September 1, 20050

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Date: 01-09-2005

Circular Number: C-107


IRO, 2002 was promulgated in October, 2002 replacing IRO, 1969 and containing several drafting errors/mistakes. There was much reaction from the workers/unions side demanding restoration of IRO, 1969.

In our Circular No.90 dated 04-11-2002 on it we made our detail comments on abolishing of the Labour Appellate Tribunal and providing for appeals to go to already over-burdened High Courts not taking lesson from the past mistake the details of which may be perused from it available on our above website, Proposals from various quarters were taken by the Federal Government to amend IRO, 2002 and taking also some of the points from there the proposed amendment Bill of the Act to be moved in the National Assembly as. The Industrial Relations (Amendment) Act, 2005 has corrected several drafting errors / mistakes, re-incorporated some provisions of IRO, 1969 and has made other changes which may be observed from our comments given below.

1. General Amendment – except in sections 32,44 and 80 the wards “High Court” wherever occurring have been substituted by the words “Labour Appellate Tribunal” in the Ordinance as the Tribunal has been re-introduced.
2. Section 1(4) Clauses (e) excluding medical institutions and (f) E.O.B.I have been omitted. After sub-section (4) a new sub-section (5) has been added as under:-

“(5) Notwithstanding anything contained in clause (g) of sub-section (4), a person employed as member of Watch and Ward, Security or Fire Service Staff shall be entitled to all financial benefits admissible to a worker of similar grade or category”.

Sub-Section (8) excludes application of IRO, 2002 to watch and ward, security or fire service staff who cannot form or join any trade union but by the above new provision they shall be entitled to the benefits admissible to a worker of similar grade or category thereby they shall not suffer due to not being member of any trade union.

3. Section 2 :-
(i) In its clause (ii) after the word “Arbitrator” a comma has been inserted and for the words “or an Appellate Court of competent jurisdiction” the words “Commission or Labour Appellate Tribunal” have been substituted.

(ii) In its sub-clause (x)(c) after the word “establishments” the words “or industry” have been inserted and in (d) the mistake of the words “Office bearer” appearing twice has been corrected as “Officer” and in (e) the words “of such establishment” have been omitted and the words “Office bearer” have been substituted by the word “Officer”.

(iii) In clause (XVI) – after the word “work” the words “of any person” have been inserted and the words “accrued to the workers” have been substituted by the words “secured to him”.

(iv) After clause (xviii) a new clause (xiii-a) has been added about the Labour Appellate Tribunal established under new Section 48.

(v) Clause (xxix) definition of trade union has been substituted by a new clause (xxix) reproduced as under:-

“(xxix) “trade union” means any combination of workmen formed primarily for the purpose of furthering the relations between workers and employers or workers and workers in any establishment, group of establishments or industry and includes a federation or confederation of trade unions, as the case may be”.

Please note that federation and confederation are also trade unions and all the relevant provisions apply to them as to the trade unions.

4. Section 3 (I) – after the word “in” at the end the word “force” has been added but the word “force” is already there and its clause (d) about affiliation of only CBA has been substituted by a new sub-clause (d) for affiliation of registered trade unions as under:

“(d) every registered trade union, may, in its discretions, affiliate with any federation or confederation at the national level registered with the National Industrial Relations Commission”.

5. Section 5 (a) after sub-clause (vii) a new sub-clause (viii) has been inserted about trade union of transport workers as under:

“(viii) in case of a trade union of transport vehicles workers, total number of transport vehicles, the names and addresses of their owners, the route permit numbers of the vehicles, and the number of workers in such vehicles”.

6. i. After Section 6 (I) (b) a new sub-clause (ba) has been added to eliminate dual membership of workers in trade unions as under:

“(ba) the manner in which a worker may become a member of the trade union specifying therein that no worker shall be enrolled as its member unless he applies in the form set out in the constitution declaring that he is not a member of any other trade union”.

ii. after sub-clause (e) new sub-clause (ea) about sources of the fund of the trade union and purposes of the fund has been added as under:-

“(ea) the sources of the fund of the trade union and the purposes for which such fund shall be applicable”.

iii. In Sub-Section (2) (b) for the word “one-fourth” the word “one-fifth” has been substituted bringing back 1/4th minimum membership for registration of a new trade union as provided by Section 6 (2) (b), IRO, 69 where more than two or more unions are already registered.

7. (i) In Section 9 Sub-Section (1) the words “after having exercised due diligence and verification of facts and” have been omitted but the words, “on being satisfied” as it was in section 8, IRO, 69 still remains in Section 9, IRO, 02 and this satisfaction has still to be based on verification of facts and not arbitrarily or on whims.

(ii) Sub-Section (2) – after the word “objection” at the end but it is “objections” the words and comma ”if no objections are received by the trade union from the Registrar within the prescribed time, the trade union shall be deemed to have been registered under this Ordinance” have been added.

