1984 PLP 553 (PLC)

(iv) any sum paid as bonus, house rent, conveyance allowance, travelling allowance or any other allowance. Section 7 of the said Act reads as under :‑ Cost of Living Allowance not, to form part of wages.‑Notwithstand ing anything contained in this Act or any other law for the time being in force the cost of living allowance shall not form part of wages of a worker for the purpose of any other law, including the purpose of contribution to provident fund, gratuity, bonus, social security scheme and calculating wages for overtime work."

4. So far the contention of the learned counsel for the workers had force, but sections 2(c) and 7 of the said Act were amended by the Em ployees Cost of Living (Relief) (Amendment) Act 1977 (XXVI of 1977), which was gazetted on 25th May, 1977. Section 2(c) after the amendment reads as under : "Wages means remuneration for service payable in cash to an em ployee without taking account of deduction for any purpose under a contract of service or apprenticeship, written, oral, expressed or implied and includes any dearness allowance or other addition in respect of the Cost of Living payable or paid for the period preced ing the first day of August, 1973, and any payment made by the employer respect of any period of authorised leave, but does not include: (i) any payment for over time ; or (ii) any sum paid to an employee to defray special expenses entailed by the nature of his employment ; or (iii) any gratuity payable on discharge ; or (iv) any sum paid as bonus, house rent, conveyance allowance, travelling allowance or any other allowance. Section 7 now reads as under :‑ Cost of Living Allowance to form part of wages.‑Notwithstanding anything contained in this Act or any other law for the time being in force, the cost of living allowance shall form part of wages of a worker for the purpose of any other law including the purpose of contribution to provident fund, gratuity, bonus, social security scheme and calculating wages for overtime work. Proviso to the above section reads as under : Provided that, for the purposes of the `Workmen's Compensation Act, 1923 (VIII of 1923), except section 4 thereof, the Payment of Wages Act, 1936 (IV of 1936), the Companies Profits (Workers' Participation) Act, 1968 (XXII of 1968), or the Industrial Relations Ordinance, 1969 (XXII of 1969) the cost of living allowance shall not form part of the wages of a worker.''

5. From the above, it is clear that prior to the amendment, cost of living allowance was not to form part of wages, but after the amendment, is to form part of wages. Now, the point for determination would be as to what is the effect of the proviso to section 7 of the Act.

6. On the admitted facts of the case of the parties, the bonus was being paid to the workers as a practice, usage and custom, and was not statutory bonus. Under the law, there are two kinds of bonuses ; firstly, profit bonus under Standing Order 10‑C, which is fixed by law and secondly, negotiable bonus which may be payable in accordance with the terms of employment or usage or settlement or an award of a Labour Court estab lished under the Industrial Relations Ordinance, 1969. I am fortified in this view by a simple reference to Standing Order 10‑C (1) and (4) of the West Pakistan Standing Orders Ordinance, 1968. It has been very clearly provided therein that profit bonus shall be claimed by the workman in addition to the wages payable to him under clause (1) of the Standing Order 10‑C, whereas the rest of the bonuses shall be payable to the workmen as a result of negotiation in accordance with the terms of employment or any usage or settlement or as a result of an award of a Labour Court in accordance with the provisions of the Industrial Relations Ordi nance, 1969.

7. The plain reading of section 7 and the proviso to it, of which the Payment of Wages Authority as well as the learned Labour Court have lost sight of, would make it clear that the bonus paid under the West Pakistan, Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, is a statutory bonus and the wages for this purpose may include the cost of living allowance, provided no part transaction or vested rights or obligations are impaired because the Cost of Living (Relief) (Amendment) Act, 1977. is only prospective and not retrospective. The bonus paid under practice, usage or a settlement is, however, negotiable as provided in the Industrial Relations Ordinance, 1969. It is left to the parties to decide the issues in the manner they think fit. The proviso to section 7 of the Employee's Cost of Living (Relief) (Amendment) Act, 1977, makes it clear that for the pur poses of the Industrial Relations Ordinance, 1969, the Cost of Living Allow ance was not to form part of wages. Further, the proviso to section 7 clearly shows that where the Legislature wanted to exempt any particular section of the enactments from the operation of the proviso as in the case of the Workmen's Compensation Act, it was specifically so stated in the proviso. In the Workmen's Compensation Act the cost of living allowance has been part of the wages it so far as the operation of section 4 of the Act is con cerned, whereas the proviso does not apply to the rest of the Act. But, there is no such exemption in the case of Industrial Relation Ordinance, 1969, or Payment of Wages Act. It would, therefore, be clear, that the Cost of Living Allowances could not be included in the wages which were paid as bonus as a practice, usage and custom. I am fortified in this view by the decision of Punjab Labour Tribunal in the case of Employees Union, Pakistan American Fertilizers Ltd, v. Management P. A. Fertilizers Ltd., Mianwali (1979 P L C 40). This decision was subsequently followed by this Tribunal in the case of General Manager, Larkana Sugar Mills v. Larkana Sugar Mills Employees' Union (1981 P L C 636).

8. In view of my above discussion, I accept the contention of the learn ed counsel of the establishment of Pakistan Fisheries Ltd. and bold that the Cost of Living Allowance could not be included in the wages which were paid as bonus as practice, wage and custom.

9. The result is that the order of the two Courts below awarding Rs. 21,450 as a deducted wages to the workers M. Saleem, Sikandar Khan and 63 others, is set aside and the Application No. KAR‑566/83 is allowed accordingly. Consequently, Application No. KAR‑588183 is dismissed. A.E. Order accordingly.