Updated: Monday August 19, 2019/AlEthnien Thoul Hijjah 18, 1440/Somavara Sravana 28, 1941, at 06:16:41 PM

The Companies’ Profits’ (Workers’ Participation) Act, 1968

(Act No. XII of 1968)

[Assented: 4th July, 1968]

An Act to provide for participation of workers in the profits of companies

Whereas it is expedient to provide for participation of workers in the profits of companies and for matters ancillary thereto;

[1][And whereas the national interest of Pakistan in relation to the achievement of uniformity within the meaning of clause (2) of Article 131 of the Constitution requires Central legislation in the matter;]

It is hereby enacted as follows;---

1.      Short title, extent, application and commencement.---(1) This Act may be called the Companies’ Profits (Workers’ Participation) Act, 1968.

(2)         It extends to the whole of [2][the Punjab].

(3)         It shall come into force at once.

2.      Definitions.---In this Act, unless there is anything repugnant in the subject or context,---

(a)         “Board” in relation to a Fund means a Board of Trustees constituted under section 4 for the management and administration of the Fund;

(b)         “company” means a company within the meaning of [3][Companies Act, 2017 (XIX of 2017)], and includes,---

(i)           a body corporate established by or under any law for the time being in force;

(ii)         any institution, organization or association whether incorporated or not, declared by the [4][Federal] Government in the official Gazette to be a company for the purposes of this Act;

[5][(bb)         “committee” means the Punjab Companies’ Profit Workers’ Participation Committee constituted under the Act;]

(c)          “Fund” means a Workers’ Participation Fund established under section 3;

[6][(cc)                      “Government” means Government of the Punjab;]

(d)         [7][“profits” in relation to a company means such net profits as are attributable to its business, trade, undertaking or other operations in Pakistan;]

(dd)  “rules” means rules made under this Act;

(e)          “scheme” means the scheme set out in the schedule;

(f)           [8][“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.]

3.      Establishment of Fund.---(1) Every company to which the scheme applies shall,---

(a)         establish a Workers’ Participation Fund in accordance with the scheme as soon as the accounts for the year in which the scheme becomes applicable to it are finalised, but not later than nine months after the close of that year;

(b)         [9][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]

(c)          furnish to the [10][Federal] Government and the Board, not later than nine months after the close of every year of account, its audited accounts for that year, duly signed by its auditors.

(2)         The amount paid to the Fund under clause (b) of sub-section (1) in relation to a year shall be deemed to have been allocated to the Fund on the first day of the year next succeeding that year.

4.      Management of the Fund.---(1) As soon as may be but not later than two months, after the establishment by a company of a Fund under section 3, there shall be constituted a Board of Trustees consisting of the following trustees, namely:---

(a)         two persons elected by the workers of the company from amongst themselves; and

(b)         two persons nominated by the management of the company of whom at least one shall be a person from the accounts branch of the company.

(2)         The persons holding office as trustees shall elect for one year a person to be the Chairman of the Board alternatively from amongst the trustees elected under clause (a) of sub-section (1) and those nominated under clause (b) of that sub-section, the first Chairman being from amongst the latter.

(3)         A trustee shall, unless he sooner ceases to represent the interest he was elected or nominated to represent, hold office for such term and on such conditions as may be prescribed by rules.

(4)         All decisions of the Board shall be expressed in terms of the opinion of the majority of the trustees and, in the event of the trustee being equally divided in their opinions, the Chairman shall have and exercise a second or casting vote.

(5)         The Board shall manage and administer the Fund in accordance with the provisions of this Act, the scheme and any rules made in this behalf.

(6)         The Board shall, in the exercise of its powers and performance of its functions under this Act, be subject to such directions as the [11][Federal] Government may, from time to time, give.

(7)         The [12][Federal] Government if it is of opinion that a trustee or a Board has been persistently failing in the performance of his or its functions or has generally been acting in a manner inconsistent with the objects and interests of the Fund, may, after giving such trustee or, as the case may be, the Board, an opportunity of showing cause against it, by order,---

(a)          remove such trustee from his office or direct that the Board shall stand superseded for such period as may be specified in the order; and

(b)          direct that, pending the election or nomination of a person in place of the trustee removed from office or, as the case may be, the re-constitution of the Board, the powers and functions of the trustee so removed or the Board shall be exercised and performed by a person specified in the order.

