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Employees' Old-Age Benefits Act, 1976

HISTORICAL BACK GROUND ALONG WITH BRIEF ON AMENDMENTS

Prior to this law, in Pakistan, there were so many labour laws like Work’s Compensation Act, 1923
Factories Act, 1934, Payment of Wages Act,1936, West Pakistan Social Security Ordinance, 1965
(Ordinance No: X of 1965), West Pakistan Industrial and Commercial (Standing Orders) Ordinance,
1968, Companies Profit (workers’ Participation)Act,1968, West Pakistan Shops and Establishment
Ordinance,1969, Industrial Relation Ordinance,1969, Workers Welfare Fund Ordinance, 1971, Workers
Children (Education) Ordinance, 1972, etc. In many labour laws remedial, beneficial and welfare clauses
and sections were provided but none from these laws or others provide such coverage of the old-age
risk thus it was necessary to make a law that can provide security in the eve of old age when a man
becomes handicap to work hard, condition of invalidity and in the case of death of a worker / employee
the pension to the widows and orphans. In the European countries such laws were in operation.

In view of this need, first time in Pakistan , in 1972, an Ordinance with the title of the Employees'
Old-Age Pension Ordinance (Ordinance X of 1972) was promulgated. Under this legislation first time, in
Pakistan , the Government indicates its desire to introduce such a social security scheme for the
betterment of the employees of private sectors. This Ordinance was issued on 23rd April, 1972 where
under Old Age Pension scheme was introduced and a pension @ Rs; 60/= was suggested on completion
of 20 years of service. For this purpose retirement age was fixed at 55 years (50 years for female). This
was a provincial legislation that was intended to apply only to those establishments which employed 100
or more workers, and wages for coverage under this scheme were proposed to be fixed at Rs. 500/= per
month, while the rate of the contribution was fixed 5%, to be paid by the employer. Before the
implementation of the Employees' Old-Age Pension Ordinance, 1972, it was realized that the provincial
pension scheme would not bear fruit thus the scheme was reshaped and after much work thereon the
government introduced a better scheme for the betterment, welfare and benefits of the people of
Pakistan.

This better scheme was promulgated on 23rd December, 1975 , whereby the Federal Government
in the place of the Employees' Old-Age Pension Ordinance, 1972, notified the Employees Old-Age
Benefits Ordinance (Ordinance XXVI of 1975). This law relates to Old-Age Benefits for persons employed
in industrial, commercial and other organizations, employing at least ten persons

Later on the Employees' Old-Age Benefits Ordinance, 1975, was substituted by the better
enactment, the Employees' Old-Age Benefits Act, 1976, (Act No XIV of 1976) which was passed by the
National Assembly on 5th April, 1976 . The President of the Islamic Republic of Pakistan gave his assent
on 15th April, 1976 , and then the Act was published in the Official Gazette of Pakistan on 19th April,
1976 . Although it came into force at once, but as per section 9 thereof the contribution was payable
from 1st day of July, 1976. This Act was implemented from 1st day of July, 1976.

After promulgation of this statute many amendments are made therein and the last amendment
has been mad in June 2005 through Finance Act, 2005. Since the process of amendment is a non-stop
process hence this journey of amendment is in way of further amendments in view of the need of the
nation and ILO conventions and recommendations on Social Security laws/ schemes. Till June 2005 this
law has been amended through amendments as below:-

1. Employees’ Old-Age Benefits (Amendment) Ordinance, 1983. (Ordinance No. XVII of 1983),
2. Finance Act, 1986. (Act 1 of 1986),
3. Labour Laws (Amendments) Ordinance, 1993 (Ordinance XXIII of 1993),
4. Employees Old-Age Benefits (Amendment) Ordinance, 2000. (Ordinance IX of 2000),
5. Labour Laws (Amendment) Ordinance, 2001. (Ordinance LIII of 2001),
6. Employees’ Old-Age Benefits (Amendment) Ordinance, 2002. (Ordinance I of 2002),
7. Employees' Old-age Benefits (Amendment) Ordinance, 2002. (Ordinance XLVI of 2002), and
8. Finance Act, 2005.
EMPLOYEES’ OLD-AGE BENEFITS ACT, 1976
CONTENTS
CHAPTER – I

PRELIMINARY.
1. Short title, extent, commencement and application.
2. Definition.

