The following is a brief overview of labour laws applicable to the Petroleum sector.For more information feel free to send us an email at aemen@joshandmak.com
The basic Labour Law framework in the sector of Petroleum Drilling and Production Facilities in Pakistan includes the following laws mainly :
  • Industrial & Commercial Employment (Standing Orders) Ordinance 1968 (the primary workers rights legislation applicable to all companies)
  • Workers Compensation Act, 1923
  • Employees’ Old Age Benefits Act, 1976
  • Industrial Relations Ordinance, 2002
  • Provincial Employees Social Securities Ordinance, 1969
Definition of a ‘Workman under the  Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 is a person “employed…. to do any skilled or un-skilled, manual or clerical work for hire or reward”.The law does not govern temporary ‘workmen’ or employees and there is a clear distinction between a “permanent workman” and a “temporary workman” made in the ordinance.In contrast to the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, the Mines Act, 1923 is one of those few labor laws that do not distinguish between an employee and a worker. It consequently applies to every employee of the establishment.The Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 and Mines Act, 1923 require certain rights and benefits rights of workmen, which are based on the International Labor Law Convention to which Pakistan is a signatory.
The employment benefits for employees under this legislation include:
  • Annual Vacation Contingent on twelve (12) months continuous service, workmen are entitled to fourteen (14) annual holidays.
  • Casual & Sick Leave:  every worker is entitled to ten (10) days casual leave with full pay in a year, and sixteen (16) days of sick leave on half average pay in a year, or eight (8) days of sick leave with full pay.
  • Benefits: Weekly Day of Rest and Holidays
  • Weekly Day of Rest: All offices must remain closed for at least one day in each week which may either be Friday or Sunday. Deduction  from wages for such a weekly holiday is not permissible. (Please note that this provision does apply to drilling and production sites).
  • Festival Holidays:   Every worker is entitled to get holidays with full pay on all days declared by the concerned provincial government to be festival holidays.
  • Compulsory Group Insurance:   All permanent workmen must be compulsorily insured by the employer.
  • Bonus:   Every worker, employed continuously for not less than ninety (90) days during a year in which profit is made, is entitled to get a specified bonus out of company’s profits.
  • Gratuity:    Gratuity is payable to a worker upon his retirement or  termination for  any reason other than misconduct.  It is payable at the rate of twenty (20) days wages for every completed year of service, or any part thereof, in excess of six (6) months.  It is, however, not payable by employers who have established a provident fund.
  • Provident Fund: The establishment of a provident fund is not obligatory but should the employer establish it and equally matches the contributions of the workmen, the employer is then not liable to pay gratuity.
Working Hours & Overtime:
The working hours for adults are limited to nine hours a day and forty eight (48) hours a week.  The continuous working time has been fixed at six (6) hours after which an interval for rest or meals of not less than one (1) hour must be given. Workers required to work in excess of nine (9) hours a day, or forty eight (48) hours a week, must be paid overtime.  In other words, if a worker works in excess of nine (9) hours on any one day, he will be entitled to overtime for the time he works in excess of nine (9) hours on that day.  Similarly if the total number of his working hours during any week are in excess of forty eight (48) hours, then he would be entitled to overtime for the excess time.  Overtime work to a maximum of one hundred and fifty (150) hours in a year is permissible.  In case of overtime work, the wages payable to the employee in respect of such overtime work must be calculated at double  the ordinary rate of wages payable to him/her.
Notwithstanding the above Mines Act, 1923 restrict women to work at oilfields and well sites from 7 pm until 6 am.
A rotational schedule for oilfield workers is allowed under this Act.It has been officially determined that the Rotational Schedule of Oilfield Workers is in accordance with the laws, as the time off days compensate for the additional working hours and work on weekly day of rest/ public holidays during the on days.
Termination of Employment
For the termination of  employment of permanent workmen for any reason other than misconduct, like want of work or retirement, one (1) month’s notice stating the reasons for such termination must be given.
Similarly a worker must give one (1) month’s notice before resigning. One (1) month’s wages calculated on the basis of average wages earned by the worker during the past three moths can be paid by either party in lieu of notice.Workers can be terminated on grounds of lack of work. In such cases, however, the worker employed last  in the category involved is to be retrenched first. And if re-employment takes place within one (1) year, then the retrenched worker must be given priority in that category.
