MEMORANDUM

To: Salman Ijaz

From: Raza Azz
Last updated: 26 August 2019

A. Issues/ Questions of Law:

1. Does Jehanzeb Qualify as a workman? If so, then is he a permanent workman or a temporary

workman?
2. On what grounds can his employment be terminated and what is the procedure that must be
followed?
3. What claims can Jehanzeb bring against the factory owner once his employment is
terminated?

B. Brief Answer:

1. As has been discussed below, Jehanzeb is most likely to be categorized as a workman and
that too permanent workman. Grounds for his termination include misconduct and the
procedure given in Standing Order 15. Lastly, he can bring claims with regards to
compensation of his injuries and the fact that the factory owner pays below the minimum rate
wages.

C. Summarized Facts:

1. The company owns, manages, and operates bicycle factories in the provinces of Punjab, Sindh
and KPK, employing approximately 500 employees across Pakistan. The factory in Punjab
alone has 100 employees, of which 80 work on the production line. Lately, our productivity
in the Punjab factory has taken a hit because of an employee named Jehanzeb.

2. Jehanzeb wroks on the production line as part of the assembly crew, but because of his rapport
with the other workers, he has quasi- managerial role, in the way that our line manager uses
him to convey his orders to all the workers along the production line. As per his employment
contract, his title is “Executive Managerial Foreman”. He’s been with the factory for the past
12 years, though we formally give a contract for only 8 months, upon termination of which
we wait 3-4 days and then offer him a new contract, so one could say that he has been
employed for several 8-month terms in the past 12 years. His salary has always been PKR
2000 less than the official minimum wage for unskilled labor for that particular year.
3. Jehanzeb seems to have socialist inclinations, and he seems to think that we don’t treat the
laborers at our factory well enough. He has, on several occasions, tried to unionize the
employees at our Punjab factory, but we have so far managed to thwart those attempts. He
also takes issue with the fact that we don’t pay our employees the minimum wage. We have
been told by several employees that he has orally encouraged them to work at a slower rate
than usual to make the production process noticeably slower so that management is put under
pressure to raise wages. Furthermore, he wants us to create a provident fund for factory
employees and pay for our health insurance. The change in Jehanzeb’s behavior occurred
almost 3 years ago when he injured himself on the job when a tile on the roof our factory came
loose and fell on his head. It also injured his hand and he lost three fingers. He wasn’t wearing
any protective gear. We didn’t pay for his hospitalization, and we penalized him for the days
of work he missed. He demanded compensation from us, saying he had sustained a
workplace injury for which we were responsible however we refused to submit to him.

D. Discussion

ISSUE 1: Does Jehanzeb qualify to be a workman? If so, then is he a permanent workman or a

temporary workman?

1. Section 2(i) of the Industrial & Commercial Employment (Standing Orders) Ordinance, 1968
(the “1968 Ordinance”) provides the definition of a workman. It states:

“Workman means any person employed in any industrial or establishment to do in any skilled or
unskilled, manual or clerical work for hire or reward.

2. Commentary provided within the “Labour Code of Pakistan1” states that only persons doing
skilled or unskilled, manual or clerical work are covered by the Ordinance. Those engaged in
supervisory, administrative and managerial capacity are excluded from its scope. In a
disputed case approach should be not from the angle whether the person concerned is a
supervisor, officer or manager or the emoluments he gets, but from the angle of examining
the actual work he performs, regardless of his designation and pay. The Supreme Court in
the case of General Manager, Hotel Intercontinental, Lahore and another vs. Bashir A. Malik and
another (PLD SC 103) laid down the test for determining whether an employee is a workman.
It stated:

“The test for determining the question whether an employee is a workman within the meaning of
various statutes in the field of labor legislations is settled. The consensus of judicial opinion seems to
be that it is the nature of the work done by the employee that would be essential and fundamental

1
Labour Code of Pakistan, Volume 2 of 2, Bureau of Labor Publications;
 consideration for determining the question and not his designation which is not conclusive. The
question to be examined is whether the manual or clerical work is incidental to the main work or a
substantial part of it, so that, the fact that the a person employed in a supervisory capacity does some
manual or clerical work as ancillary or incidental to such employment has held not to being him within
the ambit of the definition. The main features, the pith and substance must be manual or clerical before
the definition is attracted.”

