The economy will be the second casualty of Covid-19 and various businesses have probably began planning on how to cut their losses. Businesses are being effected due to the fact that governments using their executive orders have asked establishments to shut down for the time being and secondly because establishments are also dependent on other establishments for conducting their businesses and these establishments too are shut down. Faced with such a scenario businesses will eventually look to cut their losses. A complete out and out termination of employees is perhaps in bad taste since the situation is such that it is not due to any fault of the employees. Perhaps being mindful that employers may be looking to lay off employees, the Government of Sindh as early as March 23, 2020 issued a circular forbidding employers to lay off employees or cut their wages during the time that establishments are ordered to shut down by the employers. A similar circular was also issued by the Federal Government later on. The Government in a bid to secure the jobs of employees has had the State Bank of Pakistan offer loans to small to medium businesses in Pakistan in order to enable these businesses to pay the wages of employees.
In Pakistan the Labour Law in the main is applicable to Workmen only. Workmen are categorized as employees who are engaged in menial tasks such as receptionist, drivers etc. The litmus test for determining as to who is a workman is further provided by the courts wherein the courts have through their judgements clarified that workmen are people who are not in a supervisory or managerial capacity. All other employees over the rank of Workman such as supervisors and managers are bound by the terms and conditions of their Employment Contracts which fall under the law of Contract. After the passage of the 18th Amendment of the Constitution of Pakistan, all the provinces in Pakistan have their own laws for various matters including for employment matters.
There are numerous employment laws in Pakistan. With the provinces having their own laws the number of laws for employment matters has risen exponentially. The main Employment law applicable to Workmen in Pakistan is the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 at the federal level and its equivalent law at the provincial levels. The Standing Orders provide the applicable for matters relating to terminations, holidays and gratuity payable to workmen in Pakistan. They also provide for closure of establishments in the case of epidemics by first securing the permission of the Government.
Laying off workers or cutting their pay would be considered in bad taste at the moment. The stance of courts too appears to be that of offering protection to the rights of employees. Voluntary pay cuts at a higher managerial level are perhaps more advisable presently. They will act as a confidence building measure for lower level staff.
It is the time to take care of each other. Their will be a time for restructuring of businesses but that should come once lockdowns are eased worldwide and businesses asses how to make up for losses or to continue and start remodeling themselves for the future.
This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright. (c) 2020 Yousaf Amanat & Associates
