1984 PLP 1561 (PLC)

16. Annual profit bonus.‑(a) In the previous years company has been paying bonus out of its profits to all permanent workmen in addition to their normal salary. Quantum of the bonus inclusive of statutory bonus as provided under Standing Order 10‑C(1) to (4) of Standing Orders Ordinance, 1968, can, however, be determined realistically only after the finalization of the' annual audit. (b) However, in respect of the wishes of the workmen the company agrees to pay a bonus equivalent to 2 months basic salary on Eid‑ul‑Fitr and one month basic salary on Eid‑ul‑Azha to eligible permanent workmen. (c) Amount of bonus paid under (b) above would be deducted from the amount of total profit bonus that may be declared by the company on finalization of the annual audit.

4. In the Urdu version which was annexed to the Union's applica tion under section 34 of the Industrial Relations Ordinance, 1969 words "(7)" appear in clause 16(b) but the same do not appear in the English version above reproduced. However, this is not material to the decision of the case. Parties signed three later settlements every two years on 25th April, 1978, 25th June, 1980 and 5th July, 1982. In each of last three settlements there was no clause for payment of bonus to the workers. However, each of these three settlements contain an identical clause that all existing terms and conditions of service, facilities and amenities, shall continue to remain in force save to the extent they are modified, changed or altered by the agreement.

5. The case of the Union is that the appellant has been paying the three months bonus as agreed in the settlement, dated 19th March, 1976 at the uniform rate in each subsequent year from 1975/76 to 1980/81 at the time of two Eids, in spite of the facts that in three of these years, viz. 1976/77, 1977/78 and 1980/81 the appellant/company had suffered losses. Therefore Union's case is that the entitlement to bonus equal to three months' wages, became a part of the terms and conditions of service. But the appellant refused to pay the bonus which became due on Eid‑ul -Fitr in July, 1982 on the ground that the workers were entitled to bonus only if the Company had earned profits, and that as the Company had incurred losses for the year 1981/82, no bonus was due to them. The case of the appellant is that the settlement, dated 19th March, 1976 provided for payment of only profit bonus to the workers and that clauses (a), (b) and (c) if read together and properly interpreted, meant that in the event of earning profits, the statutory bonus under Standing order 10‑C (I) to (4) would become payable to the workers, the quantum of which would be determined realistically only after the finalisation of audit. That, however, in deference to the wishes of the workmen, the appellant agreed to pay bonus of two months' basic salary on Eid‑ul -Fitr and of one month's basic salary on Eid‑ul‑Azha to eligible workmen, but the amount of the bonus so paid would be deducted from the total profit bonus that may be declared by the appellant after the finalisation of annual audit. The appellant, also pleaded that bonus paid' to the workers during the year in which the Company incurred losses, namely 1976/77, 1977/78 and 1980/81 were paid only ex gratia in order to maintain industrial peace. It was further contended that the appellant Company is a taken over industry and a unit of Automobile Corporation of Pakistan Limited, and, in matters of policy, is run under the authority of the Federal Government, Ministry of Production. That it received an office Memorendum from the Finance Division, Government of Pakistan, dated 29th December, 1980 alongwith copy of the President's effective, dated 23rd December, 1978 containing guidelines on bonus policy to be implemented by State Enterprises, which provided that the Bonus should be entirely dependent on the profits of the Company. The following the said directive, no bonus becomes payable as losses have been incurred by the company for the year 1981/82.

6. The learned Member recorded evidence of Hanif Baluch, General Secretary on behalf of the Union and S. Anwar Hussain on behalf of the Appellant‑Company. By the impugned order, dated 17th August, 1983 to a learned Senior Member held that the agreement to pay bonus at the agreed rate of three months on the two Eids as mentioned in clause 16 of the settlement, dated 19th March, 1976 had become part of the terms and conditions of service of the workmen throughout their employment and was also expressly stated in each of the later settlements including the latest settlement, dated 5th July, 1982. Accordingly, he allowed the application of the Union, and directed the appellant to pay the said bonus under the last settlement.

7. We have heard Mr. Samiullah Khan for the appellant and Mr. Ali Amjad Advocate for the respondent‑Union.

8. The short question in this appeal, is whether the bonus agreed under clause 16 of the settlement, dated 19th March, 1976 by virtue of consistent practice and later settlements and other circumstances of the case. had become an express term and condition of service of the workmen.

9. The facts show that bonus was disbursed during each of the years 1975/76 to 1980/81 at the time of Eids, even before the accounts of the Company had been audited for the Account period ending 30th Tune, of the previous year, which normally took more than six months audit. Thus, for example, the bonuses were paid at time of Eid‑ul- Fitr on 10th August, 1977, even before accounts for the year 1976/77 riding 30th June, 1977 were audited which later on showed that the Company had incurred losses for that year, the Eid bonuses were dis bursed on 15th August, 1978, although it was very much in the a knowledge of the Company that it had incurred losses during the previous year ending 30th June, 1977. This clearly shows that the bonuses were, not profit bonuses and were paid in spite of losses. Even in the last at, in which losses were incurred namely the year 1980‑81 the Eid bonuses were disbursed to workers on 27th July, 1981. However, in Impliance with the Finance Division directions contained in the bonus policy, dated 29th December, 1980, prohibiting payment of bonus except on profits, the Company treated the bonus as "ex gratia bonus. There is no evidence whatsoever that bonuses paid to workers during years of losses were ever recorded or sought to be adjusted. Nor is there any evidence of waiver by the appellant‑Company.

10. Another important circumstances is that in none of the later settlement signed after the settlement of 1976, is there any mention of bonus, yet the appellant‑Company nevertheless paid bonus at the agreed rate of three months in the subsequent years 177‑78, 1978‑79, 1979‑80 and 1980‑81 even though there was no agreement to pay the same under any of these three settlements. In fact, Annexure 'A', dated 6th August, 1980 to parawise comments of appellant shows that the bonuses for the year 1979‑80 were paid in advance "as per previous years practice" to staff workers against their entitlement on the request of the C. B. A. union. It is reasonable to infer that the union was satisfied with the three months bonuses agreed under the earlier settlement of 19th March, 1976 which the appellant‑Company was faithfully paying and, therefore, the Union did not press its demand for more bonuses.

11. Equally important circumstance is that although under clause 16 (c) the amount of bonus paid on the two Bids, were to "be deducted from the amount of total profit bonus that may be declared by the Com pany on the finalisation of annual audit" neither any profit bonus was C declared. at all, nor any recoveries made in the years in which the audit disclosed losses. Nor is there any evidence of waiver.

12. I am, therefore, in agreement with the view of the learned Senior Member that the bonus entitled under clause 16 of the settlement, dated 19th March, 1976 on the facts and circumstances of the case above discussed, had become a term and condition of the service of the work men by practice and became payable under the settlement, dated 5th July, 1982. In the circumstances, I find no force in this appeal. It is accordingly dismissed. A. E. Appeal dismissed.