DECISION This is a reference under section 50 of the Industrial Relations Ordinance.
2. The Union had raised certain demands dated 27th of November, 1973. The Settlement was reached between the parties on 14th of January, 1974 to be effective from the lst of January, 1974. Clause (1) of the Settlement which has given rise to the controversy reads as under: "The Management has agreed to increase Rs. 15 and Rs. 20 per month in the wages of the permanant workers only as on 1-12-1973.
Workers getting presently Rs. 135 or less per month will get only Rs.15 and those getting more than Rs. 135 as monthly wages will get Rs. 20 as increment per month with effect from 1-12-1973."
3. The President of Pakistan was pleased to make and promulgate Employees* Cost of Living (Relief)
Ordinance, 1973 on 17th of September 1973, whereby the employees were allowed cost of living allowance equal to Rs.35 per month if the wages did not exceed Rs.700 or at such rate as, together, with wages, made a total of Rs. 700 and Rs. 35 per month, if the 581 wages were more than Rs. 700.
On the promulgation of this Ordinance, the Management allowed the cost of living allowance to the employees. Subsequently this Ordinance was approved by the Parliament and assented to by the President on the 31st of December, 1973. Consequently it became an Act. Later on the Act was amended and the additional cost of living allowance was allowed. It was laid down that in addition to the cost of living allowance already admissible, if any, every employee shall, in respect of employment on or after the 8th June, 1974, be paid by the employer a cost of living allowance equal to (a) Rs. 50 per month or 10% of his monthly wages whichever is more if his wages did not exceed Rs. 1,000 or (b) at such rates, as together with wages, make a total of Rs. 1,000 per month if his wages did not exceed Rs. 1000. This amendment was brought about on 10th September, 1974. 4.
After the aforesaid amendment the Union demanded Rs. 50 in addition to the previous cost of living allowance but the Management pleaded that by the Settlement the increase in wages was effected on the basis of the cost of living allowance and, therefore, the amount which was allowed by that increase had to be adjusted towards the cost of living allowance granted under the amending Act. Since the parties did not agree the present reference was made by the Union.
5. I have heard the learned counsel for the parties and I am of the view that the contention raised on behalf of the Union must be upheld. 1 have already reproduced the term of the Settlement. It is plain enough that the increase was effected in wages. There is nothing to indicate that the increase was agreed upon on the basis of the cost of living allowance. Indeed cost of living allowance can be one of the considerations for the increase in wages but that is not only the consideration. The increase in wages may be effected on account of the consideration of the period of service of the employees and the experience and skill gained by them as welll as the impetus to work hard to increase the efficiency and production. In thisu connection reference may be made to the Demand Notice which was served! by the Union and, result of which the Settlement was reached. Demand No. 2 consists of 8 items. Here I would confine to items Nos. 1 and 2 of the demand. Item No.l relates to the claim by the Union for 25 % Increase in wages. Item No. 2 relates to the demand for 10% cost of living allowance. By Settlement the increase in wages was allowed at the rate of Rs. 15 and Rs. 20 according to the pay and no provision was made with regard to the cost of living allowance. It is, therefore, clear that thel increase was exclusively in the wages and not with regard to the cost ofp living allowance. This is also clear from Clause 14 of the Settlement which| says that the rest of the demands contained in the Charter of Demands would be treated as withdrawn, disposed of or settled. Since there were two separate demands for wages and cost of living allowance and out of them one was allowed it follows that the other was treated as withdrawn. There is nothing to show that the cost of living allowance was linked with the increase in wages as settled between the parties.
6. It is an admitted position that no Annual Increments are allowed to the employees. Every time the increase in wages is sought by raising demands. This also supports my conclusion that increase effected by the Settlement was in wages otherwise than on the consideration of the cost of living.
7. In the result I am of the opinion that the employees are entitled to claim the cost of living allowance according to the amended Act and thel Management is not entitled to adjust it towards the wages. The reference is] ^ answered accordingly.