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Application No. KAR‑347 of 1981, heard on 13th August, 1981,
‑‑‑ S. 3 (5) (b) [as inserted vide Employees' Cost of Living (Relief) (Amendment) Ordinance (XXV of 1981)]‑Word "reached" in proviso (b)‑Merely qualifies agreement or settlement and. refers to those agreements and settlements which were actually reached between parties and excludes those which were still in process of negotia tions‑Qualifying or restrictive date (1st July, 1981) applicable only to settlement in force and not to date of execution thereof Settlement executed on 1st October, 1979 and operative for 2 years, i. e. up to 30th September, 1981‑Providing benefit of increment specifically stating that such benefit was given as a relief due to rise in cost of living and that it would be adjustable against any increase in wages, cyst of living or dearness allowance made thereafter by Government by way of announcement or legislation Scheme of annual increment otherwise not in vogue in the establishment ‑ Annual increments allowed under settlements in circumstances, held, expressly and directly relatable to increase in cost of living and not usual increment, hence adjustable under proviso (b)‑Amending Ordinance of 1981 ‑ Object To compel employers to pay their workers an additional cost of living allowance on account of increase in cost of living‑Also to entitle employers who had already granted relief to workers against increased cost of living to adjust new cost of living allowance against increase in wages or allowances already made by them expressly on account of increase in cost of living.
Allied Textile Mills Ltd., Karachi v. Workers' Union 1974 P L C 240 ref.
Plasticrafter Ltd. v. Workers' Union 1975 P L C 636: Hirjina & Co. (Pak.) Ltd., Karachi v. Mazdoor Union 1975 P L C 737; Employees Union v. Messrs Rackitts (Pak.) Ltd. 1975 P L C 717 and New Jubilee Insurance Company v. District Judge, Karachi 1981 P L C 466 ref.
Abdul Hadi Farred for Applicant.
Choudhry M. Maarif for Respondent.
Date of hearing: 13th August, 1981.
By this reference under sention 50, 1. R. O., the Gul Ahmed Textile Mills Ltd., applicants herein, have sought interpretation of paragraph 8, relating to annual increment, of the settlement, arrived at on 1st October, 1979, between the Company and the Collective Bargaining Agent in the said establishment, the respondents in the present proceeding. The said settlement is to remain in force for a period of 2 years, i.e. up to 30th September, 1981. The paragraph in question reads as follows :‑
"Demand No: 8--‑Annual Increment.‑Subject to the conditions mentioned below, the company has agreed to revise annual incre ment to all the permanent workmen whose annual increment will fall due on 1st June, 1980, as the annual increment for the year 1979 has already been given on 1stof June, 1979. This rate of annual increment will be applicable to workmen holding depart mental tickets :‑
(a) Those workers whose basic wages excluding Cost of Living Allowance are between Rs. 140 to Rs. 200 per month shall be given an increment of Rs. 15 per month.
(b) Those workers whose basic wages excluding Cost of Living Allowance are between Rs. 201 to Rs. 300 per month shall be given an increment of Rs. 18 per month.
(c) Those workers whose basic wages excluding Cost of Living Allowance are over Rs. 300 shall be given an increment of Rs. 20 per month.
(d) That the above increments shall be given to all such permanent workers who complete one year continuous service in their res pective positions after the date of this settlement and keeping in view their efficiency and good =conduct. Unskilled workers, however, unless promoted shall cease to receive increment when their basic wages excluding Cost of Living Allowance reach the maximum limit of Rs. 200 per month.
(e) The above increment has been agreed to provide financial relief to the workers due to rise in the cost of living. The management, therefore, reserves its right to adjust the increase here before agreed against any increase in wages/salaries/cost of living/dearness allowance hereinafter made by the Federal or the Provincial Government by way of announcement /legislation or otherwise."
