DECISION ' This is an appeal against the order of Sindh Labour Court No, IV at Karachi, dated 28-3-1988.
2. The 10 workmen employed by the respondents had filed an application under section 25-A(10), I.R.O. 1969, complaining that the respondents management had granted increase of 13.5% in the wages with effect from 1-71985 on the basic salary only and not upon the total wages including allowances drawn by the appellant workers and that instead of granting 18% of wages as required under subsection (7) of section 3 of the Employees Cost of Living (Relief) Act, 1973, hereinafter called the Act, the management had granted only 4-1/2%. The appellants in the grievance petition had prayed for adjudication and determination of this industrial dispute between them and the management. Only six workers have filed this appeal.
3. The respondents resisted the grievance petition on the ground that it was time-barred and further that they had given increase in the cost of living allowance in accordance with subsections
(6) and (7) of section 3 of the said Act.
4. I have heard Mr. S.P. Lodhi, learned representative for the appellants and Mr. Mahm000d Abdul Ghani, the learned Advocate for the respondents and Messrs M.L. Shahani and A. Hafiz, Advocates, as amious curiae I have also gone through the record and proceedings of the case. I may record my appreciation for the valuable assistance rendered by the above gentleman.
5. Under subsections (6) and (7) of section 3 of the said Act, the increase in the Cost of Living Allowance is allowed in the wages of the worker at the rate of 13.5% and 18% respectively of the wages. The first question that requires interpretation is as to whether the word "wages" used in subsections (6) and (7) includes the Cost of Living Allowance granted to the workmen under subsections (1), (2), (3), (4) and (5) of section 3 of the said Act. Word "wages" has been defined in section 2(e) of the Act as under:-- "(e) "wages" means remuneration for services, payable in cash to an employee without taking account of deductions for any purpose, under a contract of service or apprenticeship, written, oral, express 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."
6. It would be seen that the definition specifically includes any dearness allowance or other addition in respect of cost of living payable or paid in the period preceding 1-8-1973. Sub-clause
(iv) of this definition specifically excludes any sum paid as bonus, house rent, conveyance allowance, travelling allowance or any other allowance. It is submitted by Mr. Mahmood Abdul Ghani that the words "any other allowance" would include cost of living allowance payable under subsections (1), (2), (3), (4) and (5). It may also be pointed out that under subsections (1) to (5) of section 3, the cost of living allowance was payable to the workman in respect of the employment on or after 1st day of August, 1973. The fact that under the definition only cost of living or dearness allowance payable or paid before preceding first day of August, 1973, was specifically included, would imply that the cost of living allowance paid or payable on or after 1st day of August, 1973 was not included in the definition of wages. This also gets support from the wording of clause (iv) of this definition which specifically excludes any other allowance from the definition of wages.
7. The definition of wages is little wider and includes more than the bask salary. It will be seen that instead of words 'basic salary or salary' words `remuneration payable in cash' are used in the definition and as pointed above it also includes the dearness allowance or other addition in respect of the cost of living payable or paid in the period preceding 1st day of August, 1973.
8. The proposition that the cost of living allowance payable under subsections (1) to (5) are not included in the wages for the purpose of increment of 13.5% as increase in the wages under subsection (6) gets support from the wording of subsection (6) itself under which this increment was to be given in addition to the cost of living allowance under subsections (1), (2), (3), (4) and (5). Similarly the cost of living increase payable at the rate of 18% of the wages under subsection
(7) is also made applicable in addition to the cost of living allowance admissible under subsections (1) to (6). If the intention of the legislature had been that the allowance paid in the earlier subsections would also be merged into wages for the purpose of calculations of the increase in the wages, the words "in addition" would not have been used. If the allowance payable under earlier subsections were part of the wages then these words would import the meaning that the allowance payable under subsections (1), (2), (3), (4) and (5) would also be paid in addition to and in spite of their merger in the wages. It would amount to double payment of these allowances.
Such an interpretation does not appeal to reason nor is it warranted from the language of subsections (6) and (7). According to Maxwell on the Interpretation of Statutes, Twelfth Edition, by P.St. J Langan at page 28.
