1988 PLP 540 (PLC)

S.A. Sarwana for Respondents. Dates of hearing: 7th and 8th September, 1987. This appeal under section 64 of the West Pakistan Employees' Social Security Ordinance, 1965, is filed by the appellants against the order of Social Security Court No.l Karachi dated 3rd November, 1981 passed in Appeal No.6/80. By the impugned order the learned Social Security Court held that the appellant were liable to pay contribution as well as the increase, on the shift and washing allowances paid by the appellant to his employees, as the same are part of the 'wages'. Mr. Ali Amjad, the learned counsel for the appellants has raised the following two contentions in this appeal:‑ (i) That the washing allowance and shift allowance paid by the appellant to their employees are not part of their wages as these charges were paid to them in the nature of payments necessary to meet special expenses entailed by the nature of their emloyment and as such the appellant was not liable to pay any contribution on these amount to the respondent; and (ii) that the demand by the Institution of the increase on the contribution assessed under Section 22 was not permissible in law as such increase could only be demanded on the sums which were admittedly due and payable as contribution under Section 20 of the Ordinance but remained unpaid deliberately. The learned counsel for the respondent on the other hand supported the order of Social Security Court. After hearing the learned counsel for the parties I am of the view that the appeal must succeed in so far it relates to the demand of contribution on washing allowance paid by the appellant. 'Wages' are defined in clause (30) of section 2 of the Ordinance 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; or (b) any sum paid to the person employed to defray special expenses entailed by the nature of his employments or (c) any gratuity payable on discharge; or (d) any sum paid as bonus by the employer;" It is quite clear from the above definition of wages in the Ordinance that if a sum is paid by an employer to his employee in the nature of defraying special expenses entailed by the nature of the employment of such employee then the amount so paid will not qualify as "Wages" and as such no contribution will be payable under section 20 of the Ordinance on such payments. The appellant in support of their case examined one of its representatives Abdul Haleem before the Social Security Court. This witness in his evidence specifically stated that washing allowance is paid by the appellant to only those employees who are working on machines and who on account of nature of their duties are likely to get dirty. This witness further stated in cross‑examination that it is incorrect that the appellant were providing uniform to all the workers in the factory of appellant. He also stated that uniform is not provided even to these worker who work on hand machines and drill machines. No evidence was produce by the respondent to contradict the above statement of appellant's witness. From the above evidence produced by the appellant before the Social Security Court it is quite clear that 'washing allowance' is not paid generally to all the workman employed by the appellants but its payment is restricted only to a limited category of worker who are performing specific jobs namely working on machine and who get dirty on account of nature of their jobs. Washing allowance, therefore, is paid by the appellant not as part of the wages of the worker but to meet special expenses entailed by a limited class of the workers in the factory of appellant on account of special nature of their work. The payment of washing allowance is therefore, fully covered under section 2(30)(b) of the Ordinance and no contribution under section 20 of the Ordinance was payable on such payments. However, with regard to payment of shift allowance, the 'evidence of appellant's witness before the Social Security Court clearly shows that this amount was paid generally to all the workers of "C" shift who worked in the night shift. The payment of shift allowance was, therefore, rightly‑ held to be 'wages' as defined in the Ordinance and the institution rightly claimed contribution on such payments made by the appellant to its workers. The second contention of the learned counsel for the appellant is that 50$ increase on the amount of contribution demanded by the social security institution was not permissible under the law as these amounts of contribution were determined for the first time as a result of reassessment carried on by the institution under section 22(3) of the Ordinance. To support his contention the learned counsel relied on rules 5 and 6 of the Provincial Employees Social Security (Contribution) Rules, 1966 which provide that only in the event of non‑payment of contribution shown due in the contribution schedule filed under Rule 5 that an increase on such unpaid contribution could be demanded by the institution in accordance with Rule 6 ibid subject to the limitation imposed by Section 23(1) of the Ordinance. After hearing the learned counsel for the parties and going through section 23 of the Ordinance and Rules 5 and 6 of the Provincial Employees Social Security (Contribution) Rules 1966 I am of the view that the difference of contribution demanded by the Institution as a result of checking and scrutiny of the return filed by the appellant could not be treated as assessment or reassessment of the contribution payable under the Ordinance. It cannot be disputed that the liability of an employee to pay contribution in accordance with section 20 of the Ordinance to the Institution is a statutory liability which is not at all dependent on any action or demand by the Social Security institution in this regard. In the case of Kohinoor Chemical Ltd. v. Employees Social Security (P I, p 1977 S C 197) the nature of the liability of an employer to pay contribution under the Ordinance was considered at length and the relevant discussion appears at pages 208‑209 of the report which is reproduced here with respect: "A perusal of the rules and regulations issued by the Provincial Government under the Ordinance thus shows beyond doubt that the liability to pay contributions on all the secured workers of the, notified establishment rests on the employer, and his failure to pay can be visited with a penalty by way of an increase in the amount payable, or even by prosecution before a criminal Court. Such being the scheme of the law, it is clear that an employer would ordinarily be under a statutory duty to pay the arrears of the contributions, whether the same have arisen owing to failure to pay any amount due on the employees shown as secured workers in the requisite returns, or on account of the omission of the employer to show certain number of employees at all in such returns on the assumption that they were not covered by the notification or for any other reason. The liability having been incurred under the law, the arrears would keep on falling due in accordance with the prescribed rate of contributions on account of all the employees who would, on a proper construction of the law, be entitled to be treated as secured workers. The employer cannot benefit from his own default." In the light of the above discussion it is quite clear that 'mere' payment of amount of contribution shown by the employer in the contribution schedule filed by him under Rule 5 of the Social Security (Contribution) Rules 1966, is not enough to absolve him from the liability of payment of contribution which are payable under the Ordinance. If the employer, omitted to pay any part of contribution payable under the Ordinance on the ground that the same was not shown in the contribution schedule filed by him as he bona fidely believed that it was not so payable as a contribution, it could not absolve him from his statutory liability under the Ordinance to pay the contribution and such amount of contribution shall continue to accumulate, as arrears in accordance with the provisions of Ordinance and on such arrears the increase provided for in section 23 of the Ordinance could be legitimately demanded by the Institution. It is, therefore, quite clear that irrespective of any dispute which may be raised by any employer regarding payability of any sum as contribution under the Ordinance, if the same is found payable as contribution under the Ordinance, not only the original amount but if it is i i arrears, the increase thereon in accordance with Section 23 of the Ordinance could also be recovered by the Institution. I, therefore hold that the tribunal below rightly disallowed the claim of appellant, in this regard. The result of the above discussion is that the appeal partially succeeds to the extent indicated above but there will be no order as to costs. S.Q. /P‑44/ K Appeal partly accepted.