2. Definitions
Company;
Means a company as defined under Companies Ordinance 1984
And Includes
A body Corporate established by or under any law for the time
being inforce;
Any institution, organization or association whether incorporated or
not, declared by Federal Government in the Official Gazette to be a
company for the purposes of this Act;
Profits
As defined u/s 87C of companies Act-Since companies Act is not
more there and in 1984’s Ordinance Net profits are not defined
there this definition is redundant
Worker
Employee of the company including through contractor as
defined under clause xxx of section 2 of the Industrial relations
Ordinance, 2002
3. The charging provision-Section 3
Company to which scheme applies shall has to
establish fund u/s 3 as soon as the accounts of
the year in which the scheme become applicable
are finalized but not later than 9 months from
the close of the year
Pay to fund subject to adjustment Not later than
9 months of close of the year 5% of its profits
Furnish audited accounts to Federal Government
and the Board
4. Management of Fund-Section 4
Board of trustee-establish within 2 months of
establishment of fund
Two persons elected by workers amongst
themselves
Two being nominated by the company one of
whom shall be from accounts branch of the
company
Trustees shall elect for one year a person to be
the chairman-alternatively amongst the trustees
Procedures of the Board are defined u/s/s 3 to
11
5. Penalty-Section 5
Federal Govt. on default of the company can charge Rs.
5000 and Rs. 1000 for each day of default if the default
continues
Penalty if not paid is recoverable like a land revenue
On application within a period of 6months from the date
of order Federal Govt. can review the order
If any defaulting employer complies strictly to the
scheme and provisions so far as they are applicable then
notwithstanding any thing contained in this act or
scheme, penalty cannot be charged neither the company
is liable to pay interest as provided in the scheme
6. Powers with the Federal Govt
To call for information
Settlement of disputes
Delegation of powers
Power to make rules
Act to override other laws
7. The scheme
This scheme shall apply to all companies engaged in
industrial undertakings which satisfy any one of
the following condition, and to such other companies
as the Federal Govt. may, by notifications in the official
gazette, specify in this behalf, namely:-
The number of workers employed by the company at any time
during a year is 50 or more
The paid up capital of the company as on the last day of its
accounting year is Rs. 5 m (Rs 2 M before 2006’s change) or
more
The value of fixed assets of the company at cost as on the last
day of the accounting year is Rs. 20m (Rs. 4m before the
change ) or more
8. Industrial undertaking means an
institution, organization, enterprises or
establishment which involves the use of
electrical, mechanical, thermal, nuclear or
any other form of energy transmitted
mechanically and not generated by human or
animal agency and which is engaged in any
one or more of the following operations;
i. ….
ii. ….
iii. The transformers, generation, conversion,
transmission or distribution or electrical energy,
including hydraulic power; and
iv. …..
v.
9. Legal preposition
Reading application of scheme with
definition of industrial undertaking
Remember any one condition has to met
They are generating energy-The definition
Have more than 5 m paid up cap-Condition
Have more than 20 m cost of assets-Condition
Even if workers clause is not met above 2
will be met in most cases
10. Fund is available for investment is
company’s operations
Company shall pay interest 2.5% above
bank rate or 75 percent of dividend’s rate
which ever is higher
Incase the company issues further capital
the fund shall have the first option
11. Distribution & Disbursement of
Benefits
All workers are eligible to benefits and to participate however he
has to complete 6 months of employment in a year for eligibility
Shares of workers shall be calculated in number of units with a face
value of Rs. 10
Be divided into three parts for three categories of workers
Category 1(Average monthly salary not exceeding Rs. 7500)= 4 * x
Category 2 (Average monthly salary Exceeding 7500 but not Rs.
15000)= 2 * x
Category 3 (Average monthly salary Exceeding 15000)= x
Monthly salary be rounded to the nearest 10
Number of units available for each category be divided equally in all
workers of that category
No worker shall be allowed to get more than four times of the
minimum wages of unskilled worker notwithstanding any thing
contained in this scheme
12. Distribution
100% of annual income of fund +capital gains
A worker who voluntarily leaves employement or
terminated one 100% of net assets value in his
name
For continuing workers its choice for them to get
their 100% share in assets every year to leave
them invested
Incase of retirement or death while in
employment will receive 100% in net assets in
his name
Voluntary contributions can be made not
exceeding 10% of their annual wages
13. Misc
Fund is Exempt from Income tax (clause
9)
Allowable deduction in Income tax-for
companies (clause 8)
Income of workers are Income tax exempt
(clause 10)
Audit (clause 12)
This shall be in addition to other benefits
that may be available to workers