Lecture # 10

Industrial Relations
& Tax Introduction
 IR Lecture Outlines

• 1: What is Industrial Relations?

• Basic definitions of terms according to business Law

• 2: Industrial Relations in HRM (Details)

• 3: Introduction to Taxation System

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The Industrial Relation ACT, 2008
According to Constitute of Pakistan:
The Act consolidates and rationalizes the law
relating to formation of trade unions,
regulation and improvement of relations
between employers and workmen and
avoidance and settlement of any differences or
disputes arising between them.

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Definitions: Terms
Award
“Means the determination by a Labor Court,
Arbitrator or an Appellate Court of competent
jurisdiction of any industrial dispute or any matter
relating thereto and includes an interim award

"Commission" means the National Industrial

Relations Commission constituted under section 49;

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Definitions: Terms
"Collective Bargaining Agent"

“Means the trade union of workmen which,

under section 20, is the agent of the
workmen in the establishment, group of
establishments or, as the case may be,
industry in the matter of collective
bargaining”
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Definitions: Terms
Collective Bargaining Unit
“Means those workers or class of workers of
an employer in one or more establishments
coming within the same class of industry
whose terms and conditions of employment
are, or could appropriately be, the subject of
collective bargaining together”

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Definitions: Terms
Establishment
“Means any office, firm, factory, society,
undertaking, company, shop, premises or
enterprise which employs workmen directly or
through a contractor for the purposes of
carrying on any business or industry and
includes all its departments and branches,
whether situated in the same place or in
different places having a common balance
sheet and profit and loss account”
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Definitions: Terms
Industrial Dispute
“Means any dispute or difference between
employers and workmen or between workmen
and workmen which is concerned with the
employment or non-employment or the terms
of employment or the conditions of work; and
is not in respect of the enforcement of any right
guaranteed or accrued to workers by or under
any law, other than this Ordinance, or any
award or settlement for the time being in force”
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Definitions: Terms
Settlement
“means a settlement arrived at in the
course of conciliation proceedings, and
includes an agreement between an
employer, the collective bargaining agent
or workmen”

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Definitions: Terms
Trade Union
“Means any combination of workers formed
primarily for the purpose of furthering and
defending the interests and rights of workers in
any industry or establishment and includes an
industry-wise federation of two or more
collective bargaining agent unions and a
federation at the national level of ten or more
collective bargaining agent unions”

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Definitions: Terms
Worker or Workman
Means any and all persons not falling
within the definition of employer who is
employed in an establishment or
industry for remuneration or reward
either directly or through a contractor,
whether the terms of employment be
express or implied.
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What is IR Management ?
Industrial Relations is a process by which human beings
and their organizations interact at the work place to
establish the terms and conditions of employment
Industrial Relations System is “ Interrelations among
persons, organizations and standards in the industrial
environment”
Major players of this process are Employees, Management
and the Government

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Employee Relations
‘The regulation of the relationship between
employers and employees.
 OR

Employee relations consist of all those

areas of human resource management that
involve relationships with employees-
directly or through collective agreements
where trade unions are recognised.

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Industrial Relations Affects:
Economic Performance

Business Success

Employees Experience of Work

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 HR Planning

Training &
Development Recruitment &
Selection

Performance Core Functions of Retain

Management HRM

Other links
• Job evaluation
• Job design
• Industrial Relations
Career counseling
• Skills auditing

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Organizational Goals
 Enhance Productivity & Profitability
 Increase market share
 Customer satisfaction and repeat business
 Satisfaction of Stake holders
 Operational efficiencies
 Develop ability to respond to market opportunities
 Effective and efficient use of resources
 Cost reduction
 Waste reduction
 Competitive advantages
 Participation and motivation of human resources
 Industry reputation

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Objectives of the Employees
Job Security
Occupational Health & Safety
Fair remuneration against performance
Appropriate increase in salary / wages
Regulation of Contract / Daily Wage Employees
Learning Environment

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Objectives of the Government
To maintain the industrial peace for
Enhance productions (GDP)
Increase in Exports
Reduce Unemployment
Increase tax net
More revenue generation etc.
Elimination of Gender Discrimination
Elimination of Child Labor & Bonded Labor

