The Industrial Relations Advisers,
Management & Labour Laws Consultants
Room 3, 1st floor, Falaknuma Building, Near The Laboratory & Haroon Radio, Abdullah Haroon Road, Karachi
Phone: 2727266 & 2729770 Fax: 2729770 (SM Iqbal) Cell: 0333-2314892 Email: firstname.lastname@example.org
No. C-87 Date:
C I R C U L A R
The amendments by the employees old-age benefits (amendment) Ordinance, 2002
By the above Ordinance No. XLVI of 2002
promulgated by the President on
1- The amendments come into force at once.
2- (i) In Section 2(a) the word “widow’s” has been substituted by the word “survivor’s” which was inadvertently left out when Section 22-B – Widows Pension was changed into survivors pension as pension may be given to the surviving spouse.
(ii) Section 2(oa) has been substituted by a new Section 2(oa) according to which the self assessment scheme has now to be opted and applied for in the prescribed form instead of by simple application of the employer till now. We have been informed that the Rule 5(1) of the E.O.B. (Contributions) Rules, 1976 has now prescribed form PR-10 for this purpose. The options made by the employers prior to this amendment are not affected and shall continue till completion of two years.
3- In Section 8 pertaining to Powers and Functions of the Board of Trustees: —
(i) Its subsections (a) & (b) have been corrected to add a new subsection.
(ii) A new subsection (c) has been added to co-opt technical person by name as member for a specific purpose and limited period as decided by the Board.
4- In Section 9: —
(i) In the second Proviso to Section 9(1) the word “pension” has been substituted by “Old-age pension”.
(ii) Its third Proviso has been substituted by a new third Proviso and being important is reproduced as under: —
“Provided also that in case an employer opts for self-assessment scheme, he shall be liable to pay fixed amount of one hundred and fifty rupees in respect of every person in this insurable employment irrespective of his wages or emoluments, and the wages for the purpose of calculation of benefits shall be treated as three thousand rupees per month”.
Now under the self-assessment scheme contribution has to paid by the employer at fixed rate of Rs. 150/- irrespective of the wages of the insured person and in such establishments for calculation of benefits to the employee wage shall be treated as Rs. 3,000/- p.m. This welcome change now would have made the self-assessment scheme more attractive for the employers to opt but new Section 12-A added by the Ordinance defeats the self-assessment scheme.
(iii) In its subsection 3 the word “contribution” has been changed to “employer’s share of contribution”.
5- It may be noted that Section 9-B remains un-amended and it still does not provide/authorise the employer to deduct employee’s contribution of Rs. 20/- p.m. from his wages unless the Rule to be prescribed in this respect authorises the employer to do so as the Act, this Section of the Act and the Payment of Wages Act, 1936 do not provide for such deduction by the employer.
6- In Section 12 regarding checking of the records: —
(i) In Section 12(1) (c) the colon has to be substituted by full stop and the Proviso made in 2001 has been omitted.
(ii) Section 12(2) has been substituted by a new Section 12(2) with a Proviso in it as under: —
“(2) The official referred to in section (1) shall not ordinarily demand production of account books and other documents referred to in clause (b) of sub-section (1) for more than two years and shall be bound to secrecy as regards all matters with which he becomes acquainted in the performance of his duties and which do not relate to matter provided for in this Act:
Provided that checking of record in case of those employers who have not opted for self-assessment scheme shall only be done once in a year, with fifteen day’s prior notice, by an officer not below the rank of Assistant Director.”
The checking of records by Assistant Director or above rank once in a year with 15 days notice is a welcome change. It may be noted that Section 10 provides for records and returns to be maintained by the employer as provided by Regulations and Regulations 5(1) of the E.O.B. (General) Regulations, 1980 provides for records of attendance, payment of wages i.e. payroll and returns/contribution schedules are to be maintained by the employer which as per Regulations 5(2) are to be retained for two years. Section 12(1) provides for checking the correctness of the particulars on these records prescribed by the said Regulation made under Section 10 which are the main records to be checked and the account books which do not give names and wages of individual employees are only secondary documents.
7- A new Section 12-A with five subsections (1) to (5) has been inserted in the Act which defeats the purpose of self-assessment scheme introduced in 2001 due to Late Mr. Omer Asghar after persistent demand of the employers to save them from undue harassment by the staff of the Institution by paying more than normal contribution under the self-assessment scheme. Section 12-A being lengthy is not reproduced here but the same may be perused from the Ordinance. Our comments on some aspects of it are as under: —
(i) Strangely its sub-section (1) has made option for self-assessment scheme as application for “Registration” for self-assessment scheme, instead of written letter of the employer opting the self-assessment scheme as before and has provided for declaration about number of employees and their other particular on a prescribed form.
(ii) An employer who has been already continuing under the normal provisions of the Act if he opts for registration under self-assessment scheme, he shall not decrease the number of employees and the total amount of contribution paid by him prior to the option. What a provision! The number of employees of any employer may increase or decrease due to work requirement from time to time and so also the contribution. Why then this additional penalty for opting the self-assessment scheme?
(iii) Why should this option be limited to two years and why should it not continue till option is withdrawn by the employers as in the case of social security?
(iv) If further provides that employer has to ensure that the amount of contribution and the number of insured workers declared by him shall not decrease during two years period of self-assessment scheme. The word “workers” used in subsection (3) is wrong, it should have been “employees” as used every where in this whole law.
(v) After 2 years period if the employer wishes to continue self-assessment scheme, there shall be one time checking of records as provided by Section 12(1) by no less than Dy. Director.
(vi) The self-assessment scheme under E.O.B. Act, and P.E.S.S.Ordinance, 1965 introduced in 2001 after persistent demand of employers to save them from undue harassment of the staff of these Institutions is not liked by the officials of these Institutions. By this new Section 12-A added the self-assessment scheme has been made more difficult to discourage employers from opting for the self-assessment scheme.
8- Section 21 for actuarial valuation of its assets and liabilities once in 5 years to know the financial position of the Institution has been substituted by new Section 21 providing actuarial valuation once in three years and further that no change in the rate of contribution or benefits shall be made without such valuation. This may also be used to increase in the rate of contribution.
9- In Section 22(Old-age pension): —
(i) The word “payable” appearing in the first Proviso under clause (b) of Section 22(1) and Section 22(2-C) are to be substituted by the word “paid”. This change is to deprive the employees from benefits if the employer failed to pay his contribution payable in respect of the employee for which the employee cannot be blamed.
the second Proviso of Section 22(1) semicolon at the end has been changed to a
colon and after this under it two new Provisos have been added. By the first
new Proviso if the employer failed to pay contribution payable prior to
10- Section 22-A (Old-age grant) & Section 23 (Invalidity Pension): —
(i) Identical amendments/changes with similar two provisos as in Section 22 mentioned above have also been made in Section 22-A and Section 23 having the same effect and implication as explained above.
11- In Section 37 (c) the word “contribution” has been rightly changed to by “employer’s share of contribution”. This amendment and the amendment in Section 9(3) does not authorise the employer to deduct employee’