Pakistan Labor Laws

and
Social Accountability
Requirements and Procedures

1
 Contents
• What is Corporate Social Responsibility (CSR)
• What is Social Accountability (SA)
• How SA fits into CSR
• Scope of Pakistan Labour Laws and Social Accountability
• Responsibility of Project Owner
• Responsibility of EPC Contractor
• Responsibility of Sub-Contractors hired by EPC Contractor
• Responsibility of Tier 3 Sub-Contractors hired by Tier 2 Sub Contractors
• Requirements of Pakistan Labour Laws
• Administrative Procedures for compliance of SA 8000 and Pakistan Labour Laws
• Calculations related to Salaries, Overtime, SESSI, EOBI, Working Hours, Leaves etc
• Internal and External Grievances Handling Mechanism and Role of Project Owner and
EPC Contractor
• Controls designed in Administrative Procedures for ensuring compliance
• How Arch Associates will monitor the compliance
• What Client Admin and EPC Contractor Admin have to do after the Audit
• Major violations
 What is Corporate Social Responsibility ?
Corporate social responsibility (CSR) is a broad term used to
describe a company's efforts to improve society in some way.

These efforts can range from donating money to nonprofits to

implementing environmentally-friendly policies in the
workplace. CSR is important for companies, nonprofits, and
employees alike.
 What is Corporate Social Responsibility ?

Social responsibility is an ethical framework and suggests that

an entity, be it an organization or individual, has an obligation
to act for the benefit of society at large. Social responsibility is
a duty every individual has to perform so as to maintain a
balance between the economy and the ecosystems

Corporate Social Responsibility is a management concept

whereby companies integrate social and environmental
concerns in their business operations and interactions with
their stakeholders
 What is Social Accountability ?
Social accountability can be defined as an approach towards
building accountability that relies on civic engagement, i.e., in
which it is ordinary citizens and/or civil society organizations
who participate directly or indirectly in exacting
accountability (World Bank, 2004).

SA8000 is the management system standard developed by

Social Accountability International (SAI)

SA8000 measures social performance in eight areas important

to social accountability in workplaces, anchored by
a management system element that drives continuous
improvement in all areas of the Standard
 How SA fits in CSR ?
Social accountability is part of CSR with an inward focus i.e.
workplace and workers/employees

Corporate Social Responsibility

Wind Project Community

Social Community
Accountability Development

Employees Wind Project

 Scope of Pakistan Labour Laws
• Employment
• Nature of Employment (Permanent, Temporary, Daily Wage etc)
• Terms & Condition
• Age Verification
• Acceptance by Employee
• Compensation
• Salary
• Overtime
• Benefits
• Leaves
• Sick Leaves, Casual Leaves, Annual Leaves
• Accommodation
• Food
• SESSI
• EOBI
 Scope of Pakistan Labour Laws
• Working Hours
• Normal Working Hours
• Overtime Working Hours

• Work Environment
• Health & Safety
• Accommodation
• Food
• Harassment
• Forced Labor

• Disciplinary Practices
• Grievance Handling
Scope of Social Accountability Standard SA 8000

1. Child Labor
2. Forced or Compulsory Labor
3. Health and Safety
4. Freedom of Association and Right to Collective
Bargaining
5. Discrimination
6. Disciplinary Practices
7. Working Hours
8. Remuneration/Compensation & Benefits
9. Management System
Responsibility of Project Owner / Project Developer
• Develop Policies and Procedures for EPC and O&M
Contractor

• Ensure that EPC and O&M Contractor implements policies

and procedures which are in line with Labour Laws of
Pakistan and Social Accountability standards

• Monitors compliance against requirements through formal

audits of Tier 1-4 Contractors/Sub Contractors
 Responsibility of EPC / O&M Contractor
• Develop their own Policies and Procedures based on the guidelines
provided by Project Owner / Developer as well as based on the Labour
Laws of Pakistan

• Ensure that Tier 2 Sub Contractors implement all the Administrative

Policies and Procedures as defined by EPC and O&M Contractor which
are in line with Labour Laws of Pakistan and Social
Accountability standards

• Trains EPC and O&M Contractors on the Social Accountability

requirements and Administrative Policies & Procedures

• Ensures that Tier 2 Sub-Contractors engage lower/Tier 3 Tier Sub-

Contractors using the same method/procedure which EPC / O&M
Contractor has used for the hiring of Sub-Contractor

• Monitors compliance by Tier 2 & 3 Sub Contractors against

requirements through formal audits
 Responsibility of Tier 3 Sub Contractor hired by Tier 2 Sub Contractor

• Implement all the Administrative Policies and Procedures as defined by

EPC and O&M Contractor and Tier 2 Sub Contractor which are in line
with Labour Laws of Pakistan and Social Accountability standards