(8)         A casual vacancy in the office of a trustee shall be filled as soon as may be by the election or, as the case may be, nomination of another person and the person elected or nominated to fill such vacancy shall hold office for the unexpired term of his predecessor.

(9)         Upon the suppression of a Board under sub-section (7), the trustees in that Board shall cease to hold office and references to the Board in this Act, the scheme and the rules shall be construed as references to the officer specified in the order under that sub-section.

(10)     Before the expiry of the period of suppression, the Board shall be re-constituted in accordance with the provisions of this Act so as to enable it to take over its functions upon the expiry of such period.

(11)     No act or proceeding of the Board shall be invalid or questioned merely on the ground of the existence of a vacancy in, or defect in the constitution of the Board.

[13][4-A. The Committee.---(1) The Government shall, by notification, constitute a committee to be called “Punjab Companies’ Profits Workers’ Participation Committee” to monitor the implementation of the Act and the scheme thereunder and to advise the Government for appropriate administrative, legislative and other measures to accomplish 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 from a company or the Board as may be prescribed or as may be required by the Company for purposes of the implementation of the provisions of the Act.

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

5.      Penalty.---[14][(1) Where the company fails to comply with the provisions of the Act or the scheme, 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 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.]

(2)         [15][Where a company fails to comply with the orders of the committee under subsection (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.]

(3)         A penalty imposed by an order under sub-section (1) shall, if it is not paid within the time specified in the order, recoverable as an arrear of land revenue.

(4)         The [16][Federal] Government may, upon an application made in this behalf by any person aggrieved by an order made under sub-section (1) [*   *   *] within a period of six months from the date of the order, review the order and may, upon such review, pass such orders as it may think fit.

(5)         [17][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.]

6.      Power to call for information.---The [18][Federal] Government may at any time, call upon a company or a Board to furnish it with such information and documents, including records of the proceedings of the company or the Board, as may be relevant or useful for the purposes of, or necessary for ensuring proper compliance with, the provisions of this Act, the rules and the scheme.

7.      Settlement of disputes etc.---(1) Any difference arising between the Board and the company relating to the administration of the scheme shall be reported to the [19][Federal] Government whose decision thereon shall be final.

(2)         All claims of a worker relating to the benefits of the scheme, whether against the Board or the company, shall be settled in the same manner as it provided for in the Payment of Wages Act, 1936, for the settlement of claims arising out of deductions from wages.

8.      Delegation of power.---The [20][Federal] Government may, by notification in the official Gazette, direct that all or any of its powers or functions under this Act may, subject to such limitations, restrictions or conditions, if any, as may be specified in the notification, be exercised or performed also by any officer subordinate to it or by any authority so specified.

[21][8-A. Power to amend the Schedule.---The Government may, by notification in the official Gazette, amend the Schedule.]

9.      Power to make rules.---The [22][Federal] Government may make rules to carry out the purposes of this Act.

10.  Act to over ride other laws.---The provisions of this Act shall have effect notwithstanding anything contained in any other law for the time being in force, or in any contract or the memorandum or articles of association of a company.

 

-----------------------------

 

COMPANIES PROFITS (WORKERS' PARTICIPATION)

(AMENDMENT) ORDINANCE, 2002

 

ORDINANCE LXIX OF 2002

 

An Ordinance further to amend the Companies Profits (Workers' Participation) Act, 1968

 

[Gazette of Pakistan, Extraordinary, Part-I 9th October. 2002]

 

F. No.2(1)/2042‑Pub. dated 9‑10‑2002.-----The following Ordinance promulgated by the President is hereby published for general information:‑‑

 

2. Amendment of Schedule, Act XII of 1968,‑‑In the Companies Profits (Workers' Participation) Act, 1968 (XII of 1968), in the Schedule, in Paragraph 4, in clause (a), under the heading "Categories".

 

(a) in the entry of serial number 1 , for the word "two", Occurring for the second time, the word "five" shall be substituted: and

 

(b) in the entry at serial number 2, for the word "two" occurring for the second time, the word "five" shall be substituted.

