' SALEEM AKHTAR, J.---This judgment will dispose of all the aforestated appeals in which the entire controversy depends upon the meaning and definition of the word "wages" as defined in the Provincial Employees' Social Security Ordinance, 1965 (hereinafter referred as the Ordinance).
2. There are three sets of appeals in which questions though not common, depend upon the definition of the word "wages". In the first set consisting of CAs. Nos.37-K of 1989, 38-K of 1989 and C.A. 567 to 578 of 1990 the question involved is whether house rent allowance paid to an employee forms part of the wages. In CAs. Nos.216 and 217 of 1985, 221-K and 222-K of 1986, 9-K and 10-K of 1989 and 579 of 1990 the question involved is whether attendance allowance can be termed as wages. In CA. 870 of 1990 the question involved is whether payment made towards leave encashment can be termed as wages.
3. It is not necessary to give facts in detail of each case as it is an admitted position that the dispute is between the employer and the employee as defined in the Ordinance and either of them is aggrieved by the judgment passed by the High Court.
4. In the first set dealing with the house rent allowance the High Court has held that house rent allowance is not part of the wages. The Employees' Social Secuirty Institution has thus challenged it in appeal claiming that house rent allowance forms part of the wages. The Ordinance has defined the word "wages" in the following manner:-- "S.2(30) "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;"
' This definition was considered by various judgments of this Court and the High Courts. The first in the series is Sindh Employees' Social Security Institution and another v. Dawood Cotton Mills Ltd. PLD 1977 SC 177. Section 2(30) of the Ordinance which defines the word "wages" was interpreted in the following manner:-- "According to this clause, the term 'wages' means "remuneration for services 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 strike." The definition then excludes certain items of payment, with which we are not directly concerned in the present case.
' This definition accords with the dictionary meaning of the term `wages' which is construed as the amount paid periodically, specially by the day or week or month, for time during which workman or servant is at employer's disposal. The word 'remuneration' as used in the definition means, according to the Oxford dictionary, a reward payable for service rendered. It would be seen that the rendering of service, or at least the availability of the employee at the disposal of the employer for service, is an essential requirement or prerequisite for the payment of wages. The definition by including payments made by the employer in respect of any period of illegal lock-out or legal strike has indeed given effect to the principle that during these periods the employee must be deemed to be available for service with the employer. By specifically including the payment made for any period of authorised leave, the definition has accorded a statutory status to this payment as if it were included in every contract of service."
' In Sindh Employees' Social Security Institution v. Dawood Cotton Mills Ltd. PLD 1988 SC 1 the Institution had demanded contribution in respect of payment made by the respondent to its employees towards:--
(1) conveyance allowance,
(2) leave encashment,
(3) supplementary payments, and
(4) festival holidays.
' The respondent objected pleading that these payments did not constitute wages as defined in clause 30 of section 2 of the Ordinance. As the appeal filed by the respondent was dismissed, it filed an appeal before the High Court which was partly allowed where it was held that the respondent was not liable to make contribution in respect of the employees who were covered by the definition of `employee' but the wages being drawn by him exceeded Rs,20 per day. The respondent also filed an appear against the order in respect of inclusion of certain payments made to the employees which were not thought to be not covered by the definition of wages. Both the appeals were heard together. While discussing the contention that extra holdiay in lieu of festival holiday which falls .On a gazetted holiday for which extra sum equal to a day's wages is paid, did not constitute wages and that it amounted to overtime which is excluded by the definition of wages, it was observed as follows:-- "We do not agree with him. In both the instances the employee works for the Mill on days when he need not work, for earning his daily wage, hence it is the "remuneration" for the "service" he renders to the Mill. It is clearly a wage which under the definition he is entitled as of right and not as grace or mere compensation so-called by the learned counsel. The definition visualises it clearly in addition to "any payment by the employer to a secured person in respect of any period of authorised leave". As based on the definition, the alternative argument of the learned counsel is too weak to be attended to. "Overtime" has a special connotation in the industrial and commercial terminology. The term is used in this and other similar laws in the sense that a 'time' is spent over and above the authorised working hours during a day or week. It cannot be equated with what has been described above as `leave encashment' or 'payment' regarding 'Festival holiday'. These arguments thus are repelled."
