Work and Wages

Minimum Wage

Wages, as defined under the Minimum Wages Ordinance 1961, mean all remuneration, expressible in monetary terms, and payable to a person on fulfillment of the express or implied terms of employment contract but does not include  contributions paid by the employer on behalf of the worker under any scheme of social insurance, pension fund or provident fund; travelling allowance or value of any travelling concession; amount paid to defray special expenses incurred by the worker in respect of his employment; any sum paid as annual bonus; or any gratuity paid on contract termination.

The minimum wage rate for unskilled & juvenile (14 years to 17 years) workers is Rs.13,000 per month in the provinces of Punjab, Sindh, and Balochistan as well as the Islamabad Capital Territory. These minimum wage rates are applicable from 01 July 2015. The daily minimum wage for an 8 hour work day is Rs. 500 (and Rs.13,000 for 26 working days). Minimum wage for unskilled & juvenile workers (14 years to 18 years) is notified as Rs.12,000 per month in Khyber Pakhtunkhwa with effect from July 2014. The daily minimum wage in Khyber Pakhtunkhwa is Rs.461.54 (and Rs.12,000 for 26 working days)

Minimum wages for semi-skilled, skilled and highly skilled workers are determined by the Minimum Wage Boards constituted under the Minimum Wages Ordinance, 1961. The detailed Minimum Wage notifications for different industries based in the provinces are issued later by the provincial labour departments. One such detailed notification has been issued by the Punjab Labour & Human Resource Department on 7 August 2015. The said notification provides minimum wage rates for ministerial, highly skilled, semi-skilled and skilled workers in the 102 industries based in the province. Similar detailed notifications have yet to be issued by the other Provincial governments.

For the last couple of years, the trend has been to increase workers' minimum wages while announcing the federal and provincial budgets instead of announcing a wage increase for private sector on May Day. In his Federal Budget 2015-16 speech, the Federal Finance Minister announced the increase of minimum wage for private sector workers from PKR12,000 to PKR13,000 per month. The Provincial Budgets in all the Provinces except Khyber Pakhtunkhwa followed suit and increased minimum wage for unskilled workers in line with the increase announced by the Federal Government.

Minimum Wages for Unskilled Workers used to be fixed under the Minimum Wages for Unskilled Workers Ordinance 1969 however after devolution of Ministry of Labour to provinces, the wages are announced under section 6 of the Minimum Wages Ordinance, 1961 (the Khyber Pakhtunkhwa Minimum Wages Act, 2013) which applies to all industrial establishments’ employees (whether skilled, unskilled or apprentices and even domestic workers) but it excludes the employees of Federal or Provincial governments, coalmine employees or persons employed in agriculture. The minimum wage rates for coal mine workers are determined under the Coal Mines (Fixation of Rates of Wages) Ordinance 1960 (in consultation with Mines Welfare Boards). 

For newspaper employees, wages are determined under the Wage Board Award and wages are fixed by the Wage Board (constituted specifically for that purpose) while taking into consideration the cost of living, the prevalent wage rates in comparable employment, circumstances relevant to the newspaper industry in different regions of the country as well any other reasons that the Boards considers appropriate and relevant. 7th Wage Board Award, announced in 2001, could not be implemented. The 8th Wage Board was constituted in September 2013 however no award has been announced yet. The Wage Board, having equal representation of newspaper workers and employers, are constituted under Newspaper Employees (Conditions of Service) Act 1973.

Sources: §4-6 of the Minimum Wages Ordinance, 1961; §4-6 of the Khyber Pakhtunkhwa Minimum Wages Act, 2013; §10-12 of the Newspaper Employees (Condition of Service) Act, 1973; §3-5 of the Coal Mines (Fixation of Rates of Wages) Ordinance, 1960

The current minimum wage rates can be found in Minimum Wage Section.

Regular Pay

Wages can be paid on daily, weekly, fortnightly or monthly basis. However, a wage period can't exceed one month. The detailed instructions on payment of wages are found in Payment of Wages Act, 1936 and Khyber Pakhtunkhwa Payment of Wages Act, 2013.  A factory, railway or industrial or commercial establishment employing less than 1,000 workers is liable to disburse pay to its employees before the expiry of seventh day from the last day of wage period. However, the establishment employing more than 1000 workers can delay the disbursement of pay up till the 10th day from the last day of wage period. The law also requires that wages are to be paid on a working day and in current coin or currency notes only. This also means that wage payments by organizations through cheque are not permitted under the law. In order to ensure that workers are paid their wages as specified under the law or employment contract or memorandum of settlement (referred to generally as collective bargaining agreement), necessary amendment in Payment of Wages Acts is needed. It must however be specified that the Khyber Pakhtunkhwa Payment of Wages Act requires payment of wages in current currency through scheduled banks the manner of which is yet to be prescribed under the Rules. Employer is required to display, in a conspicuous place at or near the main entrance of the factory, a notice, in English and in the language of majority of the persons employed therein, showing for at least two months in advance, the day on which wages are to be paid.

