References
▷ Note: EPLex entry reflects only federal labour legislation applicable in the Islamabad Capital Territory and to trans-provincial establishments. Following the 18th Constitutional Amendment (2010), labour became a provincial subject in Pakistan. Provincial labour laws are not covered in this entry.
▷ The Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 (formerly the West Pakistan Standing Orders Ordinance) is the foundational labour law in Pakistan governing employment terms, disciplinary procedures, and worker classifications. The Finance Act of 2008 introduced crucial amendments, notably removing the term "West Pakistan" to make it federally applicable
Industrial and Commercial Employment (Standing Orders [SO]) Ordinance, 1968 [ICEO], W.P. Ordinance VI of 1968, as last amended by the Finance Act 2008 (Federal Act I of 2008).
Note: prior to the 2008 amendment, this Ordinance was called: West Pakistan Industrial and Commercial Employment (Standing Orders)
view website
»
Scope
Size of enterprises excluded (≤): 50
The ICEO applies to "every industrial establishment or commercial establishment wherein twenty or more workmen are employed, directly or through any other person whether on behalf of himself or any other person, or were so employed on any day during the preceding twelve months all workers belonging to industrial and commercial establishments of 20 or more workers." (sec. 1(4)a) ICEO)
However, some provisions, in particular those regarding severance pay of contained in the Standing Order 12 "Termination of employment", the provisions regarding stoppage of work and lay-offs, and those governing dismissals for misconduct do not apply to the enterprises employing not more than 49 persons during the last twelve months.
(sec. 1(4) ICEO)
Workers' categories excluded: civil/public servants, agricultural workers, domestic workers, apprentices
While the ICEO does not exclude specific categories of workers from its purview, it is important to note that it is limited in its scope, first of all all because it only applies to industrial establishment or commercial establishment employing twenty or more workmen are employed. Therefore, workers who are not employed by an industrial or a commercial establishment (such as domestic workers, agricultural workers, civil servant because) are excluded from the ambit of the ICEO. Sec. 1(4)c) also excludes "industrial and commercial establishments carried on by or under the authority of the Federal or any Provincial Government, where statutory rules of service, conduct or discipline are applicable to the workmen employed therein".
Lastly, the ICEO only applies to a "workman" which is defined as a person who does "manual" or "clerical" work. This definition has been very narrowly construed by the courts to exclude many workers from protection against arbitrary dismissal under this legal instrument. In deciding whether a person may qualify as a "workman" under the provisions, the courts have regard not to the category of the job, but rather to the nature of the work involved.
Reforms under process:
No reform under process with regard to termination of employment. See however, "Labour Policy 2010 of the Government of Pakistan" (attached below under 'Source of additional information - 2010').
FTC regulated: Yes
The ICEO does expressly regulate the use of fixed-term contract.
However, Standing Order No. 1 of ICEO distinguishes between the following categories of workers (in addition to "probationers" as already mentioned above):
- "Permanent employees" are defined as workers who are engaged in in work of a permanent nature likely to last more than nine months and has satisfactorily completed a probationary period of three months.
- "Temporary workers" are those who have been engaged for work of an essentially temporary nature that is likely to be finished within a period not exceeding nine months.
- "Badli" describes a worker who is appointed in the place of a permanent worker or probationer who is temporarily absent. A badli who has been employed for a continuous period of three months or for one hundred and eighty-three days during any period of twelve consecutive months is to be considered as a permanent worker.
- "Contract workers" (added by the Finance Act 2006),are those who work on contract basis for a specific period of remuneration to be calculated on piece rate basis.
Note that according to SO 12(2) ICEO, no notice period shall be observed by either party in the event of unilateral termination of employment of a probationer, a badli, or a temporary worker whether monthly-rated, weekly-rated, daily-rated or piece-rated.
Valid reasons for FTC use: objective and material reasons
See the definitions of a permanent and temporary workers (SO No. 1 ICEO)
"Permanent employees" are defined as workers who are engaged in work likely to last more than nine months and who have satisfactorily completed a probationary period.
- "Temporary workers" are those who have been engaged for work of an essentially temporary nature that is likely to be finished within a period not exceeding nine months.
Maximum number of successive FTCs: no limitation
The ICEO does not expressly refers to the renewals of FTCs.
It only provides that temporary workers cannot be hired for more than 9 months (see S0 1(e) ICEO).
Maximum cumulative duration of successive FTCs: 9month(s)
Maximum probationary (trial) period (in months): 3 month(s)
Standing Order (SO) 1(c) of the ICEO defines a "permanent workman as a workman who has been engaged on work of permanent nature likely to last more than nine months and has satisfactorily completed a probationary period of three months" and a "probationer as a workman who is provisionally employed to fill a permanent vacancy in a post and has not completed three months service therein".
