Master & Servant

Master & Servant

With a projected population of 191.71 million people, Pakistan is often ranked as the sixth most populous country in the world. According to official sources, 60% of the total population, i.e. 103.76 million people, fall within the working age group. According to the International Labour Organisation statistics, 5.3% of Pakistan’s workforce is unemployed. The rest of the working force that is to say, 98.26 million people, is effectively employed in the public sector, private sector establishments in either full time or part time basis, domestic employment or involved in entrepreneurial activities, including SMEs (small and medium-sized enterprises).

In order to regulate this astronomical workforce, a number of legislations are in play. The public sector employees are subject to a number of legislations and codes that regulate their employment. Federal legislation regulates the terms and conditions of employment of persons working with the federal state apparatus, whereas legislation of each province respectively, regulates its civil servants and judicial officers. Both the federation and the provinces, have also established specialist service tribunals for adjudication of issues relating to the terms and conditions of employment of their civil servants and judicial officers. A number of autonomous and semi-autonomous public authorities have issued their own rules and regulations in this regard. However, the employees of these public authorities are not entitled to approach the service tribunals for resolution of their grievances. Under certain circumstances these employees would be able to approach the relevant High Court under the constitutional jurisdiction for issuance of a writ. While a number of state owned companies have also issued their respective employment rules and policies, their employees are considered to be private sector employees. Accordingly, their employment is regulated by rules applicable to private sector employees, unless there is an express statutory exemption.

The private sector is also regulated by a number of legislations. These legislations regulate working hours, minimum wage, leaves, gratuity, bonus, dismissal and retrenchment etc. Since the passing of the Eighteenth Constitutional Amendment, labour matters fall within the domain of each province. The Federal Government and the Provincial Governments have issued their respective industrial relations legislations to regulate the labour market in their areas of domain. While there may be some minor differences in the legislation issued by the federal government and each of the provinces, respectively, there is no conceptual difference. The numerous legislations regulating employment in the private sector effectively police the employment relationship of a single category of employees, i.e. workers. In each case, the relevant Industrial Relations Act and the other legislations define a ‘worker’ and hence identify who would be entitled to protection afforded by that law.

The definition of a worker is a novella. In order to fully understand who is a worker it is important to understand who is an ‘employer’. Obviously, a person who fulfils the criteria of an employer will not qualify as a worker. The laws provide an exhaustive definition of who is an employer. A person is a worker if that person is an employee of that establishment, provided that person is not an employer. To ensure that things are crystal clear and that any irrelevant person does not become categorised as a worker, the legislators slipped in an explanation in the legislation as well.

By way of an example, the Federal Industrial Relations Act, 2012, defines an employer as:

“…in relation to an establishment, means any person or body of persons, whether incorporated or not, who or which employs workmen in the establishment under a contract of employment and includes–

(a)  an heir, successor or assignee of such person or body;
(b)  any person responsible for the management, supervision and control of the establishment;
(c)  in relation to an establishment run by or under the authority of any department of the Federal Government or the Government, the authority appointed in this behalf or, where no authority is so appointed, the head of the department;
(d)  in relation to an establishment run by or on behalf of a local authority, the officer appointed in this behalf, or where no officer is so appointed, the chief executive officer of that authority;

Explanation.– For the purpose of distinction from the category of “workers” or “workmen”, officers and employees of a department of the Federal Government or the Government or local authority who belong to the superior, managerial, secretarial, directorial, supervisory or agency staff and who have been notified for this purpose in the official Gazette shall be deemed to fall within the category of “employers”; and

(e)  in relation to any other establishment, the proprietor of such establishment and every director, manager, secretary, agent or officer or person concerned with the management of the affairs thereof;”

This trend or concept remains the same in almost all labour market legislations and across provinces.

Accordingly, a worker is a person who is neither part of the junior nor mid to senior management. Obviously, this means that workers would be the junior most category of employees in any establishment. In a country like Pakistan, white collared positions are not easy to come. It is necessarily assumed that any person who would be entitled to occupy a white collared position would have spent a number of years in obtaining some form of formal education, professional qualification or many years to professional experience under their belt. Having gone through the labour of all that, one would wonder why the vast majority employees who would consider themselves to have earned a white collar position would want to be categorised as workers.

