This is a petition under section 50 of the Industrial Relations Ordinance, 1969, for the interpretation of Demand No. 3 on production bonus in the settlement dated 20-12-1974 arrived at between the parties. It was to last for a period of three and a half years, i.e. Up to 20-6-1978. The relevant clause of the settlement is as under :----- "Demand No. 3. Bonus.
It has been decided to grant the following bonuses :-------- I. Production Bonus.-(a) If production is 100 % of the rated capacity which is 90,000 tons----------- -1 month
(b) If the production is above 6 % of the rated capacity--------2 months
(c) If production is above 10 % of the rated capacity ---------3 months
(d) If production is above 12 % of the rated capacity----------4 months It has also been agreed that if there is shortfall in the production and does not reach to the target of the rated capacity the Management will recommend, together with full justification, the grant of one month bonus to the Chairman, N. F. C. For his consideration, if the causes for the shortfall are beyond the control- of the workers.
II. Profit Bonus as per clause 10-C of the Standing Orders 1 month III. Ex gratia Bonus for maintaining good behaviour, discipline and peace I mouth It has further been agreed that :-----
(a) Production Bonus and Bonus mentioned at Item III above will be paid in the month of July every year.
(b) Profit Bonus will be paid in the month of August every year.
(c) Gas Allowance/Rick Allowance will be added in pay for purpose of payment of bonus.
2. The learned counsel for the petitioner contended that the afore--mentioned bonus should include Rs. 110 Cost of Living Allowance. In other words, if one month's pay is being paid as bonus, it should include Rs. 110 Cost of Living Allowance. If two months' pay is being paid as bonus; it should also include double the amount of Rs.
110. If three months' pay is being paid as bonus, it should include three times the Cost of Living Allowance. If four months' pay is being paid as bonus then it should also include four times the Cost of Living Allowance. The learned counsel for the petitioner also contended that the word "wages" only occurs once in the Industrial Relations Ordinance, 1969 as is given in section 2 (viii) (b), where it is laid down that a person employed in a supervisory capacity drawing wages exceeding Rs. 800 per mensem, is not a workman. Therefore, according to him, in view of the proviso to section 7 of the Employees' Cost of Living (Relief) Act, 1973, the wages mentioned therein would not include Cost of Living Allowance.
3. The learned counsel for the respondent, on the other hand, resisted the petition and contended that the Cost of Living Allowance could not be included in the wages.
4. In order to appreciate the contentions of the parties, it will be convenient to reproduce sections 2
(e) and 7 of the Employees' Cost of Living (Relief) Act, 1973. Section 2 (e) of the Act reads as under :- ---- " `Wages' means remuneration for services other than cost of living allowance, payable in cash to an employee without taking account of deduction for any purpose, under a contract of service or apprenticeship, written, oral, expressed 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."
Section 7 of the said Act reads as under :---- Cost of Living Allowance not to form part 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 purpose of any other law, including the purpose of contribution to provident fund, gratuity bonus, Social Security Scheme and calculating wages for overtime work.
5. So far the contention of the learned counsel for the respondent had force, but sections 2 (e) and 7 of the said Act were amended by the Employees Cost of Living (Relief) (Amendment) Act, 1977 (XXVI of 1977), which was gazetted on 25th May, 1977. Section 2 (e) after the amendment reads as under :----- "Wages" means remuneration for services payable in cash to an employee without taking account of deduction for any purpose, under a contract of service or apprenticeship, written, oral, expressed 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 made 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.
Section 7 now reads as under :----- Cost of Living Allowance to form part of wages.-Notwithstanding anything contained in this Act or any other law for the time being in force, the cost of living allowance shall form part of wages of a worker for the purpose of any other law including the purpose of contribution to provident fund, gratuity, bonus, social security scheme and calculat--ing wages for overtime work.
Proviso to the above section reads as under :- Provided that, for the purposes of the Workmen's Compensation Act, 1923 (VIII of 1923), except section 4 thereof, the Payment of Wages Act, 1936 (IV of 1936), the Companies Profits (Workers'
Participation) Act, 1968 (XII of 1968), or the Industrial Relations Ordinance, 1969 (XXIII of 1969), the cost of living allowance shall not form part of the wages of a worker.
6. From the above it is clear that prior to the amendment, Coat of Living Allowance was not to form part of wages, but after the amendment it is to form part of wages. Now the point for determination is as to what is the effect of the proviso to section 7 of the Act.
