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Petitioner: RECKITT & COLMAN OF PAKISTAN LTD. through Manager VS Respondent: Mrs CARMAN DEMLLO and 20 others
Court Name: National Industrial Relations Commission Judge(s): Allah Rakhio Leghari, Abdul Sattar Khan, Zia Mehmood Mirza Title:RECKITT & COLMAN OF PAKISTAN LTD. through Manager vs Mrs CARMAN
DEMLLO and 20 others Case No.: Appeal No, 12(69.) of 2000 Case No,4-A(307) of 1999 Date of Judgment:2001-02-21 Reported As: 2001 PLC 543 Result: Appeal dismissed Judgment ORDER ' ZIA MEHMOOD MIRZA (CHAIRMAN).---This appeal under section 22-D of I.R.O. 1969 filed by Reckitt & Colman of Pakistan Limited, Ethical Pharma Factory is directed against the order of the learned Single Member, Karachi Bench dated 29-7-2000 whereby the respondents' petition under section 22-A(8)(g) of I.R.O., 1969 has been accepted holding that the termination of the respondents is of no legal effect and they will be deemed to be in the employment of the appellant until any of them voluntarily accepts the offer of Golden Hand Shake and voluntarily resigns in terms of the agreement dated 24-3-2000 or until Sindh Labour Court accords permission for closing down the factory under Standing Order 11-A of the Standing Orders Ordinance, 1968 and in pursuance thereof, the appellant issues fresh termination letters to the respondents. It has been further directed in the impugned order that the appellant will continue to pay salary to the respondents "till they are terminated by legal course under Standing Order 12(3) of Standing Orders Ordinance, 1968, after permission for closure is accorded by Sindh Labour Court No,3, or any one of the applicant, if accepts the terms of agreement dated 24-3-2000 R/24 and thereby receives Golden Hand Shake benefits, and the salary so received by any of the said applicants shall be adjusted from their Golden Hand Shake benefits, which the respondents have agreement to give in case the worker severes relationship with the respondents by tendering his resignation w,e,f, 8-3-2000". 2. Facts forming the background of this appeal, briefly stated, are that the appellant company terminated the services of all its employees, 117 in number, including 21 respondents herein, who were working in its Ethical Pharma Factory situate at C-36, S.I.T.E., Karachi. The services of all these employees were terminated on 8-3-2000 and the reason for their termination as stated in the
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letter of termination all similarly worded was the high cost of manufacturing the Products in the said factory which it was stated, "caused continuous decline in profits and turned the operation in loss" which also eroded profits of the company as a whole. Yet another reason cited in the termination letters was the space constraints in the factory causing GMP Violations pointed, But by the Drug Authorities from time to time. For these reasons, the management decided to close down the factory and outsource the manufacturing of the Ethical Pharma Products to other Pharmaceutical Companies at Cheaper rates. Services of all the workers employed in the factory were accordingly terminated with immediate effect i,e, close of working hours of 8th March, 2000, on payment of one month's salary in lieu of notice. ' Simultaneous with the termination of all the 117 employees, the appellant filed an application under Standing Order 11-A of the Standing Orders Ordinance, 1968 before the 3rd Sindh Labour court for permission to close down its factory at C-36 Karachi. It appears that a day or two after the termination of services of the workers the appellant entered into negotiations with the office- bearers of the C.B.A. Union and as a result of the negotiations, an Agreement was signed/executed on 24-3-2000 whereby the management offered a financial package to the terminated employees by increasing their basic salary and House Rent Allowance w.e.f 1-1-2000, increasing the gratuity amount and allowing other additional benefits such as ex-gratia payment in lieu of bonus and other amounts of redundancy benefits. The agreement further provided that the individual affected/terminated workers will submit resignations with the request to convert their termination letters into resignations and also acknowledge that they forego lien to further employment or re- employment. It was also agreed that a joint consent application will be made by the Management and the C.B.A. In the 3rd Sindh Labour Court in Application No, 1 of 2000 under Standing Order 11-A for closure of the Ethical Pharma Factory/Establishment and that the union shall withdraw all cases pending before NIRC/other Courts. This Agreement/Package purported to settle the industrial dispute raised by C.B.A. On January 1, 2000 which was stated to be pending before the Area Conciliator. It may be stated that Reckitt & Colman Pharmaceutical Employees Union which was the C.B.A. In the appellant establishment had served a charter of demands on 1-1-2000 and the dispute so raised was pending before the Area Conciliator when the services of 117 workers were terminated by the appellant and also at the time of execution of the afore-referred Agreement. 