Find a Lawyer

Miscellaneous Appeal No. 59 of 1982, decided on 2nd December, 1986

(a) West Pakistan Employees' Social Security ordinance (X of 1965)-

-- S. 2(30)-Word "wages", connotation of-Word "wages" as defined in S. 2(30) of Ordinance X of 1965, held, does not include payment for overtime.-[Words and phrases].

(b) West Pakistan Employees' Social Security Ordinance (X of 1965)--

-- S. 2(30)-Word "wages", interpretation of-Definition of word "wages" having been specifically given in Social Security Ordinance, 1965, same, held, was to be followed in letter and spirit in a case falling within ambit of Ordinance to the exclusion .of definition of "wages" given in any other law unless so expressly permitted under Ordinance X of 1965.-[Words and phrases].

(c) West Pakistan Employees' Social Security Ordinance (X of 1965)-

-- Ss. 20, 21, 22 & 80-West Pakistan Provincial Employees' Social Security (Employers' Returns and Records) Regulation, 1967, para. 8-Payment of contributions by employers-Social Security Institution empowered to check records of employer-Procedure for maintenance and inspection of employer's returns and records stated.

Chapter III of the West Pakistan Employees' Social Security Ordi nance, 1965 pertains to contributions and section 20 thereof provides for payment of contribution to the Institution by the employer. Section 21 provides that every employer shall keep such records and shall submit to the Institution such returns, at such time, in such form and containing such particulars relating to persons employed by him, as may be provided in the Regulations. Section 22 empowers officials of the Institution to check the record of the employer as referred in section 21. Subsection (3) of section 22 provides that if an employer fails to maintain records or to submit returns as required by regulations, the contribution shall be assessed on the basis of such evidence as the Institution may find satis factory for this purpose. Section 80 empowers the Governing Body to make regulations on the subjects specified therein and in subsection (2) at item No. (XIV) is mentioned the subject of records and returns to be submitted by the employers and the forms in which such returns are to be submitted relating to employees. On this subject Provincial Employees' Social Security (Employers' Returns and Records) Regulations, 1967 have been published in the Gazette of West Pakistan on 21st June, 1968. Paragraph 8 of these Regulations requires employer to submit pay roll or contribution schedule to the Institution and to retain a copy thereof for a period of at least 2 years after the date of payment of the wages and further provides that employer shall make them and any relevant docu ments relating to the payment of wages, available for examination by the official of the Institution. Paragraph 2(l)(c) provides that "Pay roll" means a form of pay roll or wage sheet approved by the Institution for the purpose of the payment of social security contributions. At item (d) "Contribution Schedule" is defined to mean a form obtainable from the Institution (Form C-1) for the purpose of payment of social security contributions where the pay roll or wage sheet in use by an employer has not been approved by the Institution or where the employer prefers to use the Contribution Schedule.

It appears that for the purpose of payment of social security contri butions, pay-roll or wage sheet are to be first approved by the Institution and if they are not approved then alternatively "Contribution Schedule" can be used, which is obtainable from the Institution in (Form C-1). Employer is allowed to used contribution schedule if he prefers to do so instead of pay-roll or wage sheet. It, therefore, follows that it is open to the employer to use pay roll or wage sheet, which are used in the normal course of business and if they are not approved by the Institution, then the employer can use contribution schedule form of which is prescribed as Form C-1.

(d) West Pakistan Employees' Social Security Ordinance (X of 1965)-

-- S. 2(30)-Factories Act (XXV of 1934), preamble-Object and scope of Ordinance--Payment of overtime to workers-Getting permission for overtime under Factories Act not a condition precedent.

Social Security Ordinance is promulgated to provide benefits to certain employees or their dependents in the event of sickness, maternity, employment injury or death, and for matters ancillary thereto. This Ordi nance exempts overtime from the payment of social security contribution for the reasons that it is not' part of wages. It is for the Establishment to maintain the record. The wage sheet produced was not objected to by the Institution, as such it was a valid document for all intents and purposes particularly when it had a separate sub-heading for overtime. Audit team inspected the record of the establishment repeatedly and sufficient proof was provided by the establishment in support of overtime, which should have been accepted in the ordinary course. Social Security Ordinance has nowhere empowered the Institution to disbelieve payment of overtime on the ground that permission was not obtained as required under the Factories Act. Factories Act, 1934 is quite self-sufficient to take care of any lapses made thereunder. It would be quite correct to say that getting permission for overtime under the Factories Act is not a condition precedent for grant of exemption under section 2(30) of the Ordinance X of 1965.

