Aurangzaib v Medipak (Pvt) Ltd. and others (Appeal deciding whether Salesmen are covered by Compensation Laws)

Date of hearing: 14.09.2018
Court: Supreme Court of Pakistan
Name: Civil Petition No.2743 of 2017 (Aurangzaib v Medipak (Pvt) Ltd. and others)
Judges Present: Mr. Justice Mushir Alam
Mr. Justice Munib Akhtar

The facts of the case are as follows: The petitioner was employed by the respondent in 1997 as a sales representative. His job description, which was subject to change at the company’s discretion, stated that he would be required to promote the company and its products, increase sales and maintain close contact with healthcare professionals and organisations in his trade zone. He was required to report to the Area Sales Manager who could assign his additional tasks. He was dismissed in 2012 after which he was awarded Rs. 290,000/- by a court for his claim under the Payment of Wages Act 1936. Payment three times this amount was also awarded to him (by the presiding commissioner) based on the assertion that he was a ‘workman’ within the meaning of the 1968 ordinance. The company objected to both the amount awarded and the latter claim which was considered in the present case.

The company’s appeal was dismissed by the Labour Court following which it appealed to the High Court, where its appeal was accepted. The petitioner appealed this decision to the Supreme Court by claiming that the compensation deserved by him should have been 10 times (not three times) the amount awarded, which was the maximum permissible under s. 15. This was refuted by the Company as it stated that the 1936 Act only applied to those who came within its ambit, which excluded the petitioner, as he was not a workman within the meaning of the 1968 ordinance, which denied him standing in the present case.

The court in considering the petition divided its claim into three parts:
a. Whether the petitioner’s claim was maintainable under the 1936 Act?
b. Whether the petitioner was a “workman” within the meaning of the 1968 Ordinance?
c. If the answer to question (a) be in the affirmative but that to question (b) in the negative, would the petitioner nonetheless be entitled to the relief granted, and if so, on what basis?

Section 1, sub-sections 4 (applies the Act to person employed in a factory or by railway administration), 5 (allows provincial government to extend application of the Act to any class of persons employed by an industrial establishment) and 6 (limits the Act to wages of an average of three thousand rupees a month) of the 1936 Act were looked at. The court noted that ss. 4 referred to ‘persons employed’ not ‘workers’ or ‘workmen’, which had not been used anywhere in the whole statute. This subsection was also a testament to the fact that the Act had been conceived initially to apply to factories only and ss. 5 allowed for the expansion of this scope to include those employed in industrial establishments. Up till 2001 the Provincial Government used the powers conferred on it by ss. 5 very sparingly, limiting it to people employed in factories only. The scope of the Act was therefore turning essentially on what was meant by a ‘factory’ with regards to Factories Act, 1934, s. 2(j).

The applicable law was heavily amended by the Labour Laws (Amendment) Ordinance 2001 by omitting ss. 5 and 6 and expanding the scope of ss. 4. Since this sub-section was in effect since 2001, the court held it to apply to the present case. This merely required that the claimant show that he was a ‘person employed’ in either a ‘factory’ or ‘industrial/commercial establishment’ as it removed the requirement to show that the claimant was a ‘workman’ under a specific legislation. The company had, in its submissions, accepted that the petitioner was a person employed by it, within the meaning of ss. 4 of the 1936 Act and that it was an ‘industrial establishment’ as per s. 2(ii). This completed both requirements for the petitioner’s claim to be viable under the 1936 Act.

Answering the first question, the court turned to the second to see whether the petitioner was a ‘workman’ within the meaning of the 1968 Ordinance, s 2(ii which states: “‘workman’ means any person employed in any industrial or commercial establishment to do any skilled or unskilled, manual or electrical work for hire or reward”). According to the petitioner’s job description, he was employed as a salesman by the Company. The cases of Pakistan Tobacco Co. Ltd. v. Pakistan Tobacco Company Employees’ Union and others PLD 1961 SC 403, Chairman, Brooke Bond (Pakistan) Ltd. v. General Secretary, Union Karkunane Brooke Bond (Pakistan) Ltd. PLD 1969 Lahore 717 held that a salesman did not fit the definition of a workman as he did not invest manual labour into the construction of the company’s product or complete clerical work for it. But the case of Brooke Bond (Pakistan) Ltd. v. Conciliator and others PLD 1977 SC 237 held salesmen to be ‘workmen’ pursuant to section 2(xxviii) of the Industrial Relations Ordinance, 1969 (pg. 272). Breaking the draw between these cases was Syed Matloob Hassan v. Brooke Bond Pakistan Ltd. 1992 SCMR 227. This case involved consideration of both the 1968 Ordinance and the 1969 Ordinance, and the definitions of “workman” to be found respectively in the two statutes. The court here stated that if the claimant sought to enforce a right guaranteed by the provisions of the 1969 Ordinance, it must satisfy the definition of this legislation. If, however a workman sought to enforce a claim by another law, he must satisfy not only the definition of the 1969 Ordinance but also the other relevant legislation. Since this criterion was not fulfilled by the petitioner in the present appeal, the answer to the second question was in the negative.

This brought the court to the third question. Since the petitioner’s claim was maintainable under the 1936 Act, but he was not a workman within the meaning of the 1968 Ordinance, was he still entitled to the relief granted? Since the petitioner’s employment was based on a contractual agreement, the court sought to first see if he was entitled to relief under those contractual terms. For this, counsel for the company did not dispute that the petitioner would be entitled to the relief even though he was not a workman within the meaning of the 1968 Ordinance, which answered this question in the petitioner’s favour. The court then debated whether that portion of the claim came within the scope of “wages” as defined in s. 2(vi) of the 1936 Act? Up to the 18th amendment (i.e., when the 1936 Act lay in the federal domain) the definition of wages was restricted by exclusion clauses and one such clause (clause b) made contributions paid by the employer to any pension or provident fund to not be ‘wages’. Following the 18th amendment the 1936 Act repealed this clause and in 2015 when the petitioner filed his claim, both contributions to the provident fund, as made by him and his employer, came within the definition of wages which allowed relief to be granted pursuant to the 1936 Act. Therefore, the court answered question c in the affirmative as well and granted the petitioner’s appeal for compensation by his former employer.

The petitioner’s submission that he deserved compensative ten times to the amount as decided by the commissioner, was rejected as he did not challenge this decision itself. His submission was made in mere conjunction to his challenge to the High Court’s decision. Therefore, the court decided to uphold the commissioner’s decision regarding the quantum of the compensation.