Companies’ Position Before the Court
The petitioners argued that they operate in:
- More than one province
- Islamabad Capital Territory (ICT)
Therefore, they qualify as trans-provincial entities and should not be regulated under individual provincial labour contribution mechanisms.
They maintained that such matters fall under the agreed federal arrangement until a final mechanism is developed between the Federation and Provinces.
Key Legal Question
Justice Shahid Karim clarified that the main issue was not whether companies were required to make contributions.
The real question was:
Which authority has legal jurisdiction to collect PWWF and WPPF contributions from trans-provincial companies — Federal Government or Provincial Government?
Role of Council of Common Interests (CCI)
The Court referred to the decision of the Council of Common Interests (CCI) dated 23 December 2019.
The CCI had decided that:
Workers Welfare Fund matters involving trans-provincial companies would continue under the federal mechanism until a mutually agreed arrangement between the Federation and Provinces is finalised.
A later committee meeting held in October 2020 also confirmed that companies operating in two or more provinces would continue contributing through the Federal Board of Revenue (FBR) under the existing federal framework.
Court’s Observations
Justice Karim held that the Punjab Government’s notices violated the arrangement approved through the constitutional forum.
The Court observed that giving recovery powers to the Punjab Employees Social Security Institution (PESSI) through amendments does not automatically allow it to recover contributions from trans-provincial companies.
The judgment stated that such companies remain a separate category already under consideration before the CCI.
Reference to Sindh High Court Decisions
The Lahore High Court also noted that similar matters had previously been considered by the Sindh High Court, where petitions were resolved according to the CCI decision.
Justice Karim found no reason to take a different position.
Final Decision
The Lahore High Court:
✔ Allowed the petitions filed by companies
✔ Declared the Punjab recovery notices unsustainable
✔ Set aside demands for PWWF and WPPF recovery from trans-provincial entities
✔ Confirmed that the CCI-agreed mechanism must be followed
The Court also clarified that companies retain the right to challenge any future decision made by the CCI or another competent authority.
Impact on Businesses
This judgment is important for companies operating nationwide, especially businesses with offices or operations in multiple provinces.
It provides clarity regarding:
- Labour welfare contribution jurisdiction
- Federal vs provincial collection authority
- Compliance requirements for large organisations
- Protection from conflicting provincial demands
Businesses should continue monitoring future decisions from the CCI regarding the final framework for Workers Welfare Fund and Workers Profit Participation Fund contributions.
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