CHAPTER – II
INSURED PERSON
3. Compulsory Insurance.
4. Administration.
5. Nomination of a body corporate pending establishment of an Institution.
6. Management.
7. Board of Trustees
8. Powers and Functions of the Board of Trustees
8A. Appointment, Powers and Functions of Chairman

CHAPTER – III
CONTRIBUTION
9. Rates and Assessment
9A. Contribution by Government.
9B. Contribution by the insured person
10. Records and Returns by Employers.
11. Registration of Establishment, Etc.
11A. Cancellation of Registration of Establishments etc.
12. Officials of Institution to Check Employer's Books.
13. Increase of Unpaid Contribution and Recovery of Contribution, etc., as arrears of land
revenue.
14. Safeguard of Insured Person’s Right in Default of Payment of Contributions by Employers.
15. Refund of Contributions Paid Erroneously
16. Extinguishment of Claims to Contributions

CHAPTER – IV
FINANCE AND AUDIT
17. Employees' Old-Age Benefits Fund
18. Investments and Loans
19. Budget, Accounts and Audit
20. Annual Report
21. Valuation of Assets and Liabilities

CHAPTER – V
BENEFITS
22. Old-Age Pension
22-A Old-Age Grant
22-B Survivor’s Pension.
CHAPTER – VI
PROVISIONS COMMON TO ALL BENEFITS.
24. Calculation of Qualifying Contribution Periods.
25. Benefit Claims and Payments.
26. Extinguishment of Benefits.
27. Suspension of Old-Age Pension and Survivor's Pension.
28. Non-Duplication of Benefit.
29. Benefit nor Attachable, Chargeable or Assignable.
30. Repayment of benefit improperly received.
31. Institution's Right to Be Indemnified in Certain Cases
32. Recovery of Amounts Due

CHAPTER – VII
DETERMINATION OF QUESTIONS AND CLAIMS
33. Decisions of Complaints, questions and disputes.
34. Review of decision
35. Appeal to Board.
36. Assessment of invalidity.

CHAPTER – VIII
OFFENCE AND PENALTIES. .
37. Offences.
38. Prosecution.
CHAPTER – IX
39. Contributions etc
40. Exemption From Stamp Duty
41. Exemption From Taxes
42. Member and servants of the institution to be public servants
43. Delegation of Powers
44. Power to make Rules
45. Power to make Regulations
46. Power to exempt.
47. Act not to apply to certain persons.
48. Repealed
Schedule

EMPLOYEES' OLD-AGE BENEFITS ACT, 1976

(ACT No. XIV OF 1976)


[ April 15,1976 ]
An Act
To repeal and re-enact the Law relating of Old-Age benefits for the persons employed in
industrial, commercial and other organizations.

WHEREAS it is expedient to repeal and re-enact the law relating to old-age benefits for the
persons employed in industrial, commercial and other organizations and matters connected therewith:
It is hereby enacted as follows: -
CHAPTER 1
PRELIMINARY

1. Short Title, Extent, Commencement and Application.


(1) This Act may be called the Employees' Old-Age Benefits Act, 1976.
(2) It extends to the whole of Pakistan.
(3) It shall come into force at once.
1[(4) It applies to every industry or establishment.
(i) wherein ten or more persons are employed by the employer, directly or through any other
person, whether on behalf of himself or any other person, or were so employed on any day
during the preceding twelve months, and shall continue to apply to every such industry or
establishment even if the number of persons employed therein is, at any time after this Act
becomes applicable to it, reduced to less than ten; or

2[(i-a) wherein less than ten persons are employed if such industry or establishment voluntarily
applies for application of this Act and this Act shall apply to such industry or establishment for the
date of submission of an application by such industry or establishment; or
(ii) which the Federal Government may, by notification in the official Gazette, specify in this
behalf.}
_________________________________________________________________
1. Sub-sec.(4) by Ord. XVII of 1983.s.e enforced from July 1,1983=1983 PLS 81
2. Inserted Cl.(i-a) in sub-sec(4) by Labour Laws (Amendment) Ordinance,2001(Ord. LIII),
s.7(1), effective from July 1, 2001 : Gaz.of Pak. Extr. Pt. I, Oct. 20,2001 .

