Pakistan Case LawNATIONAL CONSTRUCTION Co. LTD. Versus EMPLOYEES' UNION
This is a reference made under section 50 of the Industrial Relations Ordinance for the interpretation of a term of settlement regarding the payment of gratuity between National Construction Company and its Employees' Union. The core legal question was whether an employee must complete one full year of service as a condition precedent before being entitled to gratuity for a period in excess of six months, or if gratuity is payable for service exceeding six months without completing a full year. The Tribunal held that an employee is entitled to gratuity if their case falls under either part of the expression 'each completed year of service or part thereof in excess of 6 months', and the second part is not controlled or qualified by the first part, meaning completion of one year is not a mandatory condition precedent if the service exceeds six months. The Tribunal rejected the reference and upheld the interpretation favoring the Union. The key principle laid down is that the expression 'each completed year of service or part thereof in excess of 6 months' consists of independent alternatives, and an employee is entitled to gratuity if their service falls under either part without requiring a prior completed year.
- Whether completion of one year of service is a condition precedent for entitlement to gratuity under a settlement referring to the Standing Orders Ordinance?
- How should the expression 'for each completed year of service or part thereof in excess of 6 months' be construed?
- Can the word 'or' be read as 'and' in statutory or settlement interpretation?
- Section 50, Industrial Relations Ordinance
- Section 12(6), Standing Orders Ordinance
- Section 4, Standing Orders Ordinance
DECISION
This is a reference made by the National Construction Company under section 50 of the Industrial Relations Ordinance for interpretation of term No. 13 of the Settlement, dated 24th May 1975.
2.The respondent-Union raised an industrial dispute by serving charter of demands and strike notice. One of the demands related to gratuity and it reads as under :
"The gratuity be paid at the rate of 30 days' wages per annum and if on the completion of one year if any employee want to leave service or is discharged by the Company, he shall be paid gratuity at the rate of 30 days' wages."
3.Conciliation proceedings were resumed and a settlement was reached with regard to various demands. The terms of settlement with regard to gratuity reads as under : .
"That it has been agreed to by both the parties that gratuity will be paid to the workers at the rate of 20 days' basic wages for each completed year of service or part thereof in excess of 6 months in accordance with the provisions of the Standing Orders Ordinance."
4.According to the Settlement the gratuity is payable in accordance with the provisions of the Standing Orders Ordinance. Evidently, this has reference to Standing Order 12 (6) of Standing Orders Ordinance dealing with gratuity. It reads as under
"Where a workman resigns from service or his services are terminated by the employer, for any reason other than misconduct, he shall, in addition to any benefit to which he may be entitled under this Ordinance or in accordance with the terms of his employment or any custom, usage or any settlement or an award of a Labour Court under the Industrial Relations Ordinance, 1969 (XXIII of 1969), be paid gratuity equivalent to twenty days' wages. Calculated on the basis of the wages admissible to him in the last month of service if he is a fixed rated workman or the highest pay drawn by him during the last twelve months if he is a piece-rated workman, for every completed year of service or any part thereof in excess of six months."
5.There is, however, a slight change. In the term of Settlement word "each" has been used instead of word "every" occurring between the words "wages for" and "completed year". Since the intention is the same, the substitution of one word for the other hardly makes any difference.
6.Taking up the contentions, it has been urged on behalf of the Company that in order to be entitled to gratuity the completion of one year's service is a condition precedent before availing of the benefit extended to the period in excess of six months. This was also sought to be supported by the nature of the demand, which has already been reproduced. On the other hand it has been urged on behalf of the Union that subject to the condition laid down by the Standing Order 12 (6), every employee is entitled to receive gratuity if he has remained in service for more than six months irrespective of the fact whether he has completed one year or not.
7.On consideration of the term settlement in the light of arguments advanced before me I am of the view that the contention raised on behalf of the Company cannot be accepted. The plain reading of the term of settlement does not admit of any such construction. It is not disputed that no such bar has been expressly imposed. It is also not possible to presume any such bar.
8.The expression "for each completed year of service or part thereof in excess of 6 months" is in two parts divided by the word, "or". Each part has to be read independently of the other. In other words the second part is not controlled or qualified by the first part. An employee is entitled `t to gratuity if his case falls under either part.
9.As a rule gratuity is calculated on the basis of a completed year of service but according to the Standing Order, the benefit has been extended to any part thereof in excess of six months treating it to be a B completed year. This in my view, is an exception to the general rule Consequently, it is not necessary that the period exceeding six months should be in addition to any completed year of service.
10.It has been urged on behalf of the Company that the word "or" here stands for the word "and", consequently it should be construed accordingly. Indeed, in some cases the use of the word "or" means "and". There is no dispute that when the word "or" is used in relation to two or more alternatives it is not necessarily the case that the alternatives are mutually exclusive. In a proper context, it may mean "and". Conversely this is true when word "and" has been used meaning thereby "or".
11.It is, however, to be presumed that the Legislature has used the words in their known and ordinary significance unless the context indicates that such a construction would frustrate the real intention of the Legislature. So the question ac to whether the words are mutually exclusive or not, must be determined by applying the general rule that the words should be construed to ascertain the intention of the provision in question to be collected from the whole of its term. This is necessary to carry into the effect the meaning and intention of Legislature.
12.As indicated, the intention of the Legislature has to be gathered from the words and phraseology which has no hesitation in saying that any settlement in terms of the demand being less beneficial than the gratuity allowed under Standing Order No 12 (6) would be hit by the proviso C to section 4 of the Standing Orders Ordinance. Moreover, the demand for gratuity was for an amount equivalent to 30 days' wages. In either case the reference to the demand is irrelevant and unavailing.
13.In the circumstances the reference stands rejected.
Judges on this bench
- Ghulam Rasool Shaikh100 judgments