' In Brooke Bond Pakistan Ltd. And others v. Sindh Employees' Social Security Institution 1990 SCM R 175 the question was whether production bonus forms part of the wages. Affirming finding of the High Court that it does, while considering the term wages as defined in the Ordinance, it was observed that the use of the word and expression "means" and "deemed to include" makes it comprehensive or an exhaustive definition. The exclusion clause enumerates certain items and one such item is "any sum paid as bonus by the employer". Shafiur Rahman, J., then proceeded to examine the meaning of the term bonus as understood from the dictionary meaning, industrial practice and the judicial precedents and held that there are two categories of bonus viz., profit bonus and production bonus and finally observed that production bonus forms part of the wages as it is regular, definite and bears direct nexus with performance of work. The term "wages" came up for consideration in Messrs Consolidated Sugar Mills Ltd. v. Sindh Employees' Social Security Institution PLD 1991 SC 862. In this case educational scholarship amount paid by the employer to its employees was held to fall within the definition of wages. While considering the definition of wages, Ajmal Mian, J., observed:-- "From the above definition of the term "wages", it is obvious that it includes remuneration for service paid or payable in cash or in kind excluding the items mentioned in above clauses (a) to (d). It must, therefore, follow that unless the appellants can bring the payment of the above educational scholarship amount within the purview of any of the above excluded items,, the same would be covered by the definition of the term "wages" given in the Ordinance."
' In an unreported judgment in Messrs Consolidated Sugar Mills Ltd. v. Sindh Employees' Social Security Institution and another C.As. Nos.7-K and 8-K of 1987, Naimuddin, J., followed the dictum laid down in Brooke Bond Pakistan Ltd. And others v. Sindh Employees' Social Security Institution 1990 SCM R 175 and dismissed the appeal.
5. We may now refer to the judgments of the High Court. In Quadri Brothers Foundary and Workshop v. S.E.S.I. PLD 1977 Kar. 112 Channa, J., refused to accept payment made ex gratin as wages because it was not paid for services rendered. In Dawood Cotton Mills Ltd. v. Sindh Employees' Social Security Institution PLD 1978 Kar. 744 Ajmal Mian, J. (as he then was) and in Messrs R.C.D. Ball Bearings Ltd. v. Sindh Employees' Social Security Institution and another 1980 PLC 752q, Sajjad Ali Shah, J. (as he then was) followed the observations made in PLD 1977 SC 177. In the later case attendance allowance and shift allowance were held to be 'wages'. Reference was made to Sindh Employees' Social Security Institution v. Amin Fabrics Ltd. 1983 PLC 182 in which Nasir Aslam Zahid, J. (as he then was) dissented from the impugned judgment in C.A. 569 of 1990 reported in 1982 PLC 325 and held that house rent allowance formed part of the wages as it was paid for services rendered. It was further observed that conveyance reimbursement paid to employees as conveyance allowance and not payment to defray conveyance expenses for any special or extraordinary assignment should be treated as part of remuneration and is covered by the definition of 'wages'.
