EMPLOYEES’ OLD-AGE BENEFIT LEGISLATION Workshop on Labour Laws Jointly Organized by Small & Medium Enterprises Development Authority, F. B. Area Association of Trade & Industry & BLP BUREAU OF LABOUR PUBLICATIONS December 2010

EMPLOYEES’ OLD-AGE BENEFIT LEGISLATION Facilitator: PERWEZ SHAFI, M.A. MS, Ph.D. Co-author:LABOUR CODE OF PAKISTAN Editor:EASTERN WORKER Journal of Labour Laws, Industrial Relations, HR & Social Compliance Advice & Consulting: To number of national and multinational companies Tel : (021) Website:

EOBI In SOCIAL SECURITY LEGISLATION presentation: Principle of social security coverage -- Article 25 of the “Universal Declaration of the Human Rights”, UN 1948: “EVERY ONE HAS A RIGHT TO SECURITY IN THE EVENT OF UNEMPLOYMENT, SICKNESS, DISABILITY, WIDOWHOOD, OLD-AGE OR LACK OF LIVELIHOOD IN CIRCUMSTANCES BEYOND HIS CONTROL”.

Purpose of Employees’ Old-Age Benefits Act, 1976 To provide Old-Age Pension/allowance Old-Age Grant Survivors’ Pension Invalidity Pension

Employees’ Old-Age Benefits Act, 1976 Applicability 1(4)(i) 5 or more persons employed (July 2008) directly or through any other person, during the preceding 12 months, Act shall continue to apply even if the number of persons falls below 5.

Employees’ Old-Age Benefits Act, 1976 Voluntarily Applied 1(4)(i-a) If less than 5 persons are employed voluntarily applies for application of Act Act applies from date of application.

Employees’ Old-Age Benefits Act, 1976 Applicable by Notification 1(4)(ii) Federal Govt. may apply EOBI Act to any establishment (even with less than 5 persons) by issuing a Notification in the official Gazette. Employers’ responsibility to find out whether Act is applicable to them or not.

Employees’ Old-Age Benefits Act,1976 Definition of Employee 2(bb) “employee” means any person employed, whether directly or through any other person for wages to do any skilled or unskilled, supervisory, clerical, manual or other work under a contract of service or apprenticeship whether written, oral, express or implied & includes laid off person. Director of a limited Co./Corp. shall not be an employee under this Act irrespective of wages.

Employees’ Old-Age Benefits Act, 1976 Definition of Wages 2(p) “wages” means the rate of wages as declared under the Minimum Wages for Unskilled Worker Ordinance, 1969 (2005). Min. wage (July 2008) =Rs pm Min. wage (July 2010) =Rs pm

Employees’ Old-Age Benefits Act, Contributions Pay contribution at the rate of 5% (2008) of employees’ wages. No contribution payable of an insured person: Who is in receipt of Old-Age pension under this Act, OR has attained the age of 60, or 55 if woman.

Employees’ Old-Age Benefits Act, Contributions (2) If employee does not receive any wages for any period, the Institution will determine the wages & contribution. (3) Employer shall not deduct/recover his portion of contribution from insured employees’ wages, notwithstanding any agreement.

Maximum EOBI Contributions after Finance Act, 2008 (July 1, 2008) _________________________________________________________________________ ________ Maximum Share of Contributions by Max. Total employer pm (sec.9) worker pm (sec. 9B) Contribution 5% x Minimum Wages* 1% x Minimum Wages* pm _________________________________________________________________________ _______ Rs. 300Rs. 60 Rs. 360 Fr July 1, 2010 Rs. 350Rs. 70 Rs. 420 * Rs (7000) is the minimum wage for unskilled worker in the Schedule (col. 2) of the Minimum Wages for Unskilled Workers Ordinance, ________________________________________________ _____ Compiled by: BLP, July 1, Source: EASTERN WORKER -- Journal of Labour Laws & Industrial Relations, Vol. 48, No. 3, May--June, [See later issues for any later amendments].

12. EOBI Officials to check Employers’ Books/Records: (1) An official of the Institution may check or verify employers’ records & returns: (a) as he may consider it necessary (b) at any reasonable time, enter any establishment & require them to produce & allow him to examine books/docs relating to employment of persons, payment of wages, or any other document. (c) examine records of employer, his agent or any other person on any relevant matter.