"If there is nothing to modify, alter or qualify the language which the statute contains, it must be construed in the ordinary and natural meaning of the words and sentences'.
' The same author at page 43 has stated:-- "It is a very useful rule, in the construction of a statute, to adhere to the ordinary meaning of the words used, and to the grammatical construction, unless that is at variance with the intention of the legislature, to be collected from the statute itself, or leads to any manifest absurdity or repugnance, in which case the language may be varied or modified, so as to avoid such inconvenience, but no further".
9. Mr.S.P. Lodhi in support of his contention that cost of living allowance under subsections (1) to (5) of section 3 of the Employees Cost of Living (Relief) Act, 1973, would also form part of wages for the purpose of the increase allowed under subsection (6) and similarly that increase as wages of cost of living allowance under subsection (6) would also form part of wages for the purpose of increase in the cost of living allowance under subsection (7) of section 3 has relied upon section 7 of the said Act. This section 7 was amended in 1977 and 1987, which is reproduced below in its original form and as amended:- "7. Cost of living allowance (not) to form cart 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 purposes of any other law, including the purpose of contribution to provident fund, gratuity, bonus, social security scheme (indexation of wages) and calculating wages for over-time work".
' The words (not) as indicated in brackets above were omitted by Act No,XXVI of 1977, whereas words (Indexation of Wages) was added by Act No,VI of 1987. It is submitted by Mr. S.P. Lodhi that conversely this section implies that the cost of living allowance was part of wages under the Payment of Wages Act which was earlier made not part of wages for the purposes of other laws but was subsequently under amendment under Act XXVI of 1977 was made as part of wages for the purposes of other laws. I am afraid that I am unable to agree with this proposition of Mr. S.P. Lodhi. If the Legislature intended to make the cost of living allowance allowed under section 3 to be part of wages of the workers, than it would have either so specifically stated under section 3 or more appropriately would have made it clear in the definition of wages as defined under section 2(3) of the Act which only specifically includes cost of living payable or paid in the period the preceding first day of August, 1973 and specifically excludes certain allowances mentioned in sub-clauses (i), (ii), (iii) and (iv) and generally excludes any other allowance under sub-clause (iv). This becomes more clear from the fact .That by the amendments effected under Act No, VI of 1987 cost of living allowance was made part of means for the purpose of indexation. If the legislature intended that the cost of living was to be considered as part of wages, then there was no necessity of amendment which was introduced under Act VI of 1987. Indexation is on the wages and if cost of living allowance was already merged in wages then there was no need for making it as part of wages by this amendment in 1987 for indexation of wages.
10. Mr. Mahmood Abdul Ghani submitted that in each subsection of section 3 of the Employees Cost of Living (Relief) Act, 1973 certain limit of salary was prescribed and workman getting wages upto that limit was allowed increase in cost of living allowance payable under each subsection. It was submitted by him that if this cost of living allowance was made part of wages then more number of workers would exceed the limits mentioned in the subsections and would be deprived of the benefits of the increase in the cost of living allowance under each subsection. He submitted that Labour Laws being enacted for the benefit of workman the interpretation which benefits larger number of workers should be accepted and not the definition which would give benefits to smaller number of workmen.
11. Mr. M.L. Shahani who assisted the Tribunal as amicus curiae submitted that cost of living allowance would form part of wages and the workmen who reach the limits of wages mentioned in each subsection after merging the cost of living allowance in the basic salary would cease to get cost of living allowance thereafter. If this theory is accepted then more number of workmen would reach the maximum and would thus be deprived of the benefits of the increase in the cost of living allowance.
12. Mr. A. Hafiz, who also assisted the Tribunal as amicus curiae, was of opinion that cost of living did not form part of wages.