6. Mr. Sarwana contended that as the Ordinance is a beneficial and remedial statute it should be liberally interpreted so that benefits may be conferred on large number of employees. The learned counsel referred to Kohinoor Chemical Co. Ltd. And another v. Sindh Employees' Social Security Institution and another PLD 1977 SC 197 and Messrs MacDonald Layton Constain Ltd. v. Punjab Employees' Social Security Institution PLD 1991 SC 1055. In the last case it was observed that under the Islamic dispensation interpretation which upholds the rights of the workers should be accepted. There can be no cavil with the proposition that the Ordinance is a beneficial legislation intended to provide benefit to the workers of a particular group measured with the salary. However, Mr. Javed Altaf, the learned ASC, contended that considering the provisions of the Ordinance, in order to cover maximum number of employees the definition of wages should be given restricted meaning because if a liberal interpretation is given, then the wages will be greatly increased and cross the limit of Rs,1,500 p.m. Thereby excluding them from the benefits and they will not be treated as secured employees. We refrain to express our opinion on the last part of this controversy which can be dealt with at an appropriate moment. The Ordinance applies to a certain category of workers who earn wages up to Rs,1,500 per month for services rendered. The law has fixed this restriction with purpose and considering the statutory rise in salary this limit is also amended from time to time. If any worker who earns wages which are higher than Rs,1,500 is excluded from category of secured employee, then the fact remains that he will he having the benefit of the excess amount which he is paid every month. In these circumstances, the accepted principle of interpretation that beneficial statutes must be interpreted liberally must be applied. Mr. Asadullah Siddiqui referred to the meaning of the word "remuneration" to contend that by including remuneration in the definition of 'wages' its scope has widened. In the New Lexicon Webster's Dictionary of the English Language, "remunerate" means "to pay money or to make a gift to someone in return for his services, to compensate for an expenditure of time, trouble or money." In Ballentinc's Law Dictionary, remuneration has been defined as follows:-- "Remuneration" is a wider term than ""Salary". "Remuneration" means a quid pro quo. Whatever consideration a person gets for giving his services, seems to me a 'remuneration' for them.
Consequently, if a person was in receipt of a payment or of a percentage, or any kind of payment which would not he an actual money payment, the amount he would receive annually in respect of this would be 'remuneration' (per Blackburn, J., R. v. Postmaster-General, 1 Q.B.D. 663, 664. Cp.
Emolument.
(8) "Remuneration" (Contracts of Employment Act, 1963 (c.49), Sched. 2, para. 3 (2) includes all that is quantifiable in money and paid to the employee for his work including, in this case, a weekly payment of a specified sum "for expenses in connection with the use of his own motor-car". (S. & V.
Stores v. Lee (1969) 1 W.L.R. 626).
' In Words and Phrases Legally Defined by John B. Saunders, 2nd Edition, Vol. IV at p.295, column 2, 'remuneration' has been defined as follows:- "Remuneration" means all salary, wages, fees, poundage and other payments paid or made to an employee as such for his own use, and includes the money value of any apartments, rations or other allowances in kind appertaining to his employment, but does not include payments for overtime, or any allowance paid to him to cover cost of office accommodation or clerks' assistance, or any travelling or subsistence allowance or other moneys to be spent, or to cover expenses incurred by him, for the purposes of his employment (Local Government Superannuation Act, 1937, S.40).
"Remuneration" includes reasonable allowances in respect of expenses properly incurred in the pursuance of the duties of any office) Air Corporations Act, 1967, S.33).
"I think the word 'remuneration' means a quid pro quo. If a man gives his services, whatever consideration he gets for giving his services seems to me a remuneration for them. Consequently, I think if a person was in the receipt of a payment, or in receipt of a percentage, or any kind of payment which would not be an actual money payment, the amount he would receive annually in respect of this would be `remuneration'. R. v. Postmaster-General (1876) 1 Q.B.D. 658, per Blackburn, J., at pp.663, 664; on appeal (1878) 3 Q.B.D. 428, C.A.
From the meanings contained in these dictionaries it is clear that the word "remuneration" has a wider significance than salary and wages. It includes payments made, besides the salary and wages. It may be in the nature of allowance, reward for services rendered and also money vlaue for the house or apartment and other similar nature of payments which may also include assistance or reimbursement allowance spent in performance of the duty.