Note that according to SO 12(2) ICEO, advance notice is not required for terminating employment during the probationary period.
Obligation to provide reasons to the employee: Yes
Valid grounds (justified dismissal):
Prohibited grounds: trade union membership and activities
Sec. 17(d) IRA : prohibition to dismiss, discharge, remove from employment, transfer a workman or threaten to do one of the previous act by reason of the worker's trade union mebership or activities.
Workers enjoying special protection:
Notification to the worker to be dismissed: written
SO 12(3) ICEO: "The services of a workman shall not be terminated, nor shall a workman be removed, retrenched, discharged or dismissed from service, except by an order in writing which, shall explicitly state the reason for the action taken".
Notice period:
▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ Standing Order 12 requires one month’s notice (or pay in lieu) for the termination of a permanent workman for any reason other than misconduct.
→ S.O. 12(1) provides that: For terminating employment of a permanent workman, for any reason other than misconduct, one month’s notice shall be given either by the employer or the workman. One month’s wages, calculated on the basis of average wages earned by the workman during the last three months, shall be paid in lieu of notice.
▷ Exception
→ According to S.O. 12(2), no notice period applies in the case of termination of a probationer, badli, or temporary workman (whether monthly-rated, weekly-rated, daily-rated, or piece-rated).
Pay in lieu of notice: Yes
SO 12(1) ICEO.
Notification to the public administration: No
Notification to workers' representatives: No
Approval by public administration or judicial bodies: No
Approval by workers' representatives: No
Definition of collective dismissal (number of employees concerned)
No legal definition of collective dismissals is provided.
However, the ICEO provides that any employer contemplating to terminate employment of more than 50% of the workforce (or close down the whole establishment) must obtain a prior permission by the Labour Court except in the event of fire, catastrophe, stoppage of power supply, epidemics or civil commotion.
Standing Order 11-A of the ICEO.
Notification to the public administration No
Notification to trade union (workers' representatives) No
However, according SO 11-A ICEO, any employer contemplating to terminate employment of more than 50% of the workforce (or close down the whole establishment) must obtain a prior permission by the Labour Court except in the event of fire, catastrophe, stoppage of power supply, epidemics or civil commotion..
Notification to workers' representatives: No
Approval by trade union (workers' representatives) No
However, pursuant to SO 11-A ICEA,any employer contemplating to terminate employment of more than 50% of the workforce (or close down the whole establishment) must obtain a prior permission by the Labour Court except in the event of fire, catastrophe, stoppage of power supply, epidemics or civil commotion..
Approval by workers' representatives No
Priority rules for collective dismissals (social considerations, age, job tenure) Yes
SO 13 ICEO: "Procedure for retrenchment" provides that the employer must retrench the worker who is the last person employed in that category.
Employer's obligation to consider alternatives to dismissal (transfers, retraining...) Yes
SO 14 ICEO: Within a period of one year from the date of the retrenchment, the employer he shall give an opportunity to the retrenched workmen belonging to the category concerned, by sending a notice by registered post to their last known addresses to offer themselves for re-employment, and they shall have preference over other persons each having priority according to the length of his service with the employer.
Priority rules for re-employment No
Severance pay:
Under SO 12(6) ICEO, workers whose employment has been terminated for any reason other than misconduct are entitled to severance pay or a "gratuity" equivalent to 30 days' wages for every completed year of service or any part thereof in excess of six months
However, if the employer has established a provident fund to which the worker is a contributor and the contribution of the employer is not less than the contribution made by the worker, no such severance pay shall be payable for the period during which such provident fund has been in existence.
tenure ≥ 6 months: 30 day(s).
tenure ≥ 9 months: 30 day(s).
tenure ≥ 1 year: 30 day(s).
tenure ≥ 2 years: 60 day(s).
tenure ≥ 4 years: 120 day(s).
tenure ≥ 5 years: 150 day(s).
tenure ≥ 10 years: 300 day(s).
tenure ≥ 20 years: 600 day(s).
Redundancy payment:
No specific provision on redundancy pay. Severance pay covers dismissals for economic reasons.
tenure ≥ 6 months: 30 day(s).
tenure ≥ 9 months: 30 day(s).
tenure ≥ 1 year: 30 day(s).
tenure ≥ 2 years: 60 day(s).
tenure ≥ 4 years: 120 day(s).
tenure ≥ 5 years: 150 day(s).
tenure ≥ 10 years: 300 day(s).
tenure ≥ 20 years: 600 day(s).
Note that the provisions related to the severance pay do not apply to enterprises employing not more than 49 persons during the last twelve months (sec. 1(4) ICEO).
mine workers: Yes
managerial / executive positions: Yes