12. EOBI Officials to check Employers’ Books/Records: (2) EOBI official cannot demand production of account books/records for a period of 2 years from date of registration or the July 1,2005 whichever is later if employer does not reduce # of employees. Provided if employer enhances # of employees by 10% on expiry of 2 yr period it will be accepted w/o question otherwise checking of records will be done as in sub-section (1) & no question will be asked about the previous 2 years. (2005)

12. EOBI Officials to check Employers’ Books/Records: (3) If employer fails to maintain records or submit returns or otherwise fail to comply with (1) & thereby makes it difficult to ascertain the identity of persons insured or the amount of contribution payable, the contribution shall be assessed based on any evidence available & deemed to be satisfactory in the prescribed manner.

Employees’ Old-Age Benefits (Verification) Regulations, Verification of employer's record.-- The employer's record shall be subject to verification by an EOBI team, if the employer:-- (i) fails to pay contributions for consecutive 3 months; or (ii)reduces the number of insured persons; or (iii) fails to submit the returns required under the EOAB (Contribution) Rules, 1976; (iv)does not enhance the number of insured persons (by 10%) section 12(2) of the Act; or (v)a complaint with corroborative evidence is received.

Employees’ Old-Age Benefits (Verification) Regulations, (c). “ corroborative evidence“ means (i) annual report or audited accounts; (ii) published report of the establishment; (iii) official record of any public office; (iv) complaint from registered trade union or CBA of the establishment; or (v) comparative study of the industries or establishments of similar capacity, their process and machinery located in the same area;

13. Increase of Unpaid contribution & recovery of contribution (1) If an employer fails to pay contribution under section 9 on the due date, the amount shall be increased (but not exceeding 50% of the amount due) by such percentage or amount as my be prescribed.

14. Safeguard of insured person’s right if employer default on payment of contribution If an employee is an insured person including any change in employment from one establishment or industry to another, in case of employer’s default on payment of contribution, such insured person have the same rights under the Act as if no such default had occurred.

EOAB BENEFITS 22. Old-Age Pension: Insured person entitled to Old-Age pension at the rate specified in the Schedule. Provided (a) he is over 60 years or 55 in case of a woman (b) contribution paid for not less than 15 years.

EOAB BENEFITS 22-A. Old-Age Grant: If an insured person retires, not otherwise entitled to old-age pension, & contribution were paid for less than 15 years but not less than 2 years, he shall be entitled to a old-age grant in a lump sum equal to his one month’s average wages for every completed year of insurable service or part thereof in excess of 6 months.

EOAB BENEFITS 22-B. Survivors’ Pension: In case of death of an insured person who had completed not less than 3 years, the surviving spouse shall be entitled to a life pension at the rate specified in the Schedule. In case of death of an insured person while not in insurable employment but after he had completed 5 years of insurable employment, the surviving spouse shall be entitled to a life pension at the rate specified in the Schedule.

EOAB BENEFITS 23. Invalidity Pension: (1)An insured person who sustains invalidity shall be entitled to an invalidity pension at the rate by a formula set out in the Schedule. Provided contributions paid not<15 yrs or contributions paid bet yrs, and he/she under 60/55 yrs of age (2)invalidity pension continues as long as invalidity continues.

EOAB BENEFITS 28. Non-duplication of Benefits 1.An insured person shall not be paid for the same period more than one of the benefits provided for in this Act. 2.Where an insured person is entitled to more than one benefit under this Act, he shall be given the higher of such benefits.

33. Decisions on complaints, questions & disputes: Any complaint received or any question or dispute arises as to: * Whether a person is insured or not, * Amount of wages of an insured person * Amount of contribution payable by employer * Person who is or was the employer * Entitlement to any benefit, its amount & duration * Registration of industry or establishment, or * any other matter the matter shall be decided by the Institution according to its regulations and communicated to the person in writing stating the reason for its decision.

34.Review of Decisions- The Institution may review its decision under section 33 if new facts are brought to its notice. 35. Appeal to Board- A person aggrieved by a decision of the Institution under section 33 or 34 may appeal to the Board.

EOBI Case Laws & Issues Part-time worker is an “employee” on whose behalf contribution has to be paid. [SC(Pak): Lahore Race Club vs. Deputy Director, EOBI; PLJ 1998 SC 1728 = 1998 SCMR 1571] [SC(Pak): Cawasjee And Sons vs. Board of Trustees, EOBI & another; 2001 SCMR 949]

EOBI Case Laws & Issues Non-profit educational institutions are also included in the definition of “establishment”. [HC(Lah): Saint Peter High School, Gujranwala vs. Asstt. Director (Field Operation), EOBI; 1990 PLC 244]