3. It is an admitted fact that pursuant to the aforementioned Agreement, 96 out of 117 workers including the office-bearers of the C.B.A. Union submitted their resignations in terms of the Agreement, received all their legal dues and additional financial benefits under the Agreement in full and final settlement of all their claims and severed all their connections with the appellant Company. The remaining 21 workers viz the respondents herein, however, did not accept the agreement in question and filed a petition under section 22-A(8)(g) of I.R.O. Before a Bench of this Commission at Karachi to challenge various action of the appellant Company as acts of unfair labour practice. It may be stated that the petition 'was initially filed by 23 petitioners It appears that during the pendency of the petition, two of the petitioners namely Muhammad Azad and Irum Jabeen also resigned and received all their legal dues and benefits under the Agreement dated 24-3-2000 in full and final settlement of their claims with the result that the petition to their extent was held to be not maintainable. Be that as it may, case set up by the respondents in their petition was that they were permanent employees of the appellant Company and were the Members of Reckitt & Colman Pharmaceutical Employees Union/CBA in the appellant Establishment. It was alleged by the respondents that the office-bearers of the said union had resigned from the employment and ceased to be the Members of the union and as such the remaining workers elected new office-bearers of the union. It was also averred in the petition that an industrial dispute was pending in pursuance of a charter of demands submitted (by the C.B.A. Union) when the appellant management persuaded the workers to resign from the employment "otherwise their
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service shall be terminated". It was further averred by the respondents that the appellant company had also filed an application under Standing Order 11-A in the 3rd Sindh Labour Court for permission to close down the Establishment in which application they (respondents) had moved an application under Order l., Rule 10, C.P.C. For being impleaded as a party. Grievance was made by the respondents that the appellant company attempted to remove the workers from the employment prior to the permission from the Labour Court whereupon the workers protested and they were allowed to attend the factory. However, on the persuation of the Management and the union, several workers resigned from the employment and received their legal dues and other additional benefits but the respondents did not resign though the appellant pressurised them to do so by extending threats and stopping the canteen facility. Precise allegation made in para. 9 of the petition was that the respondents and all other workers "were taken back on duty after illegal termination and thereafter the workers had been removed from the employment after resignation but the applicants refused to give resignation." These actions of the appellant, it was contended, amounted to unfair labour practice. An averment was also made in the petition (presumably with reference to some earlier incident) that the appellant Management in collusion with the previous office-bearers of the union attempted to terminate the workers to crush the trade union and in fact removed 11 workers from employment and the previous office-bearers gave them no protection and instead withdrew all the cases to render the respondents helpless. ' On the allegations afore-mentioned, the respondents prayed in their petition that various steps taken by the appellant be declared as acts of unfair labour practice and the appellant "be restrained from shifting any machinery plant, material and product till the disposal of the case." It was further prayed that the appellant be also restrained from gate-stopping the respondents from their attendance in the establishment or stopping their salary and benefits and harassing, pressurising and threatening them. A direction was also sought to be issued to the appellant not to deal with the previous office-bearers of the union. 4. The appellant resisted the respondents' petition by filing a Reply thereto in which, inter alia, the following preliminary objections were raised:-- (i) That the petition jointly filed by 23 petitioners was not maintainable in law. (ii) That the petitioner under section 22-A(8)(g) of the I.R.O. Is to be dealt with in the manner laid down under section 25-A of the I.R.O. And since the petitioners did not serve the grievance notice as required under section 25-A, the petition filed by them was not maintainable. (iii) That Reckitt & Colman Pharmaceutical Employees Union of which the petitioners claimed to be the Members was admittedly not an Industrywise Trade Union but was registered with the Provincial Registrar of Trade Unions. As such the grievance agitated by the petitioners based on the alleged acts of unfair labour practice was justiciable before the Labour Court in terms of section 22-A(12) of the I.R.O. And not before this Commission. (iv) That shifting of machinery, plaint, material and products is a managerial function and not an act of unfair labour practice. For this reason also, the petition filed by the petitioners under section 22-A(8)(g) of I.R.O. Was not maintainable. (v) That the petitioners had earlier filed an application under Order 1, Rule 10, C.P.C. For impleading them as party in a previous case No,4-A(422) of 1999-K which application was not entertained by Bench of this Commission and as such the petition now filed by the petitioners was barred by the principle of res judicata. (vi) That petitioners Nos.22 and 23 have since resigned and received all their dues and severed their connections with the appellant. The petition to their extent was, therefore, not maintainable. ' The appellant in its Reply also controverted the factual allegations made by the respondents in their petition and pleaded its own version in some detail stating that the services of all the petitioners were terminated vide letters of termination dated 8-2-2000 which were sent to them