3. In this context, it must be noted that since Jehanzeb was working in the assembly crew on the
production line, it is highly likely that regardless of what his position says in the contract
about him being an “Executive Managerial Foreman, he is going to be considered a workman.
The fact that he has good people skills and that he passes orders for the line manager is
incidental to his actual job that is manual and not clerical in nature.

4. In addition to this, the burden of proof is first on the employee to prove that he is a “worker”
or a “workman”. Once the employee has presented his evidence on the matter, it then
becomes the responsibility of the employer to challenge the submissions and further adduce
evidence to show that the person in question was not in fact a workman. On the given facts,
it must be noted that once Jehanzeb provides the court with enough information regarding
the particulars of his job either through documentary evidence and/or oral/written
testimonies from his co-workers, it will be quite hard for the factory owner to prove it
otherwise.

5. Although the given facts of the case do not provide us with details about Jehanzeb’s
appointment letter, however, if it can be shown that the said letter did not specifically state
that the service of the employee is to be governed by labor law, then the employer can deny
the provision of the same. In the case of Granulars (Pvt) ltd. Vs. Muhammad Afzal and others2 the
appointment letter nowhere stated that the services of the employee was to be governed by
the labor laws which was a necessary requirement in respect of an appointment letter issued
to a workman. Hence, the appointment letter’s terms and conditions took precedence and the
employee was held not to be a workman. Similarly, it must be noted that if an employee under
his contracts accepts benefits which are in addition to or in defiance of those provided under
labor law, then the person would not be considered to be a workman. In the abovementioned
case of Granular’s (Pvt) Ltd. Various kinds of leaves allowed to the employee in the
appointment letter were not in conformity with the various kind of leaves available to a
workman under section 8 of the 1968 Ordinance. Where the employee accepts the entitlement
of leaves as per the appointment letter, such factor would contribute to the circumstances of
the employee to not be a workman. In the current case as well, if the employer can bring out
the evidence relating to Jehanzeb accepting terms in his contracts that are not in compliance

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Sindh High Court (2002 PLC 1);
 with the labor laws of Pakistan, it can be shown that Jehanzeb was not a workman in the strict
terms of the 1968 Ordinance and hence cannot bring a case against the factory owner.

6. In light of the abovementioned arguments, unless the factory owner produces the Jehanzeb’s
appointment letter showing that the terms are different from those that labor law would
require, it is most likely that Jehanzeb is going to be considered as a workman.

7. The second part of this issue relates to the classification of Jehanzeb as a workman. As per the
nature of the facts in our case, Jehanzeb can either be a temporary workman or a permanent
one. The schedule to the 1968 Ordinance provides with the classification of the workman.
Section 1(b) and (e) lay down the definitions for a permanent and a temporary workman
respectively and both are reproduced below for reference.

1(b): A permanent workman is a workman who has been engaged on work of permanent
nature likely to last more than nine months and has satisfactorily completed a probationary
period of three months on the same or another occupation in the industrial or commercial
establishment, including breaks due to sickness, accident, leave, lock-out, strike (not being an
illegal lockout or strike) or involuntary closure of the establishment [and includes a badli who
has been employed for a continuous period of three months or for one hundred and eighty
three days during any period of twelve consecutive months].

1(e): A temporary workman is a workman who has been engaged for work which is of
essentially temporary nature likely to be finished within a period not exceeding nine months.