7. Under the law there are two kinds of bonuses, firstly profit bonus under Standing Order 10-C, which is fixed by law and, secondly negotiable bonus, which may be payable under a settlement arrived at between the parties under the Industrial Relations Ordinance, 1969. I am fortified in this view by the judgment in the case Pakistan Tobacco Company Limited Karachi v. Pak Cigarette Labour Union and another (PLD 1977 Kar. 879). From the perusal of section 7 of the Act, it is clear that cost of living allowance has been made part of wages only for the purposes of calculating statutory benefits, i.e. Benefits, which are conferred by law. This is so because of the words "for the purposes of any other law" used in section 7 of the Act. The bonus paid under the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 is a statutory bonus and the wages for this purpose may include the Cost of Living Allowance, provided no part transaction or vested rights and obligations are impaired because the Cost of Living (Relief)
(Amendment) Act, 1977 is only perspective and not retros--pective. The bonus paid under a settlement is, however, negotiable as provided under section 26 of Industrial Relations Ordinance, 1969. The settlement in question was arrived at as a result of negotiations` under section 26 of the Ordinance. The proviso to section 7 of the B Employees Cost of Living (Relief) (Amendment) Act, 1977 makes it clear that for the purpose of the Industrial Relations Ordinance, 1969 the cost of living allowance was not to form part of wages. This proviso is an important factor to be taken into consideration because the object and policy of the law has always been not to fix any conditions or criteria for the grant of a benefit which is subject to the process of Collective bargaining. It is left to the parties to decide the issues in the manner they think fit. Such criteria and conditions are fixed only in the case of statutory benefits. This is also clear from the definition of Industrial Dispute as given in section 2 (xiii) of Industrial Relations Ordinance, 1969. It reads as under:------ " `Industrial dispute' means any dispute or difference between employers and employers or between employers and workmen or between workmen and workmen, which is concerned with the employment or non-employ--ment or the terms of employment or the conditions of work of any person ; and is not in respect of the enforcement of any right guaranteed or secured to him by or under any law, other than this Ordinance, or any award or settlement for the time being in force."
8. When a matter is negotiable between the parties, no fixed criteria and conditions like statutory benefits can be imposed. Statutory benefits can only the imposed in respect of the enforcement of any right guaranteed or secured by or under any law. For example in the case of statutory bonus payable under Standing Order 10-C of West Pakistan Industrial and Commer--cial Employment (Standing Orders) Ordinance, 1968, the first condition is that it is to be paid only when there is profit, second is that it will be at a maximum of one month's wages if the profit is equal to or more than the aggregate of one month's wages of the workers employed, third is that it shall be paid to all the workers, who have been in employment for not less than ninety days in the year concerned. But there is no such criteria or conditions for the bonus paid under a settlement in consequence of an industrial dispute. In most of the cases the bonuses are paid under settlements even when there is no profit. There is also no minimum or maximum limits of such bonuses as compared with statutory bonus. There is nothing in law with regard to the length of service on which the bonuses agreed upon under the settlement are to be paid. All these matters are left to the parties to settle through the process of collective bargaining. It is for the parties to decide as to what should be the quantum of bonus and what the word should mean and include for the purpose. This being the case, the only appropriate interpretation that can be placed on the word "bonus" used in section 7 of the Employees' Cost of Living (Relief) Act, 1973 would be that it has reference to statutory bonuses only. In other words, it would be obligatory to treat the cost of living allowance as part of the wages for the purpose of statutory bonus only. In the case of bonuses agreed upon under a settlement, it will be for the parties to decide the matter during the process of collective bargaining on the terms agreed upon by them. According to the settlement in question, there was no agreement that the bonus would also include the cost of living allowance. If the parties wanted to include the cost of living allowance, then it would have stated so.
9. Moreover, it is apparent from the proviso to section 7 of the Employees' Cost of Living (Relief)
(Amendment) Act, 1977, that the cost of living allowance is not to be made part of the wages for the purpose of the whole of the Industrial Relations Ordinance, 1969. The settlement was arrived at under the Industrial Relations Ordinance, 1969 and has sanctity and is enforceable only under the Industrial Relations Ordinance, 1969. It is well settled that the proviso cuts down the meaning and scope of the preceding section. I am fortified in this view by the judgments in the cases Yousaf Ali Khan v. Muhammad Javed Iqbal Cheema (PLD 1975 Lah. 1339) and Rashid Rayon Mills v. Amin Yousaf Nizami (PLD 1975 Kar. 96).
10. Further the proviso to section 7 clearly shows that where the Legislature wanted to exempt any particular section of the enactments from the operation of the proviso as in the case of Workmen's Compensation Act, it was specifically so stated in the proviso. In the Workmen's Compensation Act the cost of living allowance has been made part of wages in so far as the operation of section 4 of the Act is concerned, whereas the proviso does not apply to the rest of the Act. But there is no such exemption in the case of industrial Relations Ordinance, 1969 or Payment of Wages Act.
11. In view of the above, I accept the contention of the learned counsel for the respondent and hold that the cost of living allowance could not be included in the wages which were paid as bonus in view of the settlement.
12. The petition is disposed of accordingly.