2. The precise dispute or difference which has arisen between the parties in regard to the interpretation and implementation of the above provision in the settlement is that whereas according to the establishment the entire annual increment admissible to the workers under the aforesaid paragraph is adjustable against the Cost of Living Allowance of Rs. 40 payable to workmen under the Employees Cost of Living (Relief) (Amendment) Ordinance, 1981, promulgated by the President of Pakis tan on 28th June, 1981, hereinafter referred to as the Amending Ordi nance, the case of the workmen is that they are entitled to the annual increment, as provided in the settlement, in addition to the Cost of Liv ing Allowance admissible under the amending Ordinance, the language of the aforesaid paragraph in the settlement is clear enough and while providing for different scales of annual increment to workmen drawing different amounts of wages, it specifically recites, firstly, that the said increment has been agreed for the purposes of providing financial relief to the workers on account of the rise in the Cost of Living and secondly, that the management was entitled to adjust the said increase against any increase in wages/salary/cost of living/ dearness allowance wade by the Federal or the provincial Government, The annual increments granted under the settlement have thus to be considered in the light of the amending Ordinance, by which subsection (5) was added to section 3 of the Employees' Cost of Living (Relief) Act, 1973, hereinafter referred to as the Act. The substantive part of the newly‑added subsection (5) provides for the pay ment of an additional cost of living allowance, equal to Rs. 40 per month to every worker, but by the proviso a set‑off is provided. The proviso and the explanation thereunder read as follows :‑
"Provided that the said cost of living allowance shall be set off:‑---
(a) against the amount payable as a relief due to rise in the cost of living under an agreement or settlement reached, or an award given, under the Industrial Relations Ordinance, 1969 (XXIII of 1969), which has been announced and become effective on or after the first day of January, 1981, or which is announced and becomes effective within a period of one year of the commence ment of the Employees' Cost of Living (Relief) (Amendment) Ordinance, 1981, and
(b) against the amount payable under an agreement or settlement reached and in force on the first day of July, 1981, under which employees get increases at regular intervals on the basis of a rise in the cost of living;
Explanation.‑For the purposes of this subsection any increase in wages accruing by virtue of the usual annual increment or promo tion to higher grade, or an allowance not specifically given to pro vide relief due to a rise in the cost of living, shall not be deemed to be an increase intended to provide relief due to a rise in the cost of living.
3. Para. (a) of the proviso is not relevant for the purposes of the present proceedings since the settlement in question was admittedly execu ted prior to 1st January, 1981. As the settlement was admittedly to force on 1stJuly, 19'81, para. (b) of the proviso would be attracted. However, Mr. Choudhry Maarif, the learned representative for the respondent union, sought to argue that even this proviso is not applicable to paragraph 8 of the settlement, as according to him in order that this proviso should be applicable, the settlement should have been reached on 1st July, 1981. In other words, according to Mr. Choudhry Maarif, in order that the provisions of clause (b) of the proviso should be applicable to the settle ment not only it should have been in force on 1st July, 1981, but it should have also been reached, and he submitted that "reached" here means "executed" on 1st July, 1981. I regret that I see no force in his contention. In the first place, it is impossible to contemplate that the Legsla ture would be making a separate provision in respect of settlements which were reached on a particular date only. Secondly, clause (a) already covers settlements which were announced and became effective within one year of 1stJanuary, 1981. Thirdly, the qualifying or restrictive date in, clause (b) of the proviso is applicable only to the settlement being in force and not the date of its execution. Lastly, the word 'reach' merely qualifies the agreement or settlement and refers to those settlements and agreements which were actually reached between the parties and excludes those which were still in the process of negotiation.