8. There are three determining factors which classify workman as a ‘temporary workman’: first,
and the most important, the he is hired to do a work essentially of a temporary nature with
some approximate completion date like in a specific project rather than open-ended work of
permanent nature; secondly, he is appointed against a specific short term project with a
completion date; thirdly, the duration of this specific project is likely to be completed in about
nine months hence length of service is closely tied to the completion date. All three of these
factors will be discussed separately followed by an analysis of Jehanzeb’s position so as to
best understand the position that the employer finds himself in.

9. M. Shafi and Parwez Shafi in their commentary on the 1968 ordinance argue that no
temporary worker should be employed on a permanent job that is going to last more than
nine months. In their opinion, a cost cutting practice has evolved whereby an employer would
hire a temporary workman and just a day or two before their nine months finish, they fire
them. Two or three days later, they hire the person back as a temporary workman again. The
courts have frowned on an extreme form of this practice. Successive hiring and firing of
temporary workers on permanent jobs after 89 days or one day short of nine months to
 technically bypass the law. This ‘beating of the intention of the law’ is also a violation and
could result in prosecution of the employer. The courts in their recent judgments have
condemned this practice this practice whose purpose is to save cost at the expense of worker.

10. In the case of General Tyre and Rubber Co. of Pakistan Ltd. vs. Sindh Labour Appellate Tribunal and
another (1992 PLC 1028) employees whose services were terminated, claimed to be a
permanent workman whereas the employer contended that they were temporary ones and
were never employed as permanent. Letter of appointment by employer indicated that
employees were employed to do work of temporary nature, not likely to last for more than
nine months. Employees on the other hand could not bring any substantial evidence on record
showing otherwise. In this regard, the court held that the mere fact that employees after their
termination were re-employed within two or three days, could not necessarily lead to an
inference that their employment was of permanent nature. In this context, it should be noted
that in case the employer brings forward evidence which proves that the nature of Jehanzeb’s
employment is temporary and not with regards to the time he was being employed for but
also the nature of the work he was doing, then only the courts will entertain the proposition
of Jehanzeb being a temporary employee.

11. The second requirement for an employee to be a temporary workman provides that the
appointment must be against specific project/work and not open ended. This pertains to the
fact that an employer cannot hire a temporary employee for a work that will generally be
continuing for over nine months. On the current facts as well, it is clear that the nature of
work that Jehanzeb is doing is not one that finishes within 9 months. Therefore, it is quite
likely that this condition will not be fulfilled.

12. The third condition for classifying a temporary workman pertains to the length of time that a
person is employed for. It must be noted that the courts have been very flexible with regards
to requirement of the task being less than nine months. In the case of Pakistan International
Airlines vs. Sind Labour Court No. 5 and others (PLD 1980 S.C. 323), the Supreme Court held
that the High Court’s view ignores the words “likely to be”, which precede the words
“finished within a period of nine months”. Redundancy is not to be attributed lightly to the
Legislature and the words “likely to be” were inserted because given the nature of human
beings “work” expected to be finished nine months might not be finished during that period
due to human error, miscalculation, negligence or any other cause. And the insertion of the
word “likely to be” make it clear that a workman cannot become a permanent workman, if
the work for which he was employed was expected to be finished within nine months, but in
fact was completed after the expiry of nine months. Once again, this case makes it clear that
time is of little essence in determination of whether a workman is permanent or temporary.
It is the nature of his job that will define his classification. Hence, it must be noted that in most
parts of the world, working as a part of the assembly crew in a production line at a bicycle
 factory is not categorized as a job that is completed within nine months. It is generally a job
that goes all year around. However, as mentioned above a lot depends upon the letter of
appointment or the terms and conditions of Jehanzeb’s contract and if evidence is adduced
which rebuts this presumption, he would be held to be a temporary workman. Until then, it
is highly likely that this condition will not be fulfilled and that Jehanzeb will be considered as
being a permanent employee.
13. In light of the abovementioned arguments, it is more likely than not that on the given set of
facts Jehanzeb will be categorized as a permanent employee. The requirements mentioned
above with regards to the categorization of a temporary workman are not fulfilled in the
current case. Hence, from here on, Jehanzeb will be referred to as a permanent workman and
the issues will be dealt accordingly.

