Apprenticeship legally explains
S j Tubrazy
Trainees are students of Institute of the Chartered Accountants but are serving Chartered Accountants Establishment as “apprentices” who are also called as “article clerks” Such students were employees of the Establishment of Chartered Accountants and there is privity of contract between the students and the establishment, Establishment, therefore, was liable for Social Security Contribution in respect of stipends of trainees/students.
Under the Chartered Accountants Ordinance, 1961 “student” is defined to mean a person who is or has been trainee under a training contract with a member of the Institution entitled to train students under this Ordinance and the bye‑laws made thereunder, and has not successfully completed the examinations of the Institute. This is very much so and trainee is student undoubtedly for the purpose of Chartered Accountants Ordinance, 1961, but so far the relationship between such trainee/student and Establishment of Chartered Accountants is concerned that stands reflected in the contract executed between them. Pro forma of training shows that the trainee student binds himself to be trained by the principal to serve him for a term of 4 years. Further that during the term of service he would not practice as public accountant or engage in any other business or occupation. It is, therefore, clear that trainees are students of the Institute of Chartered Accountants but are serving establishment as “apprentices” who are also called as “articled clerks”. Establishment is not providing them training for nothing but derives benefits from such training which is done for the purpose of binding the trainee down for service in the establishment for 4 years after qualifying for the job. Trainee also does the some kind of work which is normally done in the establishment, hence benefit accrues to the establishment as some assistance is rendered during service of trainee and efficiency is increased in turn whereof remuneration is paid which is called “stipend”. It is mentioned in paragraph 3 (c) of the Contract Form that the trainee shall keep the secrets of the pincipal and his clients and will not divulge the names and affairs of the employers. In the circumstances, students are employees and there is privity of contract.
Under secion 2(a) of Apprenticeship Ordinance, 1992, “apprentice” is defined to mean a person undergoing training through the system of apprenticeship. “Apprenticeship” is defined in clause (3) to mean a system of training in which an employer undertakes to employ a person and to train him or have him trained systematically in an apprenticable trade for a period the duration of which had been fixed in advance and in the course of which the apprentice is bound to work in the employer’s service. In clause (e) of above section “employer” is defined to mean any person who employs five or more persons in an apprenticeable trade in an undertaking, either directly or through another person, whether on behalf of himself or any other person, and includes any person who has ultimate control over, or is responsible to the owner thereof, for the affairs of an undertaking.
Definition of “wages” mentioned in West Pakistan Employees’ Social Security Ordinance, 1965 is to be read in conjunction with definition of “employee” as is given in section 2(8) thereof.
When definition of “wages” is read in juxtaposition with definition of “employee” as mentioned in the Social Security Ordinance, it appears that there is contract of service between trainees/students and establishment in this case and non‑compliance of requirement of Minimum Wages Ordinance, 1961 would not take the case out of ambit of application of Social Security Ordinance for the reason that in this case the contract is between the student and establishment and student is not regular employee and cannot and does not put in same number of working hours and for that reason his remuneration is rather low in cash but is supplemented in kind by training. Contention that remuneration being less would take the case out of definition of “wages” thus was not tenable.
Trainees are students for the purpose of Chartered Accountants. Ordinance, 1961 but they are employees of establishment because there is a contract executed between them, terms and conditions of which clearly indicate that by giving training, establishment is also benefited as assistance is rendered in the same routine work and further after completion of training students are supposed to serve the establishment for specified terms of years.
In the present case students are taken in for training after execution of contract and remuneration is paid to the students. Terms and conditions of the contract clearly show relationship of employer and employees between the parties. Contention that trainees are students and receive training and payment made to them is stipend or pocket money does not detract from actuality of valid contract of service between the parties with terms and conditions and undertaking of regular service for 4 years by the student‑trainee in favour of establishment after qualifying as Chartered Accountant.