Being categorised as a worker has some inherent incentives. As soon as a person is categorised as worker, that person is no longer subject to the archaic legal principle of Master & Servant. In a sense, this makes the worker somewhat larger than life as compared to the managerial staff, who would consider themselves to exercise a degree of executive control and authority over that worker. As soon as a person becomes categorised as a worker, that worker becomes entitled to numerous protection under the law. These range as far wide as being able to form labour unions, appoint collective bargaining agents, protection from unfair dismissal and termination, retrenchment protection, gratuity payments and ability to approach the specialist Labour Court for redressal of employment grievances. In addition, they would also be able to approach a number of executive agencies established under relevant legislations to assist in their cause.

The employment of a person who is not a worker is governed by the principle of Master &Servant. This means that invariably all white-collared employees are outside the protection afforded by the relevant labour legislations. Many would consider this somewhat incongruous. A common question arises, why is the managerial staff not entitled to the same level of protection under the law in respect of their employment? Moreover, white collar employees cannot form labour unions or collective bargaining units in order to advance their voice. This applies across the board without discrimination irrespective whether the employee works in a company in which the government has an interest or not.

Though the concept of Master & Servant may not have been completely out of place at the time of the development of that doctrine, it is definitely out of time and place in the 21st century. The doctrine is well recognised in both common law and civil law legal systems. Originally, the concept was developed as an extension of the concept of Master & Slave. Since the abolishment of slavery in various jurisdictions since the start of the 19th century there is, today, global consensus that times of slavery have long gone. Most of the common law and civil law jurisdictions introduced statutory modifications to the concept of Master & Servant. The more progressive ones, especially countries in Western Europe, have altogether abolished that rule and replaced it with the statutory concept of Employer & Employee. While one may argue that this is merely a change of nomenclature, the concept is definitely far wider and based on transparency and equal protection of both the employer and employee.

The Master & Servant principle continues to apply in Pakistan without any significant statutory or judicial intercession. Effectively, white-collared employees are employed during the pleasure of their employer. There are several decisions of the superior courts stating that the concept of Master & Servant falls foul to basic tenets of the Constitution and Shariáh. At the same time there are numerous other judicial decisions that established the unfettered right of an employer to terminate an employee at any time while applying the principle of Master & Servant. Accordingly, the concept of unfair termination or dismissal does not extend to a white collared employee. To avoid leaving a terminated employee completely without redress the courts have held that a terminated employee can approach the ordinary courts on account of breach of contract, provided the employer failed to follow the contractual mechanism for termination. In most cases, this will render the terminated employee entitled to the salary for the notice period. In fixed term contracts, the employee may be able to claim wages for the outstanding period of contract. In all cases, the white collared employee is uncompensated for an unfair dismissal from service and the stigma attached to that.

According to the World Bank’s ‘Doing Business’ Guide, at an average, it takes just over three years to enforce a contract in Pakistan by judicial means. Also, white collared employees are not entitled to any precautionary interim measures, which would otherwise be available to workers or public sector employees. For many white collared employees the time-cost-benefit would not ordinarily justify approaching the courts for redress in cases of termination. This provides employers with opportunity to abuse the relationship with their employees, many of who would be wary of availing legal recourse for settlement of their grievances.

The Asian Development Bank ranks the Pakistani private sector as the primary producer of goods and services. It is also leading investment and economic activity within the country. Having an astronomical work force, Pakistan needs to take sincere steps to regulate its job market as a whole. There is a dire need to provide an equal level of protection to white collared employees. White collared employees should be able to seek redressal of their grievances through specialised forums, either in the shape of a specialised employment tribunal or already established Labour Courts. They should be provided additional statutory safeguards in respect of their employment, rather than solely limiting their rights to provisions of their employment contracts. A continuous neglect of the governments, both at the federal level and that of the provinces, to regulate the job market adversely affects the workforce morale. This also exacerbates the existing brain drain situation that Pakistan faces. Employees who are unable to escape abroad, for one reasons or another, feel detached of their employers and place of work. The sense of detachment paves way to a jittery job market, where an employee would be constantly seeking to make a move for the sake of moving. A well regulated job market as a whole will provide opportunity for human resource development and competitive growth within all economic sectors.


The views expressed in this article are those of the author and do not necessarily represent the views of or any organization with which he might be associated.

Syed Ali Naveed Arshad

Author: Syed Ali Naveed Arshad

The writer is an international lawyer based in Dubai and has extensive experience working in the Middle East and Pakistan. He is also a Member of Courting The Law’s Advisory Board and can be reached at [email protected]