• Seek help from Tier 1 (EPC Contractor) and/or Tier 2 Sub Contractor
w.r.t. implementation and record keeping related to Employment
records, Salary and overtime records, attendance records
 Requirements of Pakistan Labour Laws

• Employment
• Age Control
• Child Labour (person below age of 14 years is not allowed)
• Young Labour (person above age of 14 and below age of 18) can
work but not in areas/work places which has safety risks and not
during the school hours.
• Employment Type
• For a permanent nature of work, temporary employment can’t
be generated
• Any work which exits for more than nine months in a year is
categorized as Permanent Nature Work
• Daily Wage is employment type and should not be confused with
“Deharri” or per day Salary amount for 8 hours work
• Daily Wage means a person is paid at the end of the day for the
amount which is agreed before the start of work in the same day
and there is no compulsion on the employee and employer to
work next day.
• Employment Contracts
• Must be in local language
 Requirements of Pakistan Labour Laws

• Employment Contracts
• Must be in local language
• Must contain all the terms and conditions of employment mainly
related to salary, overtime, working hours, benefits e.g. SESSI,
EBOI, Leaves etc
• Must define the duration of employment
• Must contain general administrative conditions
• Must be accepted and acknowledged by the employee
 Requirements of Pakistan Labour Laws

• Compensation
• Salary
• Minimum Salary Rs 15000 per month for Un skilled worker
• Salary must be calculated on the basis of 26 days and not 30
days
• Salary must be calculated on the basis of 8 hours per day and
not 10 hours or 12 hours per day
• Allowances are not part of the Salary
• Overtime
• Overtime must be on the basis of double rate of work
• Formula for Overtime calculation is as below
Gross Salary____ *2
26 Days x 8 Hours

• Overtime for any Holiday work is calculated by Total Overtime Hours

multiplied by per hour salary multiplied by 3
• Supervisors level in Management cadre are entitled for Overtime but
Managers not
 Requirements of Pakistan Labour Laws

• Working Hours
• Any working time after eight hours of work is categorized as
Overtime
• Maximum 48 hours of overtime work is allowed in a month
• For Holidays, the total hours worked is considered as Overtime

• Benefits
• SESSI, EOBI are financial benefits
• SESSI is applicable for all those employees whose salary is
below 18000 per month
• EOBI is applicable on all categories and types of employee.
• Permanent employees are eligible for bonus, gratuity or
Provident Fund
• Allowances are financial benefits but not required by Law
• Leaves are non-financial benefits
 Requirements of Pakistan Labour Laws

• Leaves
• Temporary Employees are eligible for two paid leaves per month
• Permanent employees are eligible for 10 casual leaves, 8 sick
leaves and 14 annual leaves

• Forced Labour
• No worker can be forced to work on overtime hours
• Overtime work is an optional work which a worker may or may
not take
• If a worker is not willing to do overtime work on any day due to
any reason, he can’t be penalized for not doing the overtime
work
 Requirements of Pakistan Labour Laws

• Leaves
• Temporary Employees are eligible for two paid leaves per month
• Permanent employees are eligible for 10 casual leaves, 8 sick
leaves and 14 annual leaves

• Forced Labour
• No worker can be forced to work on overtime hours
• Overtime work is an optional work which a worker may or may
not take
• If a worker is not willing to do overtime work on any day due to
any reason, he can’t be penalized for not doing the overtime
work
 Administrative Procedures/ Steps developed by
Project Owner / Project Developer
• Hiring
• Admin Office of EPC Contractor and Sub Contractors must follow
the below steps in logical sequence
• Verify whether the person is above 18 years of age by
verifying the CNIC of the person.
• Make sure that the CNIC is not tempered and verify the
photocopy against the original CNIC
• Give him the Performa/Form on which he can fill or it can be
filled on his behalf as “ Application for Job”
• Interview the person. Discuss the following during interview
• Salary
• Duration of employment
• Evaluation the origin of the candidate i.e. if he is from
the project neighboring village or he is from distant
area. If the candidate is from distant area, then find out
whether the similar skill candidate is available in the
neighboring area of the project
• Fill the Employment Contract.
• Attach the Employee Picture and CNIC copy.
 Administrative Procedures/ Steps developed by
Project Owner / Project Developer
• Hiring
• Stamp the photocopy of the CNIC with the statement “ Verified
against Original”
• Read the employment contract to the candidate (if he can’t read)
and then ask the employee to sign the contract or put his thumb
impression on the contract.
• Employer (HC Admin Office or Sub Contractor Admin Office) signs
the Employment Contract
• Prepare the Employee card and give the Card to Employee with the
instructions that Card should be available with him all the time.
• All the hiring done by any Sub-Contractor, the Employee Card
SHALL be issued by the HC Admin Office.
• Sub Contractor Admin Office must submit the details of hired
employee to HC Admin Office and get the Employee Card
issued by HC Admin Office
• Write the Employee Number on the Employment Contract
• Give the photocopy of the Employment Contract to the employee
with the Employee Card and file the original in the file.
• HC Admin Office updates the data w.r.t. local employment
numbers and %
 Administrative Procedures/ Steps developed by
Project Owner / Project Developer
• Child Labour Remediation
• Stamp the photocopy of the CNIC with the statement “ Verified
against Original”
 Administrative Procedures/ Steps developed by
Project Owner / Project Developer
• Attendance Sheet / Attendance Recording
• Either Electronic or Manual, the attendance of each person
(worker and management) present at the project site must be
recorded.
• For workers and management cadre, the actual time IN and time
OUT should be recorded,
• Overtime work should be recorded in the same attendance sheet
or separate but overtime work should indicate the total hours
worked by each person.
• Each Tier of Sub Contractor Admin must report to HC Admin Office
on daily basis at the start of each day, the total attendance of the
previous day.
• HC Admin Office must report to TBC Admin the Daily Strength
Report (made on the basis of Daily Attendance Sheet received
from all the Sub Contractors) by mid day of every day.
• Attendance Sheet must also indicate the person who is on leave as
absent
 Administrative Procedures/ Steps developed by
Project Owner / Project Developer