2. Definitions.-In this Act, unless the context otherwise requires,-

[
(a) "benefits" mean old-age pension, invalidity pension, [survivor’s] 2 pension, old-age grant
and such other payments as may be determined by the Federal Government from time to time;}

3[(aa) "Board” means the Board of Trustees constituted under section 7 ;}

(b) "Contribution" means the sum of money payable to the Institution by the employer {or by
the Federal Government} 4 in respect of an insured person under the provisions of the Act.

5[(bb) "employee" means any person employed, whether directly or through any other person,
for wages or otherwise, to do any skilled or unskilled, supervisory, clerical, manual or other work in, or
in connection with the affairs of, an industry or establishment, under a contract of service or
apprenticeship, whether written or oral, express or implied, and includes such person when laid off {:]]

6[Omitted]

Provided5[ * * ] that a director of a limited company or of a corporation set up under any law
shall not be treated as an employee under this Act, irrespective of his wages or emoluments ;]

7[(c) "employer", in relation to an industry or establishment, mean any employee, and includes-

(i) in the case of an individual, an heir, successor, administrator or assign;

(ii) a person who has ultimate control over the affairs of an industry or establishment, or where
the affairs of an industry or establishment are entrusted to any other person (whether called a managing
agent, managing director, manager, superintendent, secretary or by any other name), such other
person ;and]

8[(iii) [Omitted]

(d) "employment injury" means a personal injury to an insured person caused by an accident,
or by such occupational disease as may be specified in the regulations, arising out of and in the course
of his employment:
_________________________________________________________________________________
1 Cl..(a) added after re-numbering original cl.(a) as (aa) by Or. XVII of 1983, enforced from 1st July
1983= 1983 PLS 81
2. Subs. for word”widow’s”,by Employees’ Old Age Benefits (Amendment) Ord. 2002,s. 2(a)
3. Original Cl. (a) re-numbered as (aa), ibid.
4. Add. By Finance Act, 1986(Act I of 1986) s.11.1.(a)
5. Cl. (bb) add by Ord. XVII of 1983.
6. Omitted 1st proviso of cl.(bb) added by Act I of 1986, by Labour Laws(Amendment) Act, 1994.
7. Cl. ( c ) subs. By Ord. XVII of 1983, s. 3
8. Sub-Clause (iii) omitted by Act I of 1986

1[(e) "establishment" means-

( i ) an establishment to which the West of Pakistan and Establishments Ordinance, l969 (West
Pakistan Ordinance No. VIII of 1969) for the time being applies, and notwithstanding anything contained
in section 5 thereof, includes clubs, hostels, organisations and messes not maintained for profit or gain
and establishment, including hospitals, for the treatment or care of sick, infirm, destitute or mentally
unfit persons ;

( ii ) a construction industry as defined in the West Pakistan Industrial and Commercial


Employment (Standing Orders) Ordinance, 1968 (West Pakistan Ordinance No. VI of 1968);

( iii ) a factory as defined in the Factories Act, 1934 (XXV of 1934);

(iv) a mine as defined in the Mines Act, 1923(IV of 1923) ;

(v) a road transport service as defined in the Road Transport Workers Ordinance, 1961 (XXVIII
of1961) ; and includes any class of industries or establishments which the Federal Government may, by
notification in the official Gazette, declare to be establishments for the purposes of this Act.]

(f) "Fund" means the Employees' Old-Age Benefits Fund set up under section l7;

(g) "Industry" means any business, trade, undertaking, manufacture or calling of employers,
and includes any calling, service, employment, handicraft industrial occupation or avocation of workmen;

(h) "Institution" means the Employees' Old-Age Benefits Institution established or nominated
under section 4 [or section 5;] 2

(i) "Insured person" means [an employee] 3 who is or was in insurable employment;
(j) "Insurable employment" means employment of a person under a contract of service or
apprenticeship, whether written or oral, express or implied and in respect of which contributions are
payable under this Act;
_________________________________________________________________
1. Cl. (a) subs. By Ord. XVII of 1983, s.4=1983 PLS 81.
2. Words and figure added. ibid.
3. Subs for “a person”, by Act I of 1986.

(k) "invalidity" means a condition, other than that caused by an employment injury, as a result
of which an insured person is permanently incapacitated to such an extent as to earn from his usual or
other occupation more than one third of the normal rates of earning in his usual occupation ;

(1) "Member" means a member of the Board;

(m) "Prescribed" means prescribed by rules;

(n) "Regulations" means regulations made by the Board;

(o) "Rules" means rules made under this Act;

1[(oa) [Omitted}