 

-----------------------------

 

ORDINANCE VII OF 2018

COMPANIES PROFITS (WORKERS' PARTICIPATION) (AMENDMENT) ORDINANCE, 2018

An Ordinance to amend the Companies Profits

(Workers' Participation) Act, 1968

[Gazette of Punjab Extraordinary,

1st June, 2018]

No. Legis:13-77/2010(C)(P-I), dated 1.6.2018.---The following Ordinance promulgated by Governor of the Punjab is hereby published for general information:

It is necessary further to amend the Companies Profits (Workers' Participation) Act, 1968 (XII of 1968) pursuant to the Constitution (Eighteenth Amendment) Act, 2010 and to update the law for purposes hereinafter appearing.

Provincial Assembly of the Punjab is not in session and Governor of the Punjab is satisfied that circumstances exist which render it necessary to take immediate action.

In exercise of the powers conferred under clause (1) of Article 128 of Constitution of the Islamic Republic of Pakistan, Governor of the Punjab is pleased to make and promulgate the following Ordinance:

1.    Short title and commencement.---(1) This Ordinance may be cited as the Companies Profits (Workers' Participation) (Amendment) Ordinance, 2018.

(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 subsection (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 "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;";

(c)   after clause (c), the following new clause (cc) shall be inserted:

"(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 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 subsection (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".

 

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 "Punjab Companies' Profits Workers' Participation Committee" to monitor the implementation of the Act and the scheme thereunder and to advise the Government for appropriate administrative, legislative and other measures to accomplish 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 from a company or the Board as may be prescribed or as may be required by the Company for purposes of the implementation of the provisions of the Act.

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

 

8.    Amendment in section 5 of Act XII of 1968.---In the Act, in section 5:

(a)   for subsection (1), the following shall be substituted:

"(1) Where the company fails to comply with the provisions of the Act or the scheme, 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 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 subsection (1), the following subsection (2) shall be inserted:

"(2) Where a company fails to comply with the orders of the committee under subsection (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

(c)   after subsection (4), the following new subsection (5) shall be inserted:

"(5) 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 section 8A in Act XII of 1968.---In the Act, after sections 8, the following new section 8A shall be inserted:

"8A. 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:

(i)    in clause (iii), for the full stop at the end, a colon shall be substituted and thereafter the following proviso shall be inserted:

"Provided that for a company established on or after first day of July 2018:

(a)   clause (ii) shall have effect as if for the expression "Rs. 20 lacs",  the expression "five million rupees" were substituted; and

(b)   clause (iii) shall have effect as if for the expression "Rs. 40 lacs", the expression "twenty million rupees" were substituted."; and

(ii)   under the heading "Explanation", in clause (a), sub-clause (ii) shall be omitted;

(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 prescribed, from time to time, by the Government.

2. Workers drawing average monthly wages exceeding the minimum wages for unskilled workers prescribed, from time to time, by the Government but not exceeding twenty two thousand rupees.

3. Workers drawing average monthly wages exceeding twenty two thousand rupees.";

(c)   in clause (d), the following shall be substituted:

"(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 in the Schedule of the Punjab Minimum Wages for Unskilled Workers Ordinance, 1969 (XX of 1969) in value in so far as such allocation is relatable to clause (b) of subsection (1) of section (3).";

(d)   paragraph 8 shall be omitted; and

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

"(9) The Government may approach the Federal Government for exemption of the income tax on the income of the Fund including capital gains.".

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[1] Omitted by section 2 of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[2] Substituted by section 4 of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[3] Substituted by section 5(a) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[4] Omitted by section 3(a) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[5] Inserted by section 5(b) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[6] Inserted by section 5(c) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[7] Substituted by section 5(d) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[8] Substituted by section 5(e) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[9] Substituted by section 6 of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[10] Omitted by section 3(a) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[11] Omitted by section 3(a) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[12] Omitted by section 3(a) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[13] Inserted by section 7 of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[14] Omitted by section 3(a) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[15] Inserted by section 8(b) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[16] Omitted by section 3(a) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[17] Inserted by section 8(c) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[18] Omitted by section 3(a) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[19] Omitted by section 3(a) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[20] Omitted by section 3(a) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[21] Inserted by section 9 of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

[22] Omitted by section 3(a) of the Companies Profits (Workers’ Participation) (Amendment) Ordinance, 2018 (Ordinance No. VII of 2018), published in Gazette of the Punjab Extraordinary, vide No. Legis: 13-77/2010(C)(P-I), dated 01-06-2018.

The Schedule (Scheme) [See section 2(e)]

The Companies’ Profits (Workers’ Participation) Rules, 1971

Model procedure for the maintenance of accounts of Workers’ Participation Fund

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