ISSUE 2: On what grounds can Jehanzeb’s employment be terminated and what is the procedure
that must be followed?

14. Standing Order 12 of the 1968 Ordinance provides for guidelines with regards to termination
of employment. 12(1) states that “For terminating employment of a permanent workman, for any
reason other than misconduct one month’s notice shall be given either by the employer or the workman.
One month’s wages calculated on the basis of average wages earned by the workman during the last
three months shall be paid in lieu of notice”. In this context it becomes important to understand
that whether Jehanzeb’s actions amount to misconduct. Furthermore, 12(5) provides that “the
services of permanent or temporary workman shall not be terminated on the ground of misconduct
otherwise than in the manner prescribed in Standing Order 15”.

15. Standing Order 15 in clause 3 clearly provides what acts and omissions shall be treated as
misconduct. They include the following:

a) Wilful insubordination or disobedience, whether alone or in combination with others, to

any lawful and reasonable order of a superior;
b) Theft, fraud, or dishonesty in connection with the employer’s business or property;
c) Wilful damage to or loss of employer’s goods or property;
d) Taking or giving bribes or any illegal gratification;
e) Habitual absence without leave or absence without leave for more than ten days;
f) Habitual late attendance;
g) Habitual breach of any law applicable to the establishment;
h) Riotous or disorderly behavior during working hours at the establishment or any act
subversive of discipline;
i) Habitual negligence or neglect of work;
j) Frequent repetition of any act or omission referred to in clause (1);
k) Striking work or inciting others to strike work in contravention of the provisions of any
law, or rule having the force of law;
l) Go slow.

16. The two instances of misconduct that are attracted to the case at hand are mentioned in sub-
clause (a) and (i). Both of which will be discussed in light of the given facts so as to best
understand the position that Jehanzeb will find himself in.

17. With regards to the 15(3)(a), the word ‘wilful’ is defined in the Black’s Law Dictionary as act
done with stubborn purpose, but not with malice. It has to be noted that act done
intentionally, knowingly and purposely is distinct from one that is done carelessly,
thoughtlessly or inadvertently. On the given facts it is quite clear that not only did Jehanzeb
slow down his own work but went on to convince others to do the same. As a result
promoting an environment of disobedience within the factory. Moreover, since whatever he
did was done intentionally, therefore his acts do fall within the ambit of 15(3)(a).

18. As with 15(3)(i), the distinction between negligence and wilful negligence was elaborated by
the Supreme Court in the case of Saadat Pervez Sayan vs. Chief Secretary, Government of Punjab,
Lahore and 3 others (2003 PLC C.S. 1277). It held:

“There is a difference between ‘negligence’ and ‘wilful negligence’. Negligence is the failure to exercise
the degree of care demanded by circumstances and the want of care which the law prescribes under
particular circumstances existing at the time of the act or omission which is involved. Negligence is an
act omission to do something which a reasonable man, guided by those considerations which ordinarily
regulate human affairs, would do, or do something which a prudent and reasonable man would not do.

Wilful Negligence is a negligent act which is done intentionally and knowingly with some motive and
is deliberate but a wilful act may not necessarily have an evil purpose behind it.”

19. In this context, the fact that Jehanzeb neglected his work intentionally, his actions are most
likely to be labelled as misconduct providing the employer to terminate his employment
keeping the relevant procedure in mind.

20. Clause 4 and 5 of Standing Order 15 provide for the procedure regarding dismissing an
employee charged with misconduct. For reference they have been reproduced below.