13. Mr. Mehmood Abdul Ghani has relied for the interpretation of subsections (6) and (7) on the letter of Government of Pakistan clarifying the Employees Cost of Standing (Relief) Amendment Act, 1985. This clarification is based on the opinion of the Justice Division which gave the opinion that the cost of living allowance totalling Rs,150 as allowed under subsections (1) to (5) of section 3 of the said Act was not to be taken into account for the purposes of calculating the increase in wages at the rate of 13.5% allowed under subsection (6). Mr. Mehmood Abdul Ghani has also relied upon the case of Messrs Radaka Corporation and others v. Collector of Customs and another 1989 SCM R 353 wherein their Lordships had observed "Interpretation that had been consistently followed by department and which had become a long standing practice had almost acquired force of law.
Such practice could therefore not be lightly departed from'. That case is distinguishable from the instant case as this letter only interprets a provision of law and there is no evidence to show that interpretation was followed by the Department and had acquired force of law by long standing practice. A provision of law is normally interpreted by the Courts of law. However there does not appear to be any difference in the interpretation put by the Justice Division and interpretation arrived at by this Tribunal therefore I need not discuss it any more.
14. In this context another point of dispute between the parties also requires clarification. According to Mr. Mehmood Abdul Ghani the increase in cost of living allowance under subsections (6) and (7) was to be given only on the salary of the workman if it did not exceed the limits prescribed therein only once and thereafter no increase on the cost of living allowance was to be given on the increase in the salary that the workman may have acquired thereafter. This argument of Mr. Mahmood Abdul Ghani contradicts his earlier argument that the cost of living allowance does not form part of wages. If it does not form part of wages as held by this Tribunal, then the workman is entitled to this increase in wages on the increased salary that he may have acquired after the first day of July, 1985 under subsections (6) and (7). The words 'on' and 'after' are significant and signify that the employee is entitled to receive the cost of living allowance under subsections (6) and (7) every month on the salary that he will be drawing on or after specified date which would include any increase in salary provided the maximum salary did not exceed the prescribed limits, which is Rs,1,500 per month in both subsections. Mr. A. Hafiz agreed to this interpretation and submitted that the employee was entitled to the increase in cost of living allowance even on increment that he may get after the prescribed date.
15. The confusion appears to be because of the words "an increase in wages at the rate of 13.5 per cent of his wages" used in subsection (6) of section 3 of the said Act. Mr. S.P. Lodhi, therefore, argues that this increase of 13.5% is increase in wages and would therefore form part of wages. It may also be pointed out that the allowances allowed under subsections (1) to (5) are shown to be paid by the employer as cost of living allowance in each subsection itself. However, under subsection (7) the opening words are "In addition to the cost of living allowance" under subsections (1), (2), (3), (4), (5) and (6)". This would show that under subsection (7) all the increases including the increase in wages under subsection (6) has been treated as increase in cost of living allowance for the purpose of subsection (7) and the increase in the cost of living allowance allowed under subsection (7) would be in addition to cost of living allowance admissible under subsections (1) to (6). After subsection (7) there is no further increase in cost of living allowance but the Government resorted to the scheme of 'Indexation' and periodically certain increase in the wages is made under the 'Indexation Scheme'. As pointed out above in section 7 as amended by Act VI of 1987 for the purpose of indexation of wages the cost of living allowance has specifically been made part of wages. Therefore, in my opinion even the increase allowed under subsection (6) would not form part of wages for the purposes of calculating the increase in wages admissible under subsection (7).
