Status of Minimum Wages in Pakistan

Minimum Wages in Pakistan according to the Minimum Wages for Unskilled Workers Ordinance, 1969 is applicable to every commercial or industrial establishment but excludes persons in service of Pakistan, defense services, ports, railways, telegraph, telephone, postal services, firefighting, electricity, gas, water supply and hospitals. The Coal Mines (Fixation of Rates of Wages) Ordinance 1960 is applicable to any coalmine and the provincial governments issue minimum wage notifications from time to time. The Provincial government can also consult the Mines Welfare Board in fixation of wages.

If some one is newspaper employee, his/her wages are determined under the Wage Board Award and wages are fixed by the Wage Board while taking into consideration the cost of living, the prevalent wage rates in comparable employment, circumstances relevant to the newspaper industry in different regions of the country as well any other reasons that the Boards considers appropriate and relevant.

7th Wage Board Award, which was supposed to be operative from October 25, 2001, could not start because the newspaper employers filed a write petition in the Sindh High Court against this award. As per judgment of the Honorable Court, and its direction the newspaper employers were asked to implement the 7th Wage Board Award for Newspaper Employees. However, these newspaper employers had moved appeal in the Supreme Court, not only against the Sindh High Court decision but had also challenged the constitutionality of Newspaper Employees (Condition of Service) Act 1973. The Supreme Court, in its decision dated 19th October 2011, has decided in the favor of newspaper employees and upheld the decision of Sindh High Court.

In case of government employee, their wages are determined by the recommendations of Pay and Pension Committee. This committee revises the pay scales of government employees from time to time. The last revisal in pay (according to the recommendations of Committee) was made in 2005. The Committee has submitted its recommendations to the Ministry of Finance for pay revisions of government employees in 2011. The Government has revised the pay scales for government employees, raising their salaries by a fraction of 60%. In the current budget (2012-13), wages for public sector employees have increased for another 20%.

Defining Wages, it include all types of remuneration in monetary terms and include house rent, dearness allowance, conveyance allowance, cost of living allowance and any other allowance but do not include value of house accommodation, traveling allowance, contribution to the pension or provident fund and gratuity.

Wages can be paid on daily, weekly, fortnightly or monthly basis. However, a wage period can't exceed a month. A factory, railway or industrial establishment employing less than 1,000 workers is liable to disburse pay to its employees before the expiry of seventh day from the last day of wage period. However, the establishment employing more than 1000 workers can delay the disbursement of pay up till the 10th day from the last day of wage period. The law also requires that wages are to be paid on a working day and in current coin or currency notes only. This also means that wage payments by organizations through cheque are not permitted under the law.

As specified by the Labor Policy 2010 and Federal Budget 2010-11, the minim wage rate was PKR 7,000. This was raised to PKR 8,000 on the eve of May Day 2012 in the federal capital territory and all provinces except Punjab where minimum wage is PKR 9,000. These new wages are applicable from July 01, 2012. Provincial Minimum Wage Boards usually present their revised minimum wage recommendations before completion of three years of earlier revision. In fixing minimum wages, the law also requires that principle of gender equality must be considered. So, if some one is a woman worker, her wage rates can't be lower than those of similar male workers.

According to the Cost of Living (Relief) Act, 1973 (COLA) is granted to every employee in the private sector whether he/she is working in a factory as defined under Factories Act, 1934; establishment or factories as defined under Standing Orders 1968; a road transport service, a mine or a newspaper establishment. Broadly speaking, it also includes road transport services, mining project and a newspaper establishment. Under this Act, every employee is entitled to a monthly allowance of PKR 100 per month, irrespective of the amount of his/her pay. This Act is not applicable to the Government employees whose COLA rates can be higher than the above. COLA is treated as part of the wages like other allowances but it has to be shown separately on the pay slip and cannot be merged in basic pay. This COLA is similar to the Dearness Allowance. In case some one is a government employee, he/she will be granted a dearness allowance.

According to the Payment of Wages Act, following deductions can be made from employee’s wages. If there are deductions from pay other than these heads, the victim needs to talk to the employer.

¨       Fines;

¨    Deductions for absence from duty; Law considers it a breach of contract when ten or more persons, through concerted action, absent themselves from office without due notice and reasonable cause. The law entitles the employer to make deductions up to eight days of wages when employees take such an action. However, the law exempts women and workers (under the age of 15 years) from such wage deduction for contract breaches.

¨    Deductions for damages to or loss of goods expressly entrusted to the employed person for custody, or for loss of money for which he is required to account, where such damage or loss is directly attributable to his neglect or default;

¨       Deductions for house accommodation supplied by the employer

¨  Deductions for such amenities and services supplied by the employer as the Provincial Government may by general or special order authorize;

¨       Deductions for recovery of advances or for adjustment of over payment of wages;

¨       Deductions of income tax payable by the employed person;

¨       Deductions required to be made by order of a court or other authority competent to make such order;

¨       Deductions for subscriptions to, and for repayment of advances from, any approved Provident Fund;

¨     Deductions for payment to co-operative societies approved by the Provincial Government or to a scheme of insurance maintained by the Pakistan Post Office;

¨       Deductions made with the written authorization of the employed person, in furtherance of any war saving scheme approved by the Provincial Government.

If someone is not being paid in time or the employer is deducting from his/her wages unlawfully or is not making contributions to the provident fund and gratuity; affected person can apply, either in person or through his/her union or through a legal practitioner to the government authority appointed under this Act, for address of the claims. If the authority finds the claims to be valid, it will order the employer to pay an amount not exceeding ten times the original amount that was deducted, delayed or not paid. If some employee and his/her other colleagues are not being paid in time or there are unlawful deductions from their wages, they can apply collectively through a single application.

According to Minimum Wages Ordinance, 1961 and the 1969 Ordinance, an employer who does not make the full payment of wages shall be punishable with either imprisonment for a term, which may extend to six months or with fine or both.

In case of any loss or damage committed from the employee’s end, fines can be imposed on the employee in respect of certain acts and omissions but these are to be specified and previously approved by the government. A notice of such acts has to be exhibited in the premises at some conspicuous place. Fines can be imposed for only that acts contained in the notice and a contravention of this provision would be unauthorized deduction that is a liable offence.