Sources: §3-6 of the Payment of Wages Act 1936; §3-6 of the Payment of Wages Act 1936, adapted by Punjab in 2014; §3-6 of the Khyber Pakhtunkhwa Payment of Wages Act, 2013; Rule 8 of the Payment of Wages Rules 1960

Deductions & Fines

According to the Payment of Wages Act, following deductions can be made from a worker's wages.

  • Fines;
  • Deductions for absence from duty; Law considers it a breach of contract when ten or more persons, through concerted action, absent themselves from office without due notice and reasonable cause. The law entitles the employer to make deductions up to eight days of wages when employees take such an action. However, the law exempts women and workers (under the age of 15 years) from such wage deduction for contract breaches.
  • Deductions for damages to or loss of goods expressly entrusted to the employed person for custody, or for loss of money for which he is required to account, where such damage or loss is directly attributable to his neglect or default;
  • Deductions for house accommodation supplied by the employer
  • Deductions for such amenities and services supplied by the employer as the Provincial Government may by general or special order authorize;
  • Deductions for recovery of advances or for adjustment of overpayment of wages;
  • Deductions of income tax payable by the employed person;
  • Deductions required to be made by order of a Court or other authority competent to make such order;
  • Deductions for subscriptions to, and for repayment of advances from, any approved Provident Fund;
  • Deductions for payment to co-operative societies approved by the Provincial Government or to a scheme of insurance maintained by the Pakistan Post Office;
  • Deductions made with the written authorization of the employed person, in furtherance of any war saving scheme approved by the Provincial Government.

Under the minimum wage notification issued by the Government of Punjab, the deductions for providing housing accommodation (Rs.162 per month) and transport facility (Rs.33 per month) are allowed subject to the agreement between the worker and employer. However, in other Provinces especially in Khyber Pakhtunkhwa, no variable or incentive allowance (non-statutory) or value of welfare facilities including house rent allowance or free house and conveyance can be adjusted against the minimum wage rates.

Fines can be imposed on employees in respect of certain acts and omissions but these are to be specified and previously approved by the Government. A notice of such acts has to be exhibited in the premises at some conspicuous place (like near factory entrance). Fines can be imposed for only those acts contained in the notice and a contravention of this provision is deemed to be an unauthorized deduction which is a liable offence. The total amount of fine in a single wage period (which can be maximum 30 days) can’t exceed 3% of the wages payable to the worker. The fine imposed has to be recovered in lump sum and has to be recovered within sixty days of the commission of an act or omission. Fines cannot be imposed on workers under the age of 15 years.

Sources: §7-13 of the Payment of Wages Act 1936; §3-6 of the Payment of Wages Act 1936, adapted by Punjab in 2014; §7-13 of the Khyber Pakhtunkhwa Payment of Wages Act, 2013; Rule 10-16 of the Payment of Wages Rules 1962; Minimum Wage Notifications 2015

Penalties for Violation

In the event of non-payment of minimum wage or at a rate lower than the rate announced by the Government, the following penalties are provided under the relevant laws.

Acts

Applicability (Area)

Penalties

 

 

Fines (monetary)

Imprisonment

Minimum Wages Ordinance, 1961 (section 9)

Islamabad Capital Territory, Sindh, Balochistan

Up to Rs.500 or

Up to 6 months or both

Minimum Wages Ordinance, 1961 (adapted in 2012)

 

(section 9)

Punjab

Up to Rs.20,000 or

 

 

Up to Rs.50,000 or           (on subsequent contravention)

Up to 6 months or both

 

 

Up to 6 months or both

 

 

Khyber Pakhtunkhwa Minimum Wages Act, 2013

(section 9)

Khyber Pakhtunkhwa

Up to Rs.20,000 but not less than Rs.5,000 or

 

Up to 6 months or both

 

Other than above fines, employer is also required to pay the difference in wages actually paid to the worker and the wages which should have been paid had there no such contravention.

