' This first appeal is directed against the order dated 16-8-1977 whereby the learned Punjab Social Security Court, Lahore held that an "attendance allowance" was a part of the wages on which contribution was obligatory.
2. The facts as stated are that the appellant Messrs National Embroidery Mills Ltd., Faisalabad, being a notified Company, has a system of paying an "attendance allowance" as an incentive to those of its employees who have attended to their work regularly for a period of 26 days or more in a month. It is contended that the appellant-Company is paying contribution to the Social Security Institution on wages paid to its employees, but the local office of the Institution recently made an increased demand under section 23 of the West Pakistan Employees' Social Security Ordinance (X of 1965) because of failure of the appellant-Company to pay contribution on the attendance allowance paid to the employees. On this demand the appellant-Company felt aggrieved and made a complaint under section 57 of the Ordinance to the Institution alleging that this allowance was an ex gratia payment, and the demand of additional contribution on this account was illegal.
The plea was rejected on 21-9-1976 and an appeal to the Social Security Court also did not succeed. Hence this appeal.
3. The learned Social Security Court disagreed with its earlier decision made in the case of the Koh- i-Noor Textile Mills, Rawalpindi and held that attendance allowance paid to the workers in the interest of production and on the basis of good conduct, punctuality and hard work shown by them was a part of the wages. It was, therefore, obligatory on the appellant-Company to have maintained record of payment of such wages and paid contribution thereon although no notice thereof was served on it by the Institution.
4. It is not disputed that the said attendance allowance is paid by the appellant-Company to its employees in pursuance of a settlement arrived at on 8-9-1973 under section 39 of the Industrial Relations Ordinance (XXIII of 1969) between the appellant-Company and its employees through the Collective Bargaining Agent. By this settlement the appellant-Company is paying a specified amount to its employees who attended to their work regularly for a period of 26 days or more in a month. It is argued that this payment is ex gratia, therefore, no contribution is payable thereon. A question arises whether the said attendance allowance does not amount to a wage but is paid as a bounty to only those of the workers who show regular attendance.
5. Contribution is a sum of money payable to the Institution by an employer in respect of an employee and is calculated on the basis of wages paid or payable to the employee. The term "wages" is defined by section 2(3) of the West Pakistan Employees' Social Security Ordinance, 1965 as under :- " Wages' mean 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 (XXXIX of 1961), without taking account of deduction 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 cost of living 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
(e) any gratuity payable on discharge ; or (d) any sum paid as bonus by the employer.
6. The above definition gives not only a specified meaning to wages but also declares some payments to be included therein, and some excluded therefrom.
' The term "shall be deemed to include" is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute. However, the term payment has been discussed at length in Adamjee Cotton Mills Ltd. v. Sind Employees' Social Security Institution (1) with an observation that certain payments included in the definition, as a matter of fact do not widen its scope, but merely clarify what is, in the context of modern legislation, a necessary implication of the ordinary concept of wages. It is held that the different types of payments specified in the including clause have a definite bearing on the contract of service therefore, the provision does not enlarge the definition of wages, but appears to have been included in the definition for abundant caution and in order to prevent unnecessary litigation. In that case the said industrial concern remained closed for a few days in June, 1972 and again for some days in July, 1972 due to civil commotion. However, in response to a press note issued by the Government, the periods of absence were treated as on duty and the employer was asked to pay wages to its employees for the periods of their absence. A question arose whether such payments made under the directive of the Government could be regarded as wages as expressed in sub- rules (2) and (3) of Standing Order No, 11 of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance (VI of 1968) although the employees had withheld their services for the employer against the terms of the contract of service. It is held that those payments, having been made under the directive of the Government, were not wages, and no contribution was payable thereon.
7. It is thus clear that every payment made to a secured person by his employer is not a wage. A wage is only that payment which is made by an employer to the employee as a remuneration for service paid or payable under a contract of service or apprenticeship, expressed or even implied. It is urged that attendance allowance, particularly in the instant case, was not an outcome of a contract of service, but was being paid as compensation, besides regular wages, with a view to persuade the workers to make successful efforts to remain' on duty regularly, and that the employer was under no obligation to pay this compensation. According to the learned counsel, if this compensation was not paid by the employer or this offer was withdrawn by him, the workers were under no law entitled to claim it as of right. This argument does not correspond to the meaning given to the term wages by the Ordinance. Their Lordships of the Supreme Court have laid down in Sind Employees' Social Security Institution v. Dawood (1) 1974 PLC 213 Cotton Mills Ltd.
(1) that the word "remuneration" 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 pre-requisite 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 been given effect to the principle that during these periods the employee must be deemed to be available for service with the employer.
