COMPANIES PROFITS (WORKERS’ PARTICIPATION) (AMENDMENT) ACT, 2021

ACT XXVIII OF 2021

An Act to amend the Companies Profits (Workers’ Participation) Act, 1968.

[Gazette of Punjab, Extraordinary, 1st October, 2021]

No. PAP/Legis-2(82)/2020/2637.–The Companies Profits (Workers’ Participation) (Amendment) Bill 2020, having been passed by the Provincial Assembly of the Punjab on June 04, 2021, and assented to by the Governor of the Punjab on October 01, 2021, is hereby published as an Act of the Provincial Assembly of the Punjab.

It is necessary to adapt the Companies Profits (Workers’ Participation) Act, 1968 (XII of 1968) pursuant to the Constitution (Eighteenth Amendment) Act, 2010.

Be it enacted by Provincial Assembly of the Punjab as follows:

1. Short title and commencement.–(1) This Act may be cited as the Companies Profits (Workers’ Participation) (Amendment) Act, 2021.

(2) It shall come into force at once.

2. Amendment in the Preamble of Act XII of 1968.–In the Companies’ Profits (Workers’ Participation) Act, 1968 (XII of 1968), hereinafter referred to as the Act, in the Preamble, the second paragraph shall be omitted.

3. Amendment in Act XII of 1968- In the Act:

(a) in Section 2, Section 3, Section 4, Section 5, Section 6, Section 7, Section 8 and Section 9, for the words “Federal Government”, wherever occur, the word “Government” shall be substituted; and

(b) in the Schedule, for the words “Federal Government”, wherever occur, the word “Government” shall be substituted.

4. Amendment in Section 1 of Act XII of 1968.–In the Act, in Section 1, in sub-section (2), for the word “Pakistan”, the words “the Punjab” shall be substituted.

5. Amendment in Section 2 of Act XII of 1968.–In the Act, in Section 2:

(a) in clause (b), for the expression “Companies Ordinance of 1984 (XLVII of 1984), the expression “the Companies Act, 2017 (XIX of 2017)” shall be substituted;

(b) after clause (b), the following new clause (bb) shall be inserted:

“(bb) “Committee” means the Punjab Companies’ Profits Workers’ Participation Committee constituted under the Act;”;

“(cc) “Government” means Government of the Punjab;”;

(d) for clause (d), the following shall be substituted:

“(d) “profits” in relation to a company means such net profits (excluding profits from sale of the whole or part of the undertaking, profits by way of premium on shares sold, dividend income, profits from dealing in real estate, notional and unrealized accounting adjustments and bounties or subsidies) as are attributable to its business, trade, undertaking or other operations in Pakistan;” and

(e) for clause (f), the following shall be substituted:

“(f) “worker” in relation to a company means an employee of the company including an employee hired by the company itself or through a contractor and who is a worker in terms of clause (xxxi) of Section 2 of the Punjab Industrial Relations Act, 2010 (XIX of 2010) and has been working for or in the company for a period of not less than six months.”.

6. Amendment in Section 3 of Act XII of 1968.–In the Act, in Section 3, in sub-section (1), for clause (b), the following shall be substituted:

“(b) subject to adjustments, if any, pay every year to the Fund not later than nine months after the close of that year five percent of its profits during such year and the Government may, for sufficient reasons, extend such time period for one month; and”.

7. Insertion of Section 4-A in Act XII of 1968.–In the Act, after Section 4, the following new Section 4-A shall be inserted:

“4-A. The Committee.–(1) The Government shall, by notification, constitute a Committee to be called the Punjab Companies’ Profits Workers’ Participation Committee to monitor the implementation of the Act and the scheme thereunder and to advise the Government on appropriate administrative, legislative and other measures essential to achieve the objectives of the Act.

(2) The Committee shall consist of the Chairperson and not more than eight members, representing the Government, the companies and the workers.

(3) The Committee may call for such record or information as may be required for purposes of the implementation of the provisions of the Act or as may be prescribed.

(4) The company or, as the case may be, the Board shall furnish such record or information, within such time, as the Committee may specify.”.

8. Amendment in Section 5 of Act of 1968.–In the Act, in Section 5:

(a) for sub-section (1), the following shall be substituted:

“(1) Where the company to which the scheme applies fails to comply with the provisions of the Act or the scheme, every director, manager or other office responsible for the management of the affairs of the company, shall be liable to the administrative penalty, not exceeding fifty thousand rupees, in the manner prescribed; but, in case of continuing failure, shall be liable to additional administrative penalty, not exceeding ten thousand rupees, for every day after the first day during which the failure continues.”;

(b) after sub-section (1), the following sub-section (2) shall be inserted:

“(2) Where a company to which the scheme applies fails to comply with the orders of the committee under sub-section (3) of Section 4A, every director, manager or other officer responsible for the management of the affairs of the company, shall be liable to the administrative penalty, not exceeding one hundred thousand rupees, in the manner prescribed; but, in case of continuing failure, shall be liable to additional administrative penalty, not exceeding twenty thousand rupees, for every day after the first day during which the failure continues.”; and

“(5) The outstanding amounts of five percent of the profits and penalty imposed by an order under sub-section (1) shall, if it is not paid accordingly within the time specified in the order, be recoverable as arrears of land revenue under the Land Revenue Act, 1967 (XVII of 1967) and be deposited in the Fund.

