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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:
Co-author:

PERWEZ SHAFI, M.A. MS, Ph.D.


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) 241-4975
701-1600
Email:
blplabourlaws@yahoo.com
Website: www.blplabourlaws.com

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) =
Min. wage (July 2010) =

Rs. 6000. pm
Rs. 7000. pm

Employees Old-Age Benefits Act, 1976

9. 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, 1976

9. 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
Max. Total
employer pm (sec.9)
Contribution
5% x Minimum Wages*
pm

Contributions by

worker pm (sec. 9B)


1% x Minimum Wages*

________________________________________________________________________________

Rs. 360

Rs. 300

Fr July 1, 2010 Rs.

Rs. 420

350

Rs. 60
Rs. 70

* Rs. 6000 (7000) is the minimum wage for


unskilled worker in the Schedule (col. 2) of the
Minimum Wages for Unskilled Workers
Ordinance, 1969.
_____________________________________________________

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, 2007
3. 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, 2007
2(c). corroborative evidence means
(i)
(ii)
(iii)
(iv)

annual report or audited accounts;


published report of the establishment;
official record of any public office;
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 persons


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 employers 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 months
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. 3--5 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 DecisionsThe Institution may review its


decision under section 33 if new
facts are brought to its notice.

35. Appeal to BoardA 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]

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