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individually by post on their addresses available on the record and which were also published in Daily Newspaper. 'Aman' dated 9-3-2000. The appellant denied the claim of the respondents that the previous office-bearers had resigned from the employment and new office-bearers were elected. It was stated that the appellant had no knowledge about the change of office-bearers as no such change was communicated to it. It was alleged by the appellant that petitioner No,1 (respondent No,1 herein) was not even a Member of Reckitt & Colman Pharmaceutical Employees Union. As regards the termination of 11 workers it was stated by the appellant that their services were terminated in 1999 due to out-sourcing of non-core activities and they were given exgratia payment over and above the legal dues and none of them challenge the termination in any Court of law. The closing down of the factory was sought to be explained on the premises that due to continuous decline in profits and the loss suffered as per the last audited Accounts of the Company, the profitability and viability of the respondent company had eroded as a whole and the space constraint had caused G.M.P. Problems and irregularities which were pointed out by the Drug Authorities from time to time under the Drugs Act, 1976 and the Rules framed thereunder. The Management, therefore, decided to close down the Ethical Pharma Factory and out-source the manufacturing of Ethical Pharma to independent Pharmaceutical Companies at cheaper rates so as to make the company economically viable. It was further pointed out by the appellant that for the year ending December, 1999, the Company had suffered financial losses to the tune of Rs215,675,000, as shown in the balance sheet Annexure R/23 and pharmaceutical results also revealed operating loss of Rs93,647 millions for the year ending 31st December, 1999. Consequently, the management filed application under Standing Order 11-A before 3rd Sindh Labour Court Karachi for permission to close down the establishment and simultaneously terminated the services of 117 workers of Ethical Pharma Factory. It was further stated by the appellant that "After receiving termination letters all the workers led by the C.B.A. Approached the management and requested for payment of redundancy benefits amount/exgratia payment in addition to the legal dues in full and final settlement of all their claims to date and also forego their laien or claim of future employment. They also agreed to tender individual resignation letters severing all the connection with the company with effect from close of office on March 8, 2000". It was further claimed by the appellant that C.B.A Union also consented to the closure of Ethical Pharma Factory and the industrial dispute was thus, resolved and settled in terms of Agreement dated 24-3-2000 which was executed between the C.B.A. Union namely Reckitt & Colman Pharmaceutical Employees Union and the appellant management. Referring to the terms of the said Agreement, the appellant stated that it was specifically agreed therein that the package which was being given in the shape of redundancy benefit amount shall also settle the industrial dispute raised by the C.B.A. On 1-1- 2000. The appellant denied the respondents' allegation that the workers were forced to resign from the employment and sought to explain that since all the workers including the respondents had already been issued letters of termination, question of forcing them to resign did not arise. As regards the respondents' allegation that the appellant attempted to remove the workers before obtaining permission of the Labour Court, it was submitted by the appellant that "The formal permission under Standing Order 11-A need not be the first step in the process of closure but could well be the last step in the process of closure. Standing Order doe's not spell out any sequence in which various steps for closing down an establishment have to be taken by the employer." It was further averred by the appellant that the respondents fell within the strength of less than 50% of the workers and their services could; therefore, be terminated without attracting the provisions of Standing Order 11-A.. The allegation of the respondents that the workers had been attending the Factory subsequent to their termination was denied by the appellant and it was claimed that the workers were only allowed to come to the factory gate so that the C.B.A. Union could inform them of the talks going on with the management after termination of their services.