This automatic registration due to indolence of the Registrar’s Office is highly objectionable which would ultimately affect the employer if any illegal trade union gets registered by such default and thrusted upon the employer.

(iii) Sub-Section (9) after the word “either” the words “rejecting the application or appeal or” has been inserted which makes the provision more clear.

8. Addition of new Section 13-A which prohibits functioning of and collection of fund by any unregistered trade union or trade union whose registration has been cancelled.
9. In Section 14 wrong year and the number of the Cooperative Societies Act, 1925 has been corrected.
10. In Section 16(I) the error of “part” has been corrected by the word “party”.
11. In Section 18(4) & (5) after the words “federation” therein the words “confederation” has been added.

The new amendments appear to encourage confederations of trade unions when in practice even federations are not properly functioning in accordance with the law and several federations have not been even registered under the Industrial Relations Ordinance and yet some Government Departments deal with them.

12. In Section 19(I) in its first and second provisos for the word “five” the word “ten” has been substituted and in the first proviso, for the word “appointed” the words “selected from the list approved and notified” have been substituted which may discourage patronising of any auditor of the choice of the Registrar.

13. Section 20 – (about-C.B.A) :-
(i) In Sub-Section (I) for the words “as the case may be, group of establishments” the words “group of establishments or industry as the case may be” have been substituted.
(ii) In Sub-Section (2) after the word “establishments” at the end the words “or industry as the case may be,” have been added.
(iii) In its first proviso after the word “establishment” the words “group of establishments or industry as the case may be” have been added. The same has been done in Sub-Section (13).
(iv) In the second proviso after the word “establishments” the words “or industry” have been added, and the same have been done in Sub-Sections (3), (11) and in Sub-Clause 3 (b) after the word ”federation” the words “or confederation” have been added.
(v) In Sub-Section (9) in the first proviso after the word “establishment” occurring twice the words “or industry” have been inserted.
(vi) In Sub-Section (11) the term of C.B.A has been reduced to two years as was in IRO, 69 and a proviso has been added under its as under:

“Provided that such certified trade union shall continue to act as collective bargaining agent till a new collective bargaining agent is determined”.

This provision makes the matter clear about functioning of the existing C.B.A till the new C.B.A has been determined.

(vii) In Sub-Section 14 the mistake of “Office bearer” has been corrected by the word “Officer”.

14. In Section 23 (5) after the word “elected” the words “or nominated” have been inserted as the C.B.A could nominate shop stewards as provided by Section 23 (I) (a).
15. Section 46 (1) The period of one month for grievance notice has been changed to 3 months as was in Section 25-A, IRO, 69, but three months period appears to be on higher side and instead the same two months as for filing of the application in the Labour Court should have been provided. Sub-Section (5) providing for compensation instead of reinstatement has been withdrawn/ omitted and also omits (5) in Sub-Section (6) but the amended provision of Sub-Section (6) of punishment for non-implementation of Order/decision of the Labour Court or Tribunal is very much objectionable as:-
(a) Equivalent provision of Section 25-A, IRO, 69 provided upto one year imprisonment or fine upto the Rs.1000/= but it didn’t provide “additionally” still to implement the Order/decision also.
(b) The original Section 46(b) removed the imprisonment but increased the fine upto Rs.10,000/= but this was still in addition to implementing the Order/decision.
(c) Now amended Sub-Section (6) has reintroduced one year imprisonment but instead of Rs.1000/= it still has the provision of Rs.10,000/= fine and on the top of it the word “additionally” in it has been still retained which means that even after conviction the decision of the Labour Court or Tribunal has still to be complied with making it unique and unusual legal provision.
(d) On the top of all “or with both” have been added which means the Order/decision has still be implemented even after conviction and for default one year imprisonment or Rs.10,000/= fine or both may be imposed. This is taking a big leap/swing from one side to the other extreme which seriously needs to be corrected.

16. New Section 48 replaces the original Section 48 and it pertains to about the Labour Appellate Tribunal. There may be more that one Appellate Tribunals in a Province with their territorial limits notified. Appointment and determining the terms of service of the member of the Tribunal shall be in consultation with the Chief Justice of the High Court of the Province. In Section 48(5) after the word “award” the words “decisions or Orders” should have been added to cover other cases also as the “award” has restricted meaning which is given when an industrial dispute is adjudicated upon by the Labour Court. The Tribunal has to decide appeals within 60 days which is only directory and not mandatory and contradicted by the provision that stay granted by it could continue upto 180 days and after which it shall stand vacated on the lines of stays granted by Civil Courts under Order 39 C.P.C. Other provisions are on the same lines as Section 38, IRO, 69 but Sub-Section (11) provides for appeal to High Court on conviction and sentence under Sub-Section (5) of imprisonment for any period or fine exceeding Rs.5,000/= in its decision in any appeal in the Tribunal.
17. Section 49:- The controversy of stay Orders by NIRC given under IRO, 69 which continued indefinitely and the same was attempted to be curtailed/corrected by the original Section 49, IRO, 2002 has been resolved by substituting the proviso under Section 49(4) by two new provisos as under:

“ Provided that, an interim Order passed by the Commission shall ease to have effect on the expiration of a period of sixty days, following the day on which it is made, unless the case is finally decided or the interim Order is confirmed or vacated by the Commission earlier”.