(6) Notwithstanding anything contained in this Act or the scheme, if a defaulting company complies with the provisions of Section 3 and distributes the benefits in accordance with paragraph 4 of the scheme for the period of default on or before the date fixed by the Government, no such penalty shall be levied and the company shall not be liable to pay interest as provided in paragraph 2 of the scheme.”.

9. Insertion of Sections 8A, 8B and 8C in Act XII of 1968.–In the Act, after Section 8, the following Section 8A shall be inserted:

“8-A. Inspectors.–(1) The Government may, by notification in the official Gazette, appoint such persons, in such manner, as may be prescribed, to be the Inspectors for the purposes of this Act within such local limits as it may assign to them respectively.

(2) No person shall be appointed to be an Inspector under sub-section (1) or have been so appointed, continue to hold office, who is or becomes directly or indirectly interested in a company or in an industrial undertaking, process or business carried on by it.

(3) Every Inspector shall be deemed to be a public servant within the meaning of Section 21 of the Pakistan Penal Code 1860 (XLV of 1860) and shall be responsible to the Committee.

8-B. Powers of Inspector.–(1) Subject to any rules made by the Government in this behalf, an Inspector, within the local limits of his jurisdiction shall have the powers to:

(a) enter into any place which is or which he has reason to believe to be, used as an industrial undertaking or capable of being declared to be an industrial undertaking or company under the provisions of this Act;

(b) make such examination of the premises and plant and of any prescribed registers, record, and take on the spot or otherwise such evidence of persons or call for an information as he may deem necessary for carrying out the purposes of this Act; and

Provided that no one shall be required under this section to answer any question or give an evidence tending to criminate himself.

(2) An Inspector shall report the matter to the Committee, if he found any company or industrial undertaking to which the scheme applies, within the local limits for which he is appointed has failed to comply with any of the provisions of this Act or the scheme for taking further necessary action under this Act.

8-C. Power to amend the Schedule.–The Government may, by notification in the official Gazette, amend the Schedule.”.

10. Amendment in the Schedule of Act XII of 1968.–In the Act, in the Schedule:

(a) in paragraph 1, under the heading “Explanation”, in clause (a):

(i) sub-clause shall be omitted;

(ii) after sub-clauses (iii) and (vi), the word “and” shall be omitted and after sub-clause (iv) the following sub-clauses (v), (vi) and (vii) shall be added:

“(v) a factory as defined under the Factories Act, 1934 (XXV of 1934);

(vi) a commercial establishment as defined under the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 (VI of 1968); and

(vii) a construction industry as defined under the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 (VI of 1968); and”;

(b) in Paragraph 4, in sub-paragraph (a), under the heading “CATEGORIES”, for the existing entries, the following shall be substituted:

“1. Workers drawing average monthly wages not less than the minimum wages for unskilled workers fixed, from time to time, by the Government.

2. Workers drawing average monthly wages exceeding the minimum wages for unskilled workers fixed, from time to time, by the Government but not exceeding five thousand rupees in excess thereof.

3. Workers drawing average monthly wages exceeding upper level of wages fixed for category 2.”;

“(d) Notwithstanding anything contained in this scheme, no worker shall, in any one year, be entitled out of the annual allocation of units exceeding the amount of four times the minimum wages for unskilled workers as given under the Punjab Minimum Wages Act, 2019 in value in so far as such allocation is relatable to clause (b) of sub-section (1) of section (3). Any amount left out of the annual allocation after the units have been so allocated shall be transferred to the Fund established under the Punjab Workers Welfare Fund Act, 2019. No part of such amount shall be deemed to be included in the net asset value of Fund established under this Act and no individual worker shall have any lien on this amount by virtue of holding any units.

Explanation: In this paragraph, “average monthly wages” means total wages drawn during the year of account divided by 12, or by the number of months a worker actually worked during a year in respect of which he is entitled to the benefit under the scheme, as the case may be, and “wages” has the same meaning as in clause (vi) of Section 2 of the Payment of Wages Act, 1936 (IV of 1936); but does not include any overtime allowance, bonus and gratuity or provident fund payable.”;

(d) Paragraph 8 shall be omitted; and

(e) for Paragraph 9, the following shall be substituted:

9. Tax Treatment of the Income of the Fund.–The Government may approach the Federal Government for exemption from the levy of income tax on the income of the Fund including capital gains.”

COMPANIES PROFITS (WORKERS’ PARTICIPATION) (AMENDMENT) ACT, 2021

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