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' The appellants also denied the respondent's allegation that it was attempting to hire other workers to crush the trade union and reiterated its submission that the management had decided to close down the Ethical Pharma Factory and out-source the manufacturing of Ethical Pharma Products to Independent Pharmaceutical Companies at Cheaper rates which, it was alleged, was permissible in law. The appellants also denied the allegation that after termination, the respondents or other workers were taken back on duty. It was explained by the appellant that the terminated workers were only allowed to sit in the factory so that the C.B.A. Could inform them about the result of negotiations going on with the management and get their consent in General Body Meeting for signing the Agreement. It was further stated by the appellant 96 out of 117 workers including petitioners Nos.22 and 23 had received all their dues and benefits and severed their connections with the appellant. It was alleged by the appellant that the petition was filed by the respondents with mala fide intentions in order to extort some more extra benefits from the respondent management as the formula of redundancy benefits depends on the length of service and since the applicant had lesser length of service, this claim suited them less favourably". 5. Both the parties adduced evidence by filing affidavit-in-evidence in support of their respective contentions. All the respondents herein filed their own affidavits-in-evidence while the appellant Company placed on record affidavit-in-evidence of three of its officers The deponents/witnesses on either side were duly cross-examined. The learned Member hearing the petitioner first of all dealt with the legal objection raised on behalf of the appellant and repelled them. The legal objection against the maintainability of the joint petition was rejected by the learned Member holding that all the petitioners before him had common cause of action against the termination based on closure of the factory by the appellant without prior permission of the. Labour Court, and therefore, their joint application was maintainable. The learned Member also overruled the appellant's objection regarding non-service of grievance notice under section 25-A of I.R.O. And held that for invoking the provisions of section 22-A(8)(g) of I.R.O., workers are not required to give grievance notice under section 25-A and in any case, when a petition under section 22-A(8)(g) is filed to prevent the occurrence of unfair labour practice, the case is to be dealt with under Regulation 32(2) of N.I.R.C. (Procedure and Functions) Regulations, 1973 which does not lay down any pre-condition of grievance notice. The learned Member proceeded to observe that the petition filed by the respondents under section 22-A(8)(g) has been dealt with in the manner prescribed in Regulation 32(2)(c) and as such grievance notice under section 25-A of I.R.O. Was not required to be given. ' The appellant's objection that since the respondents were Members of a locally registered trade union, their remedy lay only before the Labour Court under section 22-A(12) of I.R.O. And they could not invoke the jurisdiction of this Commission, was also overruled by the learned Member holding that both the N.I.R.C. And the Labour Court have concurrent jurisdiction to deal with the cases in respect of unfair Labour practice. The learned Member also found no substance in the appellant's objection that the respondents had filed their petition against Reckitt & Colman Pharmaceutical Limited which Company had no existence. The learned Member h found with reference to the appellant's evidence that Reckitt & Colman Pharmaceutical Limited which had employed the respondents was later amalgamated with the appellant Company. The objection of the appellant that the petition was not properly signed by some of the respondents, had also been overruled with the observation that the appellant did not produce any evidence to support this objection. The appellant's objection that petitioners Nos.22 and 23 having resigned during the pendency of the proceedings and having received all their dues in full and final settlement, the petition to their extent was not maintainable, has, however, been upheld by the learned Member with the observation that "the applicants Nos.22 and 23, having resigned and taken their dues in full and