“Provided further that the Commission shall neither extend the period of interim Order so granted nor issue fresh Order after expiry of sixty days as provided hereinabove”.

18. In Section 50(6) The word “of” occurring for the first time has been corrected by the word “or”.
19. Section 51 in Clause (a):– The original Section (51) Contained no imprisonment but only fine but now the same imprisonment which may extend to 6 months as was provided in its equivalent Section 22-C (a) of IRO, 69 has been reintroduced and instead of Rs.2000/= the fine has been increased by five times to Rs.10,000/=.
20. In Section 54 (I) and its clause (a) after the word “establishments” the words “or industry, as the case may be” have been added and in the first proviso under its sub-clause(c) after the word “establishments” at the end the words “or group of establishments or industry” have been added and in the second proviso after the word “establishments”, the words “or industry” have been added.
21. In Section 55(2)(a) the word “on” has been corrected to “of ”.
22. In Section 60 (5) the figure(3) has been changed to (8) and “High Court” changed by the word “ Tribunal”.

The concept in the original IRO, 2002 taken and incorporated was that the workers and employers are not criminals, they be not treated as such but they may make mistakes by infringing any provision of IRO, 02 which has been technically made an offence under IRO, 2002 and instead of imprisonment heavy fines were imposed as corrective measure. Now by these amendments in the penal provisions the same has not only reversed the said concept by reincorporating imprisonments as provided by IRO, 1969 but the heavy fines introduced by the original IRO, 2002 are still retained even after these amendments which should have been reduced with reintroduction of convictions of imprisonments. To hope that Labour Judiciary may not impose maximum imprisonment and maximum fine provided therein is only a pious hope. This sea-saw of frequent changing of concepts must be avoided and corrected by further changes.

23. The original Section 66 has been substituted by new Section 66 according to which for breach of any term of award, settlement or decision, for the first offence fine upto of Rs.5,000/= has been provided and for each subsequent offence imprisonment upto 2 years or fine upto Rs.10,000/= or both has been provided. The period of imprisonment and fine both have been increased as compared to the corresponding Section 55, IRO, 69.
24. Section 67 – The fine has been reduced from “twenty” to “five” and for the words “a further fine which may extend to five thousand rupees” the words, “imprisonment which may extend to one year or a fine which may extend to two thousand rupees” have been substituted.
25. Section 70 (1), has been substituted by a new Sub-Section (1) which has retained one year imprisonment of similar Section 61, IRO, 69 but the fine shall be not less than the double the amount found by the Court to have been embezzled or misappropriated which may act as check against misappropriation of union funds.

26. Three new Sections viz Section 70-A, 70-B and 70-B have been added:-

Section 70-A :
(i) relates to penalty for activities of unregistered union or trade union whose registration has been cancelled providing imprisonment upto one year or fine may extend to Rs.20,000/= or both. The whole idea behind it is to eliminate activities of unregistered trade unions or the trade union whose registration has been cancelled but this provision should have been made more clear and specific to include such federations and confederations also as there are such federations functioning and some Govt. Departments yet even entertain them.
Section 70-B :
(i) Section 70-B deals with dual membership of trade unions of workers providing imprisonment upto 6 months or fine upto Rs.5,000/= or both.
Dual membership has lead to multiplicity of trade unions which, inter alia, weakens the collective strength of workers. With atleast 20% minimum membership there could not be more than five trade unions in any organization but some large organizations have over a dozen registered trade unions in their organizations.

Section 70-C :
(i) Section 70-C provides penalty for non-appearance before conciliator or the Board of conciliators as provided by Section 29(2) with the same penalty as provided by Section 70-B above which is against the concept of conciliation based on persuation and voluntary acceptance. If such a person is compelled in such a way to appear, he would not be willing to concede any thing in such a conciliation.

27. Insertion of Section 79-A : All appeals and other cases under IRO, 02 pending in the High Courts before these amendments shall stand transferred to the Labour Appellate Tribunals at the same stage of the proceedings.

Correction of errors made by these amendments mentioned above may not be of much interest to all but other changes being made by these amendments explained above may be carefully perused with the original IRO, 02 and the text of the proposed amendments.


For M/s S. M. Yaqoob


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