4. Mr. Abdul Hadi Farred, the learned representative for the applicant‑Company, strongly, urged that as the settlement itself explicitly provides that the annual increments were being granted by reason of the increase in the cost of living, therefore, the additional Cost of Living Allowance payable under the amending Ordinance was to be adjusted against the annual increments admissible under the settlement. In support of his contention, the learned representative relied upon the decisions of this Tribunal in the cases of Allied Textile Mills Ltd., Karachi v. Workers Union (1974 P L C 240), Plasticrafter, Ltd. v. Workers' Union (1975 P L C 636), Hirjina and Co. (Pak.) Ltd., Karachi v. Mazdoor Union (1975 P L C 737), Employees' Union v. Messrs Rackitts (Pak.) Ltd. (1975 P L C 717), an unreported decision of this Tribunal in the case of New Jubilee Employees Union v. New Jubilee Insurance Co., decided on 27th November, 1980, and a decision of a Division Bench of the Karachi High Court in the case of New Jubilee Insurance Company v. District Judge, Karachi. It may, however, be pointed out that all these decisions, except the decision of this Tribunal in the case of New Jubilee Insurance Company Employees Union, are in respect of the provisions of section 8 of the Act. However, the proviso and the explanation to the said section are similarly worded as the proviso and the explanation in the amending Ordinance. The decision in the case of the Allied Textile Mills is important for though the settlement arrived at between the parties did not explicitly state that the increase in the wages of the workers was being made on account of the increase in the cost of living but the Tribu nal took the view that as the increases in the wages were of substantial amounts in certain cases amounting to over 50% of the basic wages, the increase were due to the increase in the cost of living. A similar question arose in the case of the New Jubilee Insurance Co.'s case before the High Court. The issue raised was whether the Cost of Living Allowance pay able to workmen under section 8 of the Act, could be adjusted against the increase of 8% in the wages of the workmen provided under the settle ment reached between the management and the workmen, though there was no specific provision in the settlement that the increase in wages was on account of increase in the cost of living. In view of absence of any ref erence in the settlement that the increase in wages was being made due to the increase in the cost of living and by reasons of the provisions con tained in the explanation to section 8 of the Act, the wording whereof, as stated earlier is similar to the explanation in subsection (1981 P L C 466) of section 3 of the Act, the High Court remanded the case to the District Judge for further consideration with the following observations:‑
"We are of the considered view that the explanation to section 8 does not provide a form to express the nature and purpose of payment in a settlement or a document. It merely clarifies that if the employer wants to adjust any allowance, then it should be provided relief due to rise in cost of living. In such a situation if there is any ambiguity the benefits will be given to the workers and the employer will not be entitled to the benefits of adjustment. If the purpose of granting such increase is not clear from the agreement itself then the Court is empowered to look into the facts and circumstances and also to consider the evidence subject to the rules of evidence to determine the intention of the parties, whether the payment was intended to be made to provide relief due to rise in the cost of living."
5. In the instant case, however, as already pointed out, it is expressly stated in the settlement that the increments were being allowed by reason of the increase in the Cost of Living Allowance. Although the settlement speaks of annual increment, it appears that there is no practice in the applicant establishment of normal annual increments of the nature covered by the explanation to subsection (5) of section 4 of the Act, and the scheme of annual increments was introduced in the company, through settlement, to compensate the workman on account of the increase in the cost of living. This inference finds support from the earlier settlement arrived at between the parties on 25th August, 1977, wherein also annual increments to workmen have been granted solely by reason of‑ increase in the cost of living. Furthermore, since these settlements are for a limited period only, it is clear that the payment of the annual increments would be admissible to workmen only during the currency of the settlement and, unless provision for such annual increment is made in the fresh settlements, no annual increments would accrue to the workmen. Mr. Ch. Maarif, the learned representative of the respondent‑Union frankly conceded that there was no practice in the appellant‑Company of payment of normal annual increments. As such, the annual increments covered by the settlement are expressly and directly relatable to the increase in the cost of living and cannot be considered as usual annual increments or increments on account of promotions.
6. The object of the amending Ordinance appears to be on the one hand to compel employers to pay to their workmen an additional cost of living allowance on account of increase in the cost of living and on the other hand to entitle those employers, who had already granted relief to their workmen against increase in the cost of living, to adjust the new cost of living allowance against the increase in the wages/allowance which had been made by them expressly on account of increase in the cost of living.
7. The upshot of the above discussion is that, in my opinion, the cost of living allowance payable under the amending Ordinance is adjust able against the increase admissible to workmen in respect of demand No. 8 in the settlement reached between the parties on 1st October, 1979.
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