(e) West Pakistan Employees' Social Security Ordinance (X of 1965)-

-- Ss. 2(30) & 64-Appellate jurisdiction of High Court-Entitlement to claim exemption in respect of overtime by establishment being justified, order passed by Social Security Court granting such exemp tion was upheld by High Court in appellate jurisdiction.

S. A. Sarwana for Appellant.

Ismail Kassim for Respondent.

Dates of hearing : 21st, 22nd and 23rd October, 1986.

This is an appeal under section 64 of Social Security Ordinance, 1965, against order dated 26-8-1952 passed by Social Security Court No. 11, Karachi, whereby decision dated 13-6-1981 of the Commissioner Sind Employees' Social Security institution, Karachi, has been set aside.

Briefly stated the relevant facts are that appellant before me is Sind Employees' Social Security Institution (hereinafter to be referred as the Institution), a statutory body established under section 3 of the West Pakistan Employees' Social Security Ordinance, 1965 (hereinafter to be referred as the said Ordinance). Respondents are Prestige Fabrics Ltd. (hereinafter to be referred as the establishment). Under the provisions of the said Ordinance during scrutiny by the Audit Team it was found that the establishment was not making proper contribution to the institu tion on certain payments made to the workers as appearing in the books of account for the period from January 1979 to December 1979. Plea was taken by the establishment that no social security contribution was payable for the reason that for the period mentioned above overtime was paid to the workers. The other objection was taken that some payments were made to outside firms in connection with factory work but no social security contributions were made on those payments. Such notice of demand was sent on behalf of the Institution. A reply of objections was filed in which establishment explained their position. After exchange of further correspondence finally demand notice dated 10-1-198t was sent on behalf of the institution, wherein establishment was called upon to pay social security contributions amounting to Rs. 16,143.55.

Establishment filed a complaint under section 57 of the said Ordi nance as there was a dispute because on one hand institution pressed for payment of contributions and on the other hand establishment claimed exemption on the ground that payment of overtime was not included in the definition of wages. The Commissioner of the Institution vide his decision dated 13-6-1981 has held that the establishment has failed to prove that disputed payments related to overtime because of three reasons. Firstly, that the disputed amounts have been shown in the books of accounts under the heading of "Mills Wages Account". Secondly, the disputed amounts were not shown separately in the books of accounts under the heading of overtime and in fact no such register for that purpose was main tained. Thirdly, permission as required under the Factories Act for allowing overtime was not obtained from the Labour Department. For the reasons stated above, the Commissioner was of the view that the disputed payments were not in respect of overtime but were part of wages as such establishment was not entitled to exemption contemplated under section 2(30)(a) of the said Ordinance.

Against the decision of the Commissioner, having felt aggrieved establishment filed appeal before the Social Security Court under section 59 of the said Ordinance and after hearing counsel for both parties vide order dated 26-8-1982 appeal has been allowed and in consequence order passed by the Commissioner has been set aside. This time Institution feeling aggrieved has filed appeal in the High Court under section 64 of the said Ordinance, which permits filing of such appeal against the order of Social Security Court if it involves substantial question of law.

I have heard at length Mr. S. A. Sarwana counsel for appellant Institution and Mr. Ismail Qasim counsel for respondent establishment. Question of law involved is interpretation of the word "wages" as defined in section 2(30) and other relevant ,provisions of the said Ordinance. Section 2(30) of the said Ordinance is reproduced as under :-

(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,"

From reading of the definition as reproduced above, it becomes crystal clear that "wages" do not include payment for overtime. There is A absolutely no room for dispute or doubt because it is so specifically stated, is in very unambiguous terms as reproduced above. Mr. Sarwana has assailed the impugned order passed by the Social Security Court on the ground that therein reliance has been placed on the definition of "wages" as contemplated in the Payment of Wages Act. To that extent, he is right for, the reason that definition of "wages" is specifically given in the Social B Security Ordinance, which is to be followed in letter and sprit in this case to the exclusion of definition of "wages" given in any other law unless sol expressly permitted under the said Ordinance.