(4): No order of dismissal shall be made unless the workman concerned is informed in writing of the
alleged misconduct [within one month of the date of such misconduct or of the date on which the alleged
misconduct comes to the notice of the employer] and is given an opportunity to explain the
circumstances alleged against him. The approval of the employer shall be required in every case of
dismissal and the employer shall institute independent inquiries before dealing with charges against a
workman.
 [Provided that the workman proceeded against may, if he so desires for his assistance in the enquiry,
nominate any workmen employed in that establishment and the employer shall allow the workman so
nominated to be present in the enquiry to assist the workman proceeded against and shall not deduct
his wages if the enquiry is held during his duty hours.]

(5): Where, for the purpose of conducting an enquiry into the alleged misconduct of a workman, the
employer considers it necessary, he may suspend the workman concerned for a period not exceeding
four days at a time 5 [so however, that the total period of such suspension shall not exceed four weeks
except the matter is pending before an Arbitrator, a Labour Court, Tribunal or Conciliator for the grant
of permission under section 47 of the Industrial Relations Ordinance, 1969 (XXIII of 1969). The order
of suspension shall be in writing and may take effect immediately on delivery to the workman. During
the period of suspension, the workman concerned shall be paid by the employer 3 [xxxxx] to the same
wages as he would have received if he had not been suspended.

21. In this context, it is advised that the employer decides to terminate Jehanzeb, he will have to
follow the procedure quoted above where he would have to inform him of his misconduct
and then give him a chance to explain himself. Moreover, to make the procedure fair and
impartial, he will have to ensure that the inquiry that is made is transparent so as to dispense
justice. During this time, the employer will have to pay Jehanzeb his wages whether he is
suspended or not.

ISSUE 3: What claims can Jehanzeb bring against the factory owner if his employment is
terminated?

22. In light of the given facts, there are two different claims that Jehanzeb can bring against the
employer: firstly, with regards to the cost he incurred when he injured himself provided that
the court finds Jehanzeb to be a permanent employee; and secondly, with regards to the
employer’s policy on the amount of wages he pays to the employees.

23. Standing Order 10-B provides for compulsory group insurance. It states:

(1) The employer shall have all the permanent workmen employed by him insured against 2 [natural
death and disability and] death and injury arising out of contingencies not covered by the
workman’s Compensation Act, 1923 or the [Provincial Employees Social Security Ordinance 1965
(Ordinance No. X of 1965).
(2) The employer shall in all cases be responsible for the payment of the amount of premia and for all
administrative arrangements whether carried out by himself or through an insurance company.
(3) The amount for which each workman shall be insured shall not be less than the amount of
compensation specified in Schedule IV to the Workmen's Compensation Act, 1923 (VIII of 1923)].
(4) Where the employer fails to have a permanent workman employed by him insured in the
manner laid down in clauses (1), (2) and (3) and such workman suffers death or injury
 arising out of contingencies mentioned in clause (1) the employer shall pay in the case of
death, to the heirs of such workman or in the case of injury, to the workman, such sum of
money as would have been payable by the insurance company had such workman been
insured.
(5) All claims of a workman or his heirs for recovery of money under clause (4) shall be settled in the
same manner as is provided for the determination and recovery of compensation under the
workmen's Compensation Act, 1923 (VIII of 1923).

Since the employer didn’t provide any compensation to Jehanzeb and hasn’t had any
insurance in general either, Jehanzeb can potentially bring a claim under this section.

24. Section 9 of the Minimum Wages Ordinance, 1961 (the “1961 Ordinance”) prohibits the
payment of wages at a rate below the minimum rate of wages. It has been clearly mentioned
in the facts of the case that the employer pays PKR 2000 less than minimum wage to his
employees, if Jehanzeb is let go, he can very well bring this information in light of the relevant
authorities and as per subsection 9 (3) of the 1961 Ordinance “Any employer who contravenes
the provisions of this section shall be punishable with imprisonment for a term which may extend to
six months or with fine which may extend to [twenty thousand] rupees or with both, and if the court
trying such contravention by order so directs, shall also pay to the worker concerned such sum as may
be specified in the order to represent the difference between the amount actually paid to such worker
and the amount which would have been paid to him had there been such contravention.”