For terminating a worker on grounds of misconduct, the procedure specified in Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 must be strictly followed.A show cause notice must issued within one (1) month of misconduct; the  worker must be given an opportunity to explain his position in writing; after considering the worker’s response, if deemed necessary, an independent inquiry must be instituted.  The worker during this inquiry is entitled to assistance of his/her colleague; and the approval of employer is required before issuing the final dismissal letter.Here the employer has power to suspend the worker for a period not exceeding four (4) days at a time.  However such suspension must not exceed total of four (4) weeks.
Misconduct for purposes of Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 is defined as follows:
  • •Wilful insubordination or disobedience, whether alone or in combination with others, to any lawful and reasonable order of a superior;
  • •Theft, fraud, or dishonesty in connection with the employer’s business or property;
  • •Willful damage to or loss of employer’s goods or property;
  • •Taking or giving bribes or any illegal gratifications;
  • •Habitual absence without leave, or absence without leave for more than ten (10) days;
  • •Habitual late attendance;
  • •Habitual breach of any law applicable to the establishment;
  • •Riotous or disorderly behavior during working hours at the establishment or any act subversive of discipline;
  • •Habitual negligence or neglect of work;
  • •Frequent repetition of any act, or omission referred  to in clause (i) above;
  • •Striking work or inciting other to strike in contravention of the provisions of any law, or rule having the force of law;
Labor Courts , Applicable Law and Jurisdiction for Disputes
Dismissed Oil and Gas Workers can file suits challenging dismissal in Labor Courts.In jurisdictions where there is no special labor court, District and Sessions Court takes Labor cases, directly.Different Laws will govern different situations and matters.
Workers Compensation Act, 1923
Workers Compensation Act, 1923 essentially provides that if personal injury is caused to a worker by accident arising out of and in the course of him/her employment, then the employer must pay compensation under the provisions of Workers Compensation Act, 1923.
Employees’ Old Age Benefits Act, 1976
Employees’ Old Age Benefits Act, 1976 applies to every industry or establishment where ten (10) or more persons are employed. The employer is required every month to pay 5% of its employees wages for wages in excess of Rs.3000 per month; for employees performing managerial or administrative work; and for those possessing professional degrees. Contributions cease upon the employee attaining the age of sixty (60) years in case of he is male, fifty five (55) years in case she is female.The Federal Government matches the employer’s contribution, and pays the same to a fund under Employees’ Old Age Benefits Act, 1976. Subject to certain conditions, an employee covered under Employees’ Old Age Benefits Act, 1976 becomes entitled to receive old age pension from this fund upon reaching the age of sixty (60) years, or fifty five (55) years in case the employee is a female.
Industrial Relations Ordinance, 2002
This law deals with formation of labor unions;  regulation of relations between employers and workmen; and avoidance, and settlement of differences of disputes arising between them.The law also prohibits unfair labor practices,on the part of both employers and workmen.  For example, threat to dismiss or remove from employment, or intimidation, or coercion of any officer of trade union is an unfair labor practice; or canvassing for trade union membership during working hours, or intimidation or coercion of an employer to reach a settlement are unfair labor practices on the part of workmen. Indulgence in unfair labor practices is punishable with imprisonment and fine.
Provincial Employees Social Securities Ordinance, 1969
This Ordinance only applies to workers earning less than Rs5000/- per month.Such workers would essentially include workers employed through manpower contracts.The prima facie test in determining whether, directly or indirectly, an employer-employee relationship exists depends on the right of the former to supervise and control the work done by the employee not only in directing him what to do but also the manner in which work is to be done. In order to ascertain the kind of relationship involved, every case accordingly is to be judged on its particular facts.The responsibility and the liability in regard to the employees of a contract or will be considered to be that of the contractor unless otherwise specified in a law or in the relevant contract. Pakistan’s Supreme Court has gone a step further in this regard by distinguishing between contractors who carry out any particular work and contractor supplying manpower. The Supreme Court has clearly held that a company in not responsible or the acts of the contractor employed by it to carry out any particular work for the company ( Farid Ahmad v. Pakistan Burmah Shell Limited, 1987 SCMR 1463, at 1466).On the other hand, the Supreme Court has held that if contract involved is classified as “manpower supply contract”, then the company may be held responsible and liable to the contractors’ employees under certain laws.  These laws include like the one relating to the right of the workers to form a union, or file cases against his employer. The Supreme Court has construed the expression used in these laws, i.e. “persons employed directly or through a contractor”, to specifically cover “manpower supply contracts.