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Collective Bargaining
the process through which agreement on pay,
working conditions, procedures and other
negotiable issues are reached between
organised employees and management
representatives.
OR
“The resolution of conflict through
compromise.”
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Important Labor Laws of Pakistan
1. Workmen’s Compensation Act 1923
2. Factories Act 1934
3. Payment of Wages Act 1936
4. Factories Canteen Rules 1959
5. Minimum Wage Ordinance 1961
6. Apprenticeship Ordinance 1962
7. Provincial Employees Social Security Ordinance
1965

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Important Labor Laws of Pakistan
Continued……
8. Industrial & Commercial Employment (Standing Order)
Ordinance 1968
9. Companies Profit (Worker’s Participation) Act 1968
10. Shop & Establishment Ordinance 1969
11. Fair Price Shop Ordinance 1971
12. Cost of Living (Relief) Act 1973
13. Employees Old-age Benefit Act 1976
14. Industrial Relations Ordinance 2008

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AN INTRODUCTION TO
TAXATION System
Taxation System is What?
“System where Government Finances money in the
shape of tax through imposition & Collection from the
people who reside within the boundaries of country”

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©Prepared by GM Shaikh
AN INTRODUCTION TO
TAXATION System
What You Mean by Tax?
“Tax is an amount of money which is
charged or imposed by Government/ State
of country to its
residents”

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Classification of Tax
 Tax Payers
 Individual tax
 Corporate tax
 Payroll Tax
 Business Tax
 Consumption Tax
 General Sales Tax
 Sales tax
 Value added tax
 Tariffs & Excise tax

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©Prepared by GM Shaikh
Classification of Tax
Modes of Payment
 Direct tax
 Indirect Tax
Computation
 Average , Marginal Tax & Effective tax
Tax Rate
 Proportional tax rate
 Progressive Tax rate
 Regressive tax rate

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Structure of Individual
Income Tax Rates (1 of 2)
Tax Base
Amount to which tax rate is applied to determine tax
due
 E.g., individual’s tax base for Federal income is taxable
income,
 Tax base for property tax

Tax Rate
Percentage(s) applied to tax base

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© Prepared by GM Shaikh.
Structure of Individual
Income Tax Rates (2 of 2)
Progressive
Rate increases as tax base increases
 E.g., individual income tax
Proportional or flat tax
E.g., sales tax
Regressive
Rate decreases as tax base increases
 E.g.,

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© Prepared by GM Shaikh.
 Progressive Taxes
 Progressive taxes are based on the ability to pay principal.
 Taxpayers at higher income levels pay larger proportions of
their incomes in taxes than people at lower levels.
 Federal income tax is based on a progressive tax.
 The more money individuals make the more money they are
asked to pay in taxes.

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 Proportional Taxes

 A proportional tax is one that imposes the same percentage

rate of taxation on everyone’s income.
 Based on the thought, the higher the value, the greater the
tax bill.
 An example would be a school tax of 2.5% for all residents.
 Proportional taxes do follow the ability to pay principal.

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 Structure of Corporate Tax Rates

First $50K 15 % of Taxable Inc

> $50K But Not > $75K $7,500 + 25% of Taxable Inc

> $75K But Not > $100K 13,750 + 34% of Taxable Inc > $75K

> $100K But Not > $335K $22,250 + 39% of Taxable Inc > $100K

> $335K 34% of Taxable Inc

> $10M But Not > $15M 3.4M + 35% of Taxable Inc > $10M

> $15M But Not > $18,333,333 $5.150M + 38% > $15M

> $18,333,333 35% of Taxable Inc

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©2007 Prentice Hall, Inc.
Marginal, Average, and Effective Tax Rates
for Taxpayers
Marginal tax rate
Tax rate applied to incremental amount of taxable inc
that is added to tax base
Average tax rate
Total tax liability divided by amount of taxable income
Effective tax rate
Total tax liability divided by total economic income

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© Prepared by GM Shaikh
 The Purpose of Taxes
Taxes raise money to finance government programs
and services.
Taxes regulate or restrict certain types of business
practices, products or services.
Income, sales, estate and gift and property taxes are
revenue taxes.
Excise taxes and import duties are regulatory taxes.

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Special Thanks
To Students

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