28 December 2015
In the recent years, many multinational companies and other companies have “outsourced” the workings of the department of human resources. This means that the company hires and fires employees through a middle-company, the independent contractor. Usually, the remuneration of such “contracted” employees is also agreed and disbursed by the independent contractor. The advantage for doing so for the company is that it does not assume any liability on the part of the employee. Therefore, the company protects itself from the benefits that are usually provided to the employee.
When such cases reach the courts of Pakistan, due to some grievance of the employee, the company regrets any responsibility on the defence that such employee was the employee of the independent contractor and not the company.
The courts of Pakistan deliberate on the status of the employee, whether of the company or the independent contractor, when such employee falls within the definition of “workman” under the dominant labour laws such as the provincially adopted Industrial Relations Ordinance and the Industrial Relations (Standing Orders) Ordinance. However, any employee employed in a supervisory role or such employee that is expected to use creativity, imagination, intellect, skill, know-how or generally apply his mind to the assignments, does not fall within the definition of a workman. Therefore, employees employed in multinationals or such companies would usually fall outside the ambit of the definition of “workman”.
The rights of the employees are then limited to the contractual terms and conditions agreed with either the employer or the independent contractor.
Notably, the concept of “independent contractor“, as defined in the laws of United Kingdom, United States of America, and other (Western) jurisdictions is different from the concept in Pakistan. The jurisprudence in Pakistan has not yet evolved to define independent contractor as separate from an employee, outside the definition of workman. The definition of independent contractor remains limited as, what appears to be, a sub-section of those employees defined as “workman”.
Although the considerations applied when determining the status of a workman as a worker of the company or an independent contractor may be applied to the status of an employee (who is not a workman), but these considerations have, as yet, not been incorporated in the precedents set by the superior courts of Pakistan.
Such considerations include: (1) technical and administrative control over the employee; (2) the decisions re hiring, firing, remuneration and other benefits, the employees; (3) the involvement of the employee in the company; (4) that the employee works in a department that would constitute the principal organ of the company; (5) the machines, equipment, and raw material belong to the company; and the department is controlled by the supervisors of the company; (6) the company benefits from the performance of the employees functions; (7) the employee is integrated into the company; (8) the reality of the contract with the employee.
If the above considerations are present in the relationship between the employer and employee, whether hired directly or through an independent contractor, such employee is deemed to be an employee of the company and not the independent contractor.
For all employees, not protected as “workman” under the labour laws of Pakistan, the contract with the employer is the most important document and establishes the rights of the employee with the employer.
Myra Khan is a Barrister-at-Law from the Honourable Society of Lincoln’s Inn and Vice Chairperson Women Rights Committee of the Lahore High Court Bar Association. She is currently practicing law in Lahore, Pakistan.
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