7. Before deducing the principles from the aforestated judgments it will be proper to first analyse the definition of "wages" under section 2(30) of the Ordinance. The manner in which term "wages" has been defined indicates that the intention of the legislature is to make it comprehensive and exhaustive. It is a remuneration, which by itself is wider than "wage", for services rendered under a contract of service express or implied. Therefore, the employee who is in employment or is available for service can claim wages. The remuneration paid or payable under law or contract without giving credit to any deduction made for any purpose will be treated as wage. Such remuneration may be in cash or kind. As the amount of wage is related to payability, remuneration in kind will have to be evaluated in terms of money. By including remuneration in kind in the definition of "wages", its scope has been further widened. The definition further proceeds to include in it any dearness allowance or any amount paid towards cost of living allowance. It further adds to it any amount paid by the employer to a secured person toward authorised leave or any period of illegal lock-out or legal strike. Payments made against these three items indicate situations where the employee does not render any service but his absence is not illegal and he be deemed to be available for service. In the end the definition excludes from the term "wages" payments made for overtime, sum paid to defray special expense entailed by the nature of employment, gratuity payable on discharge and bonus. The definition extends the frontiers of term "wages" by describing it as "remuneration". By a deeming clause such items which may perhaps not have been considered as wages, have been brought under its net. The exclusion provided is neither general nor, wide. It categorises four items with clarity and precision in specific terms.
8. On the basis of the judgments referred above it crystalises that rendering of service or availability for service is a precondition for payment of remuneration. The amount paid by the employer is in discharge of his legal and contractual obligation for the services rendered by the employee. Such payments the employee gets as a matter of right and entitlement under the contract or law and not as ex gratia, charity, dole, grace, reward, gift or compensation on compassionate grounds at the mercy and will of the employer. The other characteristic is that the payment should not be irregular in character and must have direct nexus with the actual performance of work. There is unanimity of view that any payment ex gratia to an employee does not fall within the definition of "wages". The ex gratia payment is not made under any contract or law but at the sweet will of the employer. However, any payment made under an agreement for the services rendered describing it as ex gratia will not have the effect of excluding it from the definition of wages. As observed by Ajmal Mian, J. (1991 SCMR 862) by settlement any amount paid by the employer towards his statutory and contractual obligation cannot be excluded from being "wages". As the law has defined the term wages, by agreement the parties cannot limit it. The payment made under the instruction of Director Labour as ex gratia for the period the employees remained absent during industrial disturbance and ethnic unrest was not treated to be wages. PLD 1977 SC 177. Wage is remuneration for service and therefore, bonus dependent on profitability was not covered by the term wages, but bonus related to work or individual or collective effort was held to be wages. It is also regular or fixed. 1990 SCM R 175.
9. We now examine specific cases under consideration in the aforesaid appeals. In CA. 37-K of 1989 and CA. 38-K of 1989 the house rent allowance was not held to be part of the wages. Sindh Employees' Social Security Institution filed these appeals against the judgment of the High Court of Sindh. Likewise CA. 567 of 1990 also challenges the judgment of the Lahore High Court where similar view was taken. All these three judgments are based on a short order of the Supreme Court by which the petitions for leave to appeal against a judgment of the High Court treating house rent not part of the wages were dismissed. However, that order of the Supreme Court was withdrawn and the petition was admitted for hearing and the appeal (C.A. No,569 of 1990) has been heard with these appeals. Therefore, the ground available for taking such a view no longer exists. In other appeals, namely, C.As. 568 to 578 of 1990 the view taken is that house rent allowance is not part of the wages as it is paid to employees who are not provided residential accommodation, the allowance varies with the salary drawn by the employee and the place where accommodation is hired, it is paid to workers who due to some reasons do not actually work or render service to the employer, it does not bear a direct nexus to the services rendered by the employee and it is a sort of subsidy and compensation for meeting the cost of higher charges. The question in these appeals is not that the house rent allowance is to be paid to the worker, but the dispute is in respect of house rent allowance paid to such worker to whom the establishment has not provided any accommodation. From the record of C.As. 568 to 578 of 1990 it seems that such house rent allowance was paid under the orders of the Government. In C.A. 37-K and 38-K of 1989 such house rent allowance seems to have been paid to the worker under the terms of contract of services or settlement. It seems that when the establishment is unable to provide a house it pays house rent allowance in lieu of the house which could not be provided. Such house rent allowance is paid to every worker with the salary at a fixed rate which may be on the percentage basis and therefore the quantum may vary, but the standard remains the same. It is not an ex gratia payment as it is made under the statute, a contract of service or under the orders of the Government. Such payment is made to the workers who are rendering services or are available for service and are in employment of the establishment. The payment has direct nexus with the services rendered and cannot be termed to the ex gratia payment or merely reward or gift to the employees. The definition of wages as given in the Ordinance includes remuneration which may he in cash or kind.
