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Workmen v. Managerial Staff: Corporate & Labour Laws

For further information, please reach out to our Key Contact Advocate Mrs. Ammara Farooq Malik.

Employers are entitled to dismiss employees for a number of reasons including misconduct, retrenchment, lay-off and closure. The West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 provides a list of acts and omissions, which, if committed by an employee, amount to misconduct and can be cause for dismissal.

Issue: If a company has doubts about whether an employee has been engaged in some corrupt activities and company  wants to take action against that employee, then what legal remedies will be available to the company?

First of all, there are two kind of employees that can be covered under this situation:

  1. Workmen (Regulated by Labour Law)
  2. Non-Workmen/Managerial Staff (Regulated by their contract of employment/letter of appointment)

If it has come to the knowledge of the company that an employee may be engaged in some corrupt activities amounting to misconduct such as ‘theft, fraud, or dishonesty in connection with the employer’s business or property’ under Standing Order 15(3)(b) of the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 , the company can take the following legal actions:

  1. For workmen

Termination of services of workmen for misconduct are regulated under the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 and the Punjab Industrial Relations Act 2010.

  1. Under Standing Orders 15(2) of 1968, a workman found guilty of misconduct shall be liable to any of the following punishments:

(i)       fine in the manner prescribed under the Payment of Wages Act, 1936 (IV of 1936), upto three paisa in the rupee of the wages payable to him in a month;

(ii)       withholding of increment or promotion for a specified period not exceeding  one year;

(iii)       reduction to a lower post; or

(iv)       dismissal without payment of any compensation in lieu of notice.

  1. Under Standing Orders 15(4) of 1968, the workman concerned must be informed of his alleged misconduct and dismissal in writing, within one month of the date of such misconduct or of the date on which the alleged misconduct comes to the notice of the employer.
  2. The workman in question, must be given an opportunity to explain the circumstances alleged against him.
  3. The approval of the employer shall be required in every case of dismissal and the employer is required to institute independent inquiries before dealing with charges  against a workman.
  4. The workman proceeded against may, if he so desires, nominate any workman  employed in that establishment to assist him during the enquiry. During such an enquiry, the employer is required to allow the nominated workman to be present in the enquiry to assist the workman proceeded against without having his wages deducted if the enquiry is held during his duty hours.
  1. Under Standing Orders 15(5) of 1968, where, for the purposes of conducting an inquiry into the alleged misconduct of a workman, the employer considers it necessary, he may suspend the workman concerned for a period not exceeding four days at a time.  The order of suspension shall be in writing and may take effect immediately on delivery to the workman. During the period of suspension, the workman concerned  shall be paid by the employer to the tune of the same wages as he would have received if he had not been suspended.
  1. The employee also has the right to call upon a witness in his/her defence. The  employer has the power to suspend the employee for the duration of the inquiry;  however, the suspension shall not exceed a period of more than four weeks and  the  employer shall continue to pay wages to the employee for the duration of the suspension period.
  1. For Non-Workman/ Managerial Staff:

In case of a non-workman who commits misconduct (amounting to the corrupt act), the employment contract between the employer  and employee, and the company  HR/ Management Policy, shall determine how to regulate the matter. The company may:

  1. Demote the non-workman.
  2. Issue him a fine.
  3. Investigate the matter and gather evidence, meanwhile issue a notice of suspension while the investigation takes place.
  4. If enough evidence has been gathered, and the company decided to terminate the services of the employee, then it can opt for termination of contract of employment after following the termination procedure as laid down under the Company HR Policy, which may include termination of services without notice and without pay in lieu of notice.