that the respondent has not paid bonus to the employees of the union at the rate of 10% of the net profit by the Company for the year 1983-84 under the settlement on 27-9-1972 and the official notification issued by the company, dated 10- 10-1972.
3. Applicant claims to be a registered Trade Union and Collective Bargaining Agent for the employees of the respondent.
4. On 27-9-1972 there was a settlement executed between the union and the management whereby clause of the settlement it was mutually agreed that the respondent will pay bonus to the lower staff at the rate of 10% of the net profit.
5. Since the execution of the settlement under the mutual consent, respondent was paying the bonus to the lower staff for the subsequent years and also in the years when the company made no profit.
6. In the year 1983-84 the respondent paid the bonus at the rate of one month's pay to the employees in the month of June, 1984 by way of interim relief with the understanding that over- payment will be made when the auditors have finalized the accounts.
7. Applicant despite the payment of the interim bonus entered into correspondence with the management number at times but with no constructive result.
8. On 18-2-1985 and 13th March, 1985, the respondent declined to issue payment of the remaining profit by means of bonus for the year 1983 and 1984, and, therefore, they have come for seeking that relief from the Court that the respondent be issued directions accordingly.
9. Respondent has filed written statement and has raised number of objections.
(i) Application filed by C.B.A. Is not maintainable.
(ii) C.B.A. Has no locus standi to file case under section 25-A.
(iii) No guaranteed or secured right has accrued to the C.B.A. For the exercise of jurisdiction.
(iv) This Court has no jurisdiction to entertain application under section 25-A I.R.O. Which can only be filed by the individual worker.
10. On the factual aspect, it is contended that the non-payment of bonus in accordance with the terms of agreement, relates to the collective nature of grievance.
11. The bi-partite agreement was valid and operative for the period of 2 years only. The payment of the bonus at the same rate for few years after expiry of the agreement of 1972 cannot be termed as secured right, nor is a practice or usage.
12. It is contended by that the respondent that the respondent no doubt paid an interim bonus for the year 1984 in strict compliance of Standing Order (10-c) of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968.
13. Respondent has also contended that the letters were written to the union and that explanation was within the understanding of the labour laws applicable to the company and the union as well.
ISSUES: (1)Whether application under section 25-A, I.R.O. Is maintainable?
(2)Whether the applicant was entitled to receive bonus at the rate of 10% profit?
(3)Whether the respondent was to pay bonus under section 10-c of the Standing Orders Ordinance, 1968?
REASONS:
1. Employees Union has prayed for seeking directions against the respondent that respondent be directed to make a payment of the bonus from 10$ of the net profit earned by the company for the year 1983-84 to the employees under the settlement of 27-9-1972.
2. The respondent has taken this stand that no right is guaranteed to them or any right is infringed, of C.B.A. To find the cause of action, for prosecution under section 25-A, Industrial Relations Ordinance. Clause 6 of the agreement reads that "it is hereby agreed that this agreement shall remain in force and binding on both the parties for a period of 2 years from the date of the signing of this settlement".
3. In this context the respondent has also made reference to certain extracts of the evidence how the applicant has taken position in the Court. The applicant states as under: "We have made demand of bonus on the basis of settlement. We have claimed bonus on the basis of settlement executed in 1972. I say in clause 6 of the agreement the date of expiry is also specified."
4. From the perusal of clause 6 of the settlement, which was, dated 27-9-1972 it is thus clear that the agreement made between the C. B. A. And the respondent management expired on 27-9-1974.
It was agreed that it shall remain in force for the period of 2 years from the date of signing this settlement.
5. The respondent has referred section 40 of the Industrial Relations Ordinance which also reads that the settlement shah be binding, for such period as in agreed upon, by the parties and if no period is agreed upon, period of one year from the date on which settlement of memorandum is signed, by the parties to the dispute and shall continue to be binding on the parties after the expiry of the aforesaid period within the expiry of 2 months from the date which either party informs and other party in writing of his intention no longer to be bound by the settlement.
6. The respondent has contended that the condition of the payment of bonus at 10$ of the net profit earned by the company as agreed upon in clause ceases to be operative.. Respondent is under no legal obligation to continue payment of bonus on the above rate in spite of the fact that the respondent continued this system for some time even after the expiry.