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final settlement, have severed their connections with the respondents, as such the application in respect of applicants Nos.22 and 23 will not be maintainable". 6. On merits of the case, the learned Member found that although the letters of termination dated 8-3-2000 sent to the respondents through registered post and TCS were received back with endorsement of 'refusal' etc., the respondents came to know of their termination on 9-3-2000 when they came to the factory as usual and saw their termination orders published in daily 'Arran' dated 9-3-2000 copy whereof was affixed on the outer gate of the factory. It has been further found by the learned Member that thereafter, all the 117 workers including the respondents and the office- bearers of the C.B.A. Went to the Head Office of the appellant company where according to the management, at the request of the workers the management agreed to negotiate with the office- bearers of the C.B.A. Regarding golden handshake benefits to be given to all the terminated employees. Negotiations were accordingly held between the management and the office-bearers of the C.B.A. And three senior workers representing the employees. The learned Member, however, accepted the version of the respondents that the office-bearers of the C.B.A. Told them that they were negotiating with the management for their employment and they (respondents) had no knowledge that the negotiations were being held for golden handshake benefits. The learned Member also took note of the fact that the conciliation proceedings on the charter of demands dated 1-1-2000 were pending before the Area Conciliator when the Agreement dated 24-3-2000 was signed by the officers of the appellant Company and the office-bearers of the C.B.A. And observed that "It was, therefore, obligatory on the parties signing agreement that they should have signed the same before the Area Conciliator". The learned Member took the view that since the Agreement in question was not signed in the presence of Area Conciliator and it was also not drawn up in the matter and the form as prescribed by Rules 69 and 70 of the Industrial Relations (Sindh) Rules, 1973, it could not be considered to be an agreement or settlement for the purpose of I.R.O., 1969. Reliance for this proposition was placed on a judgment of Labour Appellate Tribunal, Sindh reported in 1981 PLC 47. The learned Member further observed that the Agreement dated 24- 3-2000 though bilateral appeared from its contents to be unilateral agreement whereby the appellant management had agreed to give package of golden handshake benefits to 117 terminated workers It was accordingly held by the learned Member that the Agreement in question "will not be binding on all the workers but will have validity only to the extent of the workers who ever accepts the same." Consequently, the respondents were not bound by the said Agreement but the same being in the nature of an offer from the management; they may or may not accept it. ' As regards the status of the respondents after the termination letters dated 8-3-2000 were issued against them, the learned Member held that since the management had itself invited all the 117 terminated workers on 9-3-2000 to come in the factory and agreed to negotiate with the office- bearers of the C.B.A. And three other senior workers by this conduct "they expressly as well as impliedly had withdrawn the termination letters of all 117 workers including the applicants" and considered them as their workers ad even recognized their status as officer-bearers and negotiated with them. With reference to Standing Order 11-A which provided that no employer shall terminate the employment of more than fifty per cent of the workmen or close down the whole of the establishment without prior permission of the Labour Court. The learned Member proceeded to hold that the termination of all the 117 workers of the Factory on 8-3-2000 without obtaining prior permission of the Labour Court in this behalf was clear contravention of the said Standing Order which also constituted an act of unfair labour practice as contemplated under section 15(1)(i) of I.R.O. The learned Member also took note of the fact that although all the 117 workers employed in Ethical Pharma Factory were terminated, the letters of termination mentioned that the services of the workers were terminated following the principle of 'last-come, first-go' which principle, it was observed by the learned Member, was relevant in the cases of retrenchment when some workers
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were retained and others were terminated. The learned Member, however, found that the appellant Company had four factories including Ethical Pharma Factory and Head Office all of which being one establishment, it…
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