Rights of Employees Governed by Non-Statutory Service Rules

Understanding the Distinction

Before delving into the rights of employees, it is crucial to understand the difference between statutory and non-statutory service rules:

• Statutory rules: These are laws/rules/regulations enacted, expressly or by reference, by a legislative body and have the force of law. They provide a comprehensive framework for employment relationships including terms and conditions.
• Non-statutory rules: These are internal regulations created by employers for managing their workforce. They are not enforced by the state but are binding on employees as part of their employment contract.

Rights Under Non-Statutory Rules

While non-statutory rules might not have the same level of protection as statutory laws, they still outline essential aspects of the employment relationship. Common rights covered under non-statutory rules include:

• Terms and conditions of employment: Salary, allowances, working hours, leave entitlements and other benefits.
• Disciplinary procedures: Rules governing misconduct, warnings and termination.
• Grievance handling procedures: Mechanisms for employees to raise concerns and seek redress.
• Performance appraisal and promotion criteria: Guidelines for evaluating employee performance and career progression.
• Code of conduct: Expected behaviour and standards of conduct for employees.

Limitations and Challenges

It is essential to recognize the limitations of non-statutory rules:

• Lack of enforceability: Unlike statutory laws, non-statutory rules are generally not enforceable through legal action. Disputes often rely on contractual terms or internal grievance procedures.
• Potential for abuse: Employers may have more discretion in interpreting and applying non-statutory rules, leading to potential unfair treatment.
• Limited scope: Non-statutory rules typically cover only specific aspects of employment, leaving gaps in protection compared to statutory laws.

Balancing Act

While non-statutory rules provide a framework for employer-employee relations, it is crucial to strike a balance between employer flexibility and employee protection.

Generally, employees governed by non-statutory rules are also referred to as being governed by the principle of master and servant and/or contract employees.

For civil servants and ‘workmen’, a legal regime, in the form of laws framed by legislative bodies and special courts/tribunals, is present. Employees called civil servants and workmen have special protections and procedures under the laws and have remedies for their grievances before special courts/tribunals, up till the Supreme Court of Pakistan.

Employees of statutory corporations/authorities/foundations/commissions governed by statutory rules, not being civil servants and/or workmen, can approach the High Court under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973 for the redressal of their employment grievances (PLD 2006 SC 602/PLD 2007 SC 681). However, that too is restricted to the violation of law only. Factual disputes/controversies cannot be resolved in constitutional jurisdiction.

The problem lies for the employees of such corporations/authorities/foundations/commissions or even government entities governed by non-statutory rules and/or by contract.

For them, since 1956 (refer to: PLD 1956 SC 298/331), as per the consistent view of the Supreme Court of Pakistan, neither the constitutional jurisdiction of the High Court under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973 is available to them nor do they have any protection for their employment rights/grievances.

These employees cannot seek reinstatement but only damages for wrongful termination through a civil suit.

They cannot even seek regularization of their employment, unless there is a law in place and they fulfil the requirement of that law.

Despite a plethora of judgments of High Courts and the Supreme Court of Pakistan over the years, such employees have to rush to the High Court or different forums for the redressal of their employment grievances. This has resulted in a waste of precious time and money. Courts are unnecessarily burdened by this type of litigation and the aggrieved employees often remain unsuccessful.

The federal legislature did intervene in 1997. By inserting Section 2A in the Federal Service Tribunal Act 1973, it provided a remedy to the employees of statutory corporations. Till the Mubeen-Ul-Islam case in 2006 (PLD 2006 SC 602), the Supreme Court of Pakistan applauded this law but then declared it unconstitutional. Since 2006, the employees governed by non-statutory rules/the principle of master and servant have again been left without a remedy and have become victims of a vicious cycle of unfruitful/frivolous litigation.

Recently, however, the Supreme Court of Pakistan, in its judgment dated 15.04.2024 passed in CA No.795-L/2012, CA 123-L/2013 and CA No. 2508-L/2017, has stressed the need for legislative intervention concerning the rights of employees under non-statutory service rules.

Judgment Highlights

• The Punjab Provincial Cooperative Bank (PPCBL) had non-statutory Staff Service Rules (2010).
• Employees Ghulam Mustafa, Iftikhar Ahmed and Barkat Ali challenged disciplinary actions against them through writ petitions in the Lahore High Court.
• The High Court dismissed the petitions on the grounds that PPCBL’s service rules were non-statutory and the relationship between the bank and its employees was that of master and servant.
• The Supreme Court upheld the High Court’s decision, ruling that the writ petitions were not maintainable for violations of non-statutory service rules.

Remedies for Employees under Non-Statutory Service Rules

• The employees can file departmental appeals within the bank as per Rule 40 of the Staff Service Rules.
• If dissatisfied with the departmental appeal outcome, they can pursue a civil suit in a civil court.

Court’s Observation on Master-Servant Relationship

• The court acknowledges the limitations of the “master-servant” principle in protecting employee rights. However, it stresses the need to change “niceties and minutiae of this colonial tenet and precept.”
• It emphasizes the need for reforms to establish a special tribunal or court for employees under this category.
• Such a tribunal would ensure checks and balances and provide faster resolution of disputes compared to civil courts.

Recommendations

• The court recommends that the government consider legislative reforms to address the situation of employees under the master-servant relationship who lack statutory service rules.
• This reform could involve creating a special tribunal or court for faster dispute resolution and ensuring some basic rights and obligations for employers and employees.

It is high time for federal and provincial legislatures to enact proper laws to safeguard the rights of employees governed by non-statutory rules/the principle of master and servant and provide for grievance redressal forums. The principles of master and servant should be done away with.

---

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