7. The counsel for the respondent, has also further argued that after the introduction of the amendment of statutory bonus under 10-C of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 the respondent was under no obligation to pay the bonus under the previous settlement which firstly it had expired and secondly its continuity of payment of bonus from the net profit prior to this introduction, which is also not based on custom or any usage. In this regard the counsel for the respondent has referred the legal effect of the usage that even if the net profit has been paid for 4 consecutive years, 1974-75, 75-76, 76-77 under balance-sheet R.W. 1 this payment of bonus also does not have the legal effect of the custom or usage within the shortest period when the custom and usage becomes practice in continuity at least for years together, to have the legal and binding effect to ripen into the customary practice of the company. He has also made reference to certain factors, which led to the establishment of the custom or usage in a particular company or organisation for example, the practice must be ancient. It must be uniform and it should exclude, the payment out of bounty, and the word ancient in legal terminology, means the custom which should exist for long time at least to the period of 30 years. (Reference is made to the Manual of Lave terms and phrases by Mr. Aiyer and reference is made to page 69-7q of that book).
8. In other words, the counsel of respondent has been precised to give the definition of the custom, that custom or usage has the legal effect only when it is old, continued for years and unfirm, and, paid not out of bounty.
9. Number of decision have been referred, held that if bonus is paid despite the loss during 3 years a period held is not sufficient to establish claim for customary bonus. If the bonus was paid at different rates, it was not sufficient to establish customary bonus. If Tie bonus is paid as ex gratia payment it is not a customary bonus 1976 PLC 80.
10. The second decision is of the Supreme Court of India where also the condition pre-requisite for the establishment of custom, as it has been held, that it should be ancient, it should be reasonable, and of uniformed rate. The period of 4 years was held too short to establish custom. There is also reference to the derision 1976 PLC 87. In this case also the bonus was paid as ex gratis for 3 years irrespective of the profit but subsequently for 13 years at different rate, it was held that the previous bonus paid was not customary.
11. On the other hand Mr. Khadim Hussain has contended that on 27-9-1972 a settlement was reached between the parties and it was agreed that the payment of the bonus is fixed at 10%, no duration was fixed. Despite that if the profit was disbursed after other 6 settlements, the facility one granted by the company to the workers if it was not withdrawn, it became condition of service which respondent cannot alter. Mr. Khadim Hussain has tried to justify the payment of the bonus from the net profit, as per settlement of 1972 proceedings, with this argument that even if the position is admitted that ex gratia payment was made the service rule did not contain any quantum of bonus or facility was not withdrawn previously after the expiry of the previous settlement or demand was not made of the payment of bonus under 10-c, still the settlement of 1972 even after expiry of 2 years continues to bound the company because of this continuity of practice and also he makes reference to section 4 in particular, of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance which reads:- "That this section permits the parties to modify Standing Order by many of collective agreement and not otherwise in the way that such agreement shall have better effect on the employees and not diminish any available benefit under the Standing Orders."
12.Mr. Khadim Hussain has also referred section 40/40(2) of the Industrial Relations Ordinance, which reads that: - "Either party can give notice expressing his intention not to be bound by the settlement."
13. He has referred to the case of Pakistan Tobacco Company 1972 f L C 190. It was held that it is the principle of law that one contract or settlement is arrived at and acted upon, are passage of time of its operation or any expression of intention unilaterally by one of the parties to the settlements to terminate its binding effect does not put up an end to the obligation.
14. Court has examined Mr. Khadim Hussain's contention and also referred the settlements of 1972 and other settlements, which both parties have admitted to be the part of the Company's record.
Both parties have admitted that the payment of bonus was inserted only as a clause in 1972 settlement and not in any other settlements. The settlements of 1972 had also to be effective for the period of 2 years and no more This was the settlement by mutual consent of the union and management. Both parties have admitted the legal position that amendment of statutory bonus came in 1972 after the settlement.
15. The question, therefore, to be contended by Mr. Khadim Hussain is that if the facility is not withdrawn, after all the subsequent settlements, the obligation for settlement of 1972 remained binding, has no force, nor Court will support his contention, firstly that the settlement expired after 2 years. It was not unilateral decision. The settlement stood automatic termination as was agreed upon. The time was specified. It was not the case that time was not agreed and one party to the dispute had to issue notice for which there was to be negotiation or obligation remained alive.
Secondly the payment of bonus if it is not based on custom, usage, have no force of law as has been rightly stated that custom must be ancient, uniform in rate, reasonable, and antique in character, for continuous years to become obligation as if it was the term of employment. The summary which is produced of the profit drawn and paid also shows that some time it has been as an ex gratia. So, if the settlement after 1972 have no saving clause expressly laid down, the payment of the bonus from the net profit shall be the term of employment and binding in addition to statutory bonus or irrespective of it. The contention of union has no force. The application is dismissed. They can only claim statutory bonus, which law guarantees them. The Court has also referred the above decisions in respect of the custom and its legal effect.
A.E.