Penalties are also provided under the Payment of Wages Acts for different offences by the employer as follows:

Acts

Applicability (Area)

Offences

Penalties

 

 

 

Fines (monetary)

Imprisonment

Payment of Wages Act, 1936

(section 20)

 

Islamabad Capital Territory, Sindh, Balochistan

  • Section 5: Time of Payment of Wages
  • Section 7: Deductions which may be made from wages
  • Section 8: Fines
  • Section 9: Deductions for absence from duty
  • Section 10: Deductions for damage or loss
  • Section 11: Deductions for services rendered
  • Section 12: Deductions for recovery of advances
  • Section 13: Deductions for payments to cooperative societies and insurance schemes

Up to Rs.500

 

Payment of Wages Act, 1936

(adapted in 2014)

(section 20)

Punjab

Up to Rs.10,000

 

The Khyber Pakhtunkhwa Payment of Wages Act, 2013

 

(section 20)

 

Khyber Pakhtunkhwa

Up to Rs.10,000 or

 

 

 

Up to Rs.20,000 or   (on subsequent contravention)

Up to one month or both

 

 

Up to two months or both

 

Payment of Wages Act, 1936

(section 20)

 

 

Islamabad Capital Territory, Sindh, Balochistan

  • Section 4: fixation of wage periods
  • Section 6: wages to be paid in current coin or currency notes
  • Section 25(section 24 for Khyber Pakhtunkhwa Act): Display by notice of the abstracts of this act

Up to Rs.200

 

Payment of Wages Act, 1936

(adapted in 2014)

(section 20)

Punjab

Up to Rs.5,000

 

 

 

The Khyber Pakhtunkhwa Payment of Wages Act, 2013

(section 20)

 

 

Khyber Pakhtunkhwa

Up to Rs.10,000 or

 

Up to Rs.20,000 or (on subsequent contravention)

Up to one month or both

 

Up to two months or both

Publication of Wages & Maintenance of Registers

Government has to ensure that minimum wage rates fixed under the law are publicized widely to all workers and employers. Government may also require thee employers, to display the minimum wage rates in prominent places in a factory, workshop or other workplace, notices in Urdu, English or any other language specified in the order.

Employers, under the West Pakistan Minimum Wage Rules 1962, are required to maintain a Wage Register, issue wage slips in authorized format and a Muster Roll as prescribed under the law. A worker, within 6 months of non-payment of minimum wage on rates specified, may submit a claim to the concerned authority for payment of arrears. 

The West Pakistan Payment of Wages Rules 1962 also requires to maintain certain registers including register of fines, register of deductions for damages or loss, register of wages, and register of advances in prescribed formats. Employers are also required to submit an Annual Return to the Chief Inspector of Factories before 12th of February each year with details of fines imposed

or any deductions made from wages for breach of contract or for damage or loss. 

Compliance Under the Minimum Wage Law

 

Requirement

Relevant Legislation

Form

Maintenance of Wages Register

Rule 19(1) of the Minimum Wage Rules 1962

Form I

Format of Wage Slips

Rule 19(2) of the Minimum Wage Rules 1962

Form II

Maintenance of Muster Roll

Rule 19(5) of the Minimum Wage Rules 1962

Form III

Compliance Under the Payment of Wages Laws

 

Requirement

Relevant Legislation

Form

Display of the abstract of Payment of Wages Act and rules in English and Urdu (or a local language understood widely by workers)

Section 25 of the Payment of Wages Act 1936

 

The Khyber Pakhtunkhwa Payment of Wages Act, 2013

 

 

Register of Fines

Rule 3 of the Payment of Wages Rules 1960

Form I

Register of Deductions for Damage or Loss

Rule 4 of the Payment of Wages Rules 1960

Form II

Register of wages

Rule 5 of the Payment of Wages Rules 1960 Rule 19(1) of the Minimum Wage Rules 1962

Form I-A

Register of Advances

Rule 17 of the Payment of Wages Rules 1960

Form III

Annual Returns

Rule 18 of the Payment of Wages Rules 1960

Form IV

Regulations on Work and Wages

  • Factories Act, 1934
  • The Payment of Wages Act, 1936
  • Minimum Wages Ordinance, 1961
  • West Pakistan Minimum Wages for Unskilled Workers Ordinance, 1969 (not in use after 18th constitutional amendment in 2010)