Considering the wider dimension of the word "remuneration" and the addition of "kind" with the word "cash" the scope of the term "wages" has greatly been enlarged. Remuneration, as seen earlier includes any payment made in lieu of providing any accommodation or apartment. It thus can be safely inferred that the house rent allowance falls within the definition of wages.
10. Mr. Javed Altaf, the learned A.S.C., referred to a judgment of the High Court of Patna, namely, Messrs Baidyanath Ayurvcd Bhawan Ltd. v. Employees' State Insurance Corpn. 1973 LAB I.C. 1546 where it was held that house rent paid to employees who were not provided with the house by the company and living in the rented house is not wages. This judgment is distinguishable and may not apply to the present cases. The definition of the word "wages" does not include the word "kind".
In this case the house rent was admissible to employees stationed at one of the specified places and had not been offered Government quarters. It was provided that once offer is made, then whether accepted or refused, employee is not entitled to house rent allowance. It was therefore, observed that "this rule does not create indefeasible right in the employee at all places wherever he may be posted and in all circumstances irrespective of whether or not he has been offered Government quarters". Secondly in this referred case the employees could not get house rent allowance unless established that they were not provided with houses by the employer and arc living in rented houses. The workers living in their own houses were not allowed rent allowance and the grant was neither unconditional nor absolute. Judging the present cases on the principles laid down in Brooke Bond Pakistan Ltd.'s case 1990 SCMR 175 it is clear that the house rent allowance was specified, uniform, certain and regular in character, having direct nexus with the actual performance of work and was paid for services rendered. Connected with these cases is C.A. 567 of 1990 in which it is claimed that payment towards house rent allowance should not be treated as wages. From the record it seems that such point was agitated before the Director, but when it was rejected, in appeal, the Judge, Social Security dismissed it as barred by time and no other points were considered. In appeal before the High Court, the judgment, though refers to such a claim, does not proceed to consider it nor any finding has been given on this aspect of the case as in the entire judgment emphasis is on the question of limitation and the challenge made to the regulations and does not refer to the house rent allowance. However, as leave has been granted in this case only on the question of house rent allowance, in view of the above discussion, our finding is against the appellant.
11. We now turn to the second set of cases in which attendance allowance has been challenged claiming that it does not form part of the wages. It seems clear that the attendance allowance is paid for rendering services and has all the characteristics of the wages as defined in the Ordinance. It is paid to a workman who is in the employeement and is paid regularly at a fixed rate and has direct nexus with the work and performance of duties. It, therefore, must form part of the wages. In this regard the judgments quoted from the High Court of Sindh have rightly held it to the a part of the wages. Such payment cannot be termed as ex gratia payment.
12. In C.A. 870 of 1990 the question is whether payment made towards leave encashment should be treated as wages. The finding of all the authorities as well as of the High Court is in the affirmative.
In Sindh Employees' Social Security Institution v. Dawood Cotton Mills Ltd. PLD 1988 SC 1 question arose whether payment made towards leave encashment and festival holidays forms part of the wages. Holding that it does it was observed that on both the days the employee works when he need not work for earning his wages and therefore, it will be remuneration for, service which he renders for the establishment. It is earned as a matter of right and entitlement and not as a grace or mere compensation. We respectfully follow the observations in this judgment and hold accordingly.
13. In view of the above discussion C.As. Nos.216 and 217 of 1985, 221-K and 222-K of 1986, 9-K and 10- K of 1989, 37-K and 38-K of 1989, 568 of 1990, 569 of 1990, 570 of 1990, 571 of 1990, 572 of 1990, 573 of 1990, 574 of 1990, 575 of 1990, 576 of 1990, 577 of 1990, 578 of 1990 and 579 of 1990 are allowed.
' CA. No,567 of 1990 and C.A. No,870 of 1990 are dismissed.
' The parties to bear their own costs.