16. The other dispute between the parties relates to the interpretation of increase under subsection (7). Under this subsection increase in wages has been allowed at the rate of 18% of the wages in addition to the cost of living allowance admissible under subsections (1) to (6) but under clause
(c) of the proviso to this subsection this increase in wages will be set off against amount payable as increase in wages under subsection (6). It appears that the respondent instead of calculating the increase in the cost of living allowance at the rate of 18% are calculating the cost of living allowance at the difference between 13.5% admissible under subsection (6) and 18% admissible under subsection (7) and are paying the cost of living allowance at the rate of 4-1/2% to the appellants in addition to their 13-1/2% increase under subsection (6). This does not appear to be intention of the Legislature. Under subsection (7) the respondent have to calculate the increase in wages at the rate of 18% and from the amount of such calculation the amount actually paid as increase in wages under subsection (6) has to be deducted. The deduction is to be made from the calculated amount and hot from the percentage. If the intention of the Legislature had been to allow only the difference between the two increases clause (c) to the proviso would have been omitted and then the wordings of subsection would have been that in addition to cost of living allowance under subsections (1) to (6) the workman be paid increase of wages at the rate of 4- 1/2% of the wages. In my opinion therefore the appellants are entitled to the increase of cost of living allowance under subsection (7) at the rate of 18% of their wages from which the increase in wages at the rate of 13.5% paid under subsection would be deducted. To be more concrete a workman who was drawing Rs,500 on 1-7-1985 would have been paid I Rs,67.50 under subsection (6). However the same worker if he gets increment of Rs,100 per year he would receive salary of Rs,600 on 1-7-1986 and calculating increase at the rate of 18% of wages this increase would come to Rs,108 from which if Rs,65.50 are deducted he would get an additional amount of Rs,42 50.
Whereas if increase is calculated at the rate of 4-1/2% of the salary on 1-2-1987 he will get only additional amount of Rs,26 which does not appear to be the intention of the legislature.
17. Mr. Mehmood Abdul Ghani has raised objection that the petition was time-barred as the appellants claim relief from 1-7-1985 whereas grievance notice was served on 20-2-1987. The appellants were entitled to the increase in the payment in wages as cost of living allowance under subsection (6) of section 3 from 1-7-1985 every month. Thus every month till they got increased wages in accordance with subsection (6), they would have recurring cause of action. Grievance notice therefore cannot be considered to be time-barred.
18. Mr. Mehmood Abdul Ghani further submitted that a settlement was entered between the management and the CBA Union after 1-4-1984 which was effective from 1-2-1986 to 31-1-1988 and therefore he claims set off with regard to the increase in wages and allowances paid under the said agreement as against increase in wages allowed under subsection (7). The Charter of Demands on the basis of which settlement was arrived at between the parties have not been produced by any of the parties but the Settlement has been produced. The terms of Settlement with regard to Demand No,1 show that the management had agreed in order to give relief to the workers due to high cost of living to revise the pay of all categories of workers as follows:-- 'The Management has agreed, in order to give relief to the workers due to high cost of living, to revise pay scales of all the categories of workers as follows:--
(i) Unskilled Grade Rs,140-25-390
(ii) Semi-Skilled Rs,170-28-450
(iii) Skilled Grade-1 Rs,180-31-490
(iv) Skilled Grade-2 Rs,300-34-640
(v) Skilled Grade-3 Rs,440-37-810 ' It also shows that due to the high cost of living the Management had agreed to increase 'House Rent' by Rs,10 p.m. And 'Washing Allowance' by Rs,3 p.m. This agreement further shows that due to the cost of living allowance some increases were made in some allowances of all the workmen whereas some increase was made in some allowances in the case of certain categories of workmen.
19. Subsection (7) of section 3 of the Employees' Cost of Living (Relief) Act, 1973 reads as under:- "(7) In addition to the cost of living allowance admissible under subsections (1), (2), (3), (4), (5) or, as the case may be, subsection (6), if any, every employee whose wages do not exceed one thousand five hundred rupees shall, in respect of his employment on or after the first day of July, 1986, whether on time-work or piece-work basis, be paid by his employer an increase in wages at the rate of 18 per cent of his wages: ' Provided that the said increase in wages shall be set off--
(a) against the amount payable as a relief due to rise in the cost of living under an agreement or settlement reached, or an award given, under the Industrial Relations Ordinance, 1969 (XXIII of 1969), which has been amended and became effective on or after the first day of January, 1984;
(b) against the amount payable under an agreement or settlement reached and in force on the first day of July, 1986, under which employees get increases at regular intervals on the basis of a rise in the cost of living; and
(c) against the amount payable as an increase in wages under subsection (6)"
' Explanation: In this section, "month" means a normal working period of twenty six days, calculated at the rate of forty-eight hours of work per week.