• Salary Sheet
• Attendance Sheet (which shows Normal and Overtime working
hours of every employee) should be used for the preparation of
salary sheet.
• Salary must be calculated on the basis of 26 days and not 30 days.
• Deduction of leaves (above the legally allowed leaves) should also
be calculated on the basis of 26 days and not 30 days.

• Overtime Sheet
• Overtime Sheet can be prepared separately or it can be included in
the Salary sheet.
• Overtime should be calculated as per the legal requirement i.e.
double rate of payment.

• Salary and Overtime Payment

• Salary and Overtime Sheets must be signed / thumb impression by
each person when they receive the salary and overtime payment
 Administrative Procedures/ Steps developed by
Project Owner / Project Developer

• Internal Grievance Handling

• HC Admin Office is responsible to implement Internal Grievance
Handling by taking following steps
• HC Admin Incharge or his representative should visit the
project work sites and accommodation areas and mess /
canteen and interact with the workers.
• Identify through interviews, any issues which workers are
facing and document in the Grievance Report
• Similarly during interaction with the workers, encourage them
to raise their concerns and submit to Admin Office or drop in
the complaint box.
• HC Admin Office must maintain the Log Sheet of all the
Grievances he has record and those he has received and those
he has collected from the Compliant Boxes
• HC Admin Office must investigate the following
• Authenticity of the Grievance (whether it’s a point of
concern or the wish of the person)
 Administrative Procedures/ Steps developed by
Project Owner / Project Developer

• Internal Grievance Handling

• If the Grievance authenticity is established, then HC
Admin Office will decide the following
• Whether any investigation is required
• If required, should be investigation be performed by
the individual or by the team
• If by the team, what will be the composition of the
team
• HC Admin Office will determine the root cause of the
grievance and determine the corrective actions
• HC Admin Office will determine which area is responsible
is for the implementation of the corrective action and
what should be the target date of implementation
• HC Admin Office ensures that decided corrective actions
are implemented and HC Admin Office verifies through
inspections/records that corrective actions are
implemented
• HC Admin Office updates / maintains the Grievance
Report and get the acknowledgement from the person
who raised the Grievance.
• HC Admin Office updates the Grievance Log Sheet
 Administrative Procedures/ Steps developed by
Project Owner / Project Developer

• External Grievance Handling

• HC CSR Incharge is responsible to implement External Grievance
Handling by taking following steps
• HC CSR Incharge or his representative should visit with TBC
Admin the neighboring villages and interact with the
villagers/communities.
• Identify through interviews, any issues which community is
facing and document in the Grievance Report
• Similarly during interaction with the community and
encourage them to raise their concerns and submit to Admin
Office or drop in the complaint box.
• HC CSR Incharge must maintain the Log Sheet of all the
Grievances he has record and those he has received and those
he has collected from the Compliant Boxes
• HC CSR Incharge must investigate the following
• Authenticity of the Grievance (whether it’s a point of
concern or the wish of the person/community)
 Administrative Procedures/ Steps developed by
Project Owner / Project Developer
• External Grievance Handling
• If the Grievance authenticity is established, then HC CSR
Incharge will decide the following
• Whether any investigation is required
• If required, should be investigation be performed by the
individual or by the team
• If by the team, what will be the composition of the team
• HC CSR Incharge will determine
• the root cause of the grievance and determine the
corrective actions
• which area is responsible is for the implementation of the
corrective action and what should be the target date of
implementation
• HC CSR Incharge ensures that decided corrective actions are
implemented and HC Admin Office verifies through
inspections/records that corrective actions are implemented
• HC CSR Incharge updates / maintains the Grievance Report and
get the acknowledgement from the person who raised the
Grievance.
• HC CSR Incharge updates the Grievance Log Sheet