8. Each case on its facts and circumstances, differs with the other and a question, whether a payment made or an allowance offered by the employer relates to the contract of employment or is otherwise connected with his service and is thus a part of the wages, has to be determined in the light of the material found in each case. The appellant-Company, in the instant case, was forced under a settlement reached by it with the Collective Bargaining Agent to pay attendance allowance to workers present on duty and available for service to the appellant-Company for a specified number of days in a month. This settlement is not an unilateral offer to make ex gratia payment to the workers who show interest in work and remain on duty for more than the required number of days in a month, but it is to the advantage of the employer also, in the sense that his workers give him more output and more benefit. Such a Settlement has a substantial bearing on the contract of service, and therefore definitely amounts to an agreement of mutual gain in the better interest of service on the one hand, and payment of its price in the shape of an allowance as an additional wage on the other. Much support can be gathered from section 10-A of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance (VI of 1968) which lays down that (1) in every Industrial establishment which is a factory and in which fifty or more workmen are employed there shall be introduced from such date as may be specified by the Provincial Government, by notification in the official Gazette, a group incentive scheme to provide incentive for greater production to groups of workmen employed in the factory. The scheme shall provide the manner in which the performance of different groups of workmen, whether in the same section, shop, department or shifts, shall be valued. (2) The incentive shall be in the form of additional wages or additional leave with wages or in both such forms to the members of the group of workmen whose production exceeds that of the other groups or the average of all the groups. The incentive shall be according to such scales as may be prescribed and shall be related to the extent of the excess production achieved by the group with the best performance.
9. The incentive as provided in this section is mandatory in nature and becomes enforcible in pursuance of the statute, whereas the one agreed upon in the present case is the result of consent of the employer and the employees and is thus contractual. However the intent and purpose in both the cases is the same so as to take best work from the workers and reward them. Since such an incentive relates to and is attached with the work of the employee, it is nothing but a part of wages and rightly described by subsection (2) of section 10-A of the Ordinance as "in the form of additional wages".
10. It is contended further that settlement is not in force after the expiry of the stipulated one year, and for that reason any such payment made to the (1) PLD 1977 SC 177 workers is not a payment under a contract. Section 2(xxiv) of the Industrial Relations Ordinance (XXIII of 1969) defines the word "settlement" to mean a settlement arrived at in the course of conciliation proceedings, and includes an agreement between an employer and his workmen arrived at otherwise than in the course of any conciliation proceeding, where such agreement is in writing, has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to the Provincial Government, the conciliator and such other person as may be prescribed.
The agreement is stated to indicate no definite period during which it would remain operative.
According to section 40 of the Industrial Relations Ordinance a settlement shall become effective, if a date is agreed upon by the parties to the dispute to which it relates, on such date; and if a date is not so agreed upon, on the date on which the memorandum of the settlement is signed by the parties. It is further provided that a settlement shall be binding for such period as is agreed upon by the parties, and if no such period is agreed upon, for a period of one year from the date on which the memorandum of settlement is signed by the parties to the dispute and shall continue to be binding on the parties after the expiry of the aforesaid period until the expiry of two months from the date on which either party informs the other party in writing of its intention no longer to be bound by the settlement.
11. It is not disputed that no period is specified in the document during which it shall remain binding on the parties, that the appellant-Company is regularly paying the attendance allowance to its workers even after the expiry of the implied one year, and that the contract is so far not withdrawn by an information in writing. A payment made during the implied period and even afterwards, till it is withdrawn in writing as provided by section 4 of the said Ordinance, is a payment under the settlement in the interest of service and for that reason it shall be deemed to be a payment of a part of wages, and contribution is payable on it. It may be mentioned here that the position of a settlement for a specified period is not different from the one where no period is agreed upon. A payment not only made during the period specified in the settlement is a payment under a contract, but that made after the expiry of the settlement is also a payment as if made under the contract of settlement. It is so because the "settlement" does not mean a settlement arrived at in the course of conciliation proceeding only, but also includes an agreement between an employer and workman arrived at otherwise than in the course of any conciliation. Such an agreement, it may be pointed out here, may be expressed or implied. In the instant case, if the settlement is taken to be arrived at for a specified period, even then it can be kept alive by an understanding, expressed or implied, and in that case it remains binding until withdrawn by an information in writing. Since the appellant-Company continues paying the allowance even after the specified period has lapsed, the payment shall, therefore, be deemed to be under the settlement, for, the contract has impliedly been extended by mutual conduct of the parties and by the active consent of the appellant-Company. Such a payment, which is evidently made under the implied contract, cannot be said to be ex gratia or voluntary in nature; and once it is made to the workers, contribution becomes payable.
12. The words "payable" and "paid" used in the definition of "wages" must be construed according to their plain tenor. It is held in Bawani Voilin Textile Mills Ltd. v. The Employees' Social Security Institution (1) that (1) Law Notes 1969 Kar. 162 the word "payable" appears to refer to that remuneration which, as a matter of legal obligation, an employer must pay to his worker, while the word "paid" would additionally include all payments made to a worker for the rendition of service to the employer. In this view, the allowance, which the petitioners paid to their workers, would be covered by the Ordinance and no exception could be taken to the impugned order. It was held that the Legislature was conscious precisely of such a situation and desired that all "remuneration" not only "payable" but also "paid" to a worker would be subject-matter of contribution. Since the attendance allowance, particularly in the instant case, relates to the efficient and regular work of the employees it is nothing but a part of their wages on which the appellant-Company is bound to pay contribution. The learned Social Security Court was, therefore, justified in holding that attendance allowance paid to the workers was a part of wages and the appellant-Company was bound to pay contribution on it.
13. For the aforementioned reasons there is no force in the appeal which is dismissed with no order as to costs.