Sindh High Court (SHC) has ruled that after the passage of the 18th Amendment to the Constitution, the Workers Profit Participation Fund Act (WPPF Act) 1968 ''fractured'' automatically and became a provincial law. According to the SHC judgment on WPPF Act issued Monday, the WPPF Act was no longer applied as a single unified federal law, but was "fractured" into four separate provincial laws.
The SHC also held that Sindh had the legislative competence to pass the Sindh WPPF Act 2015. The court also held that the Sindh WPPF Act 2015 is constitutional. The order applied to the petitions which raised various issues in-relation to or arising out of the Companies Profits (Workers'' Participation) Act, 1968 ("1968 Act" or "Federal Law") and the Sindh Companies Profits (Workers'' Participation) Act, 2015 ("Sindh Act" or "Provincial Law"). The issues pertain mainly to the interaction and applicability of these two statutes.
The Sindh WPPF Act 2015 applies to all companies in Sindh regardless of where their registered office or industrial premises is located (ie even if a company''s registered office is in Lahore and its manufacturing premises is in Peshawar but it has a presence in Sindh, the Act 2015 will apply).
The Sindh WPPF Act 2015 is to be read down so that all companies to which it applies will only make a proportionate distribution of 5 percent of their profits to their workers in Sindh. The 5 percent of profits will be calculated on the total profits of the company and not just those arising out of its operations from Sindh.
For the purposes of applicability of the Scheme, Clause 1 of the Scheme will apply based on the total workers and total assets of the company and not just those in Sindh (eg a company cannot argue that because it has less than 100 workers in Sindh, the Act 2015 will not apply to it, if it has 100 workers across the country). The Act 1968 will apply in all other provinces in the same manner, the SHC added.
The SHC stated when the Sindh Act is compared ''with its predecessor, the 1968 Act, one aspect that leaps out immediately is that the former is virtually an identical copy of the latter. Now, the 1968 Act started out as a unified, all-Pakistan statute enacted by the then central legislature. Its purpose was clearly the welfare of labor and since it operated in the manner just stated, there were no problems applying it to all the workers of a company throughout Pakistan. It retained this character on the commencement of the present Constitution and up to the 18th Amendment, ie from 1973 to 2010. The Act thereafter "fractured" into provincial legislation and was then replaced by the Sindh Act.