' In this context explanation to subsection (5) may also be reproduced:- 'Explanation: For the purposes of this subsection, subsection (6) and subsection (7) any increase in wages accruing by virtue of the usual increment or promotion to a higher grade, or an allowance not specifically given to provide relief due to a rise in the cost of living, shall not be deemed to be an increase intended to provide relief due to a rise in the cost of living.
' This settlement was in force on the first day of July, 1986, therefore, under proviso (a) of subsection
(7) the increase in wages under subsection (7) shall be set off against the amount payable under this settlement provided this increase under the settlement was intended to provide relief due to rise in the cost of living. As pointed out above the settlement clearly points out that wages and certain allowances were increased due to increase in the cost of living. The increase in some of the allowance is payable to all the workmen whatever their category may be whereas increase in certain allowances is payable to limited category of workmen only. For example under Demand No,2(a) only permanent workers were given an amount in their present wages equivalent to one increment in respect of pay scale as shown in Demand No,I. Under Demand No,3(2) increase in heat allowance was allowed only to workers who were entitled to such increase. Similarly conveyance allowance increase was allowed only to permanent workers and Site Allowance was allowed only to Clerical Workers. Increase in the Uniform Allowance has been allowed only to permanent Chowkidars. Similar increase in Furnace Repair Allowance has been paid to Massons and increase in Peons Allowance has been made to the permanent peons only. There are increases in other allowances also made to number of class of workers mentioned therein.
This increase in allowances which is not payable to all the workers, but is payable to particular category/categories of workers, cannot be set off against the increase in wages allowed under subsection (7) which increases the wages of all the workers irrespective of the fact as to their nature of work or to their status as permanent or temporary. The words used in subsections (6) and (7) are not workers but employees. The word employee has been defined in section 2(b) of the Cost of Living (Relief) Act as under:-- "Employee" means any person employed, whether directly or through any other person, for wages, to do any skilled or unskilled, intellectual, technical, clerical, manual or other work in, or in connection with the affairs of, an undertaking, under any contract of service or apprenticeship, whether written or oral, express or implied and includes such a person when laid off, but does not include a person for whom a provision has been, or may be made by the Federal Government or a Provincial Government for grant of an allowance intended to provide relief due to a rise in the cost of living".
This definition would clearly show that there is no distinction between a permanent or non- permanent workman. Therefore in my opinion the increase in allowances made under the settlement to specific category of workers cannot be set off against increase in wages allowed under subsection (7) to all the employees. However such increase in the wages or all other allowances, embodied in the settlement, which are paid or payable to all the employees would be set off against' increase under subsection (7). Under the settlement the settlement itself as pointed out above has been made effective from 1-2-1986, but as a gesture of goodwill under the settlement the respondent had agreed to pay the benefits under the settlement for the period from 1-11-1985 to 31-1-1986 as ex-gratia to the workers. In other words the salary of the workers was increased and re-fixed in terms of Demand No,1 as reproduced above from 1-11-1985 which is a date which falls after 1-7-1985. Therefore the appellants are entitled to get increase in wages at the rate of 13.5% on the increased salary from 1-11-1985 and not on the basis of salary which they were drawing on 1-7-1985. They are also to get the cost of living allowance under subsections (1) to (5) which totally in fact comes to Rs,190 in addition to the above increase in wages. However the increase under the settlement if the `Eid Gift' cannot be set off against the increase under subsection (7) as it is 'gift' and not 'wage' or 'allowance'.
22. From the 1-7-1986 the appellants would get 18% increase in wages on the basis of their increased salary as it stood on or after 1-7-1986. They will also get Rs,150 as cost of living allowance under subsections (1) to (5) and also 13.5% increase under subsection (6). However, from the amount calculated on the basis of 18%, the amount they were already getting on the basis of 13.5% increase under subsection (6) would be deducted and so also such increase in wages and allowances that they were getting under the settlement which was in force on 1-71986 as held in para. 2 ante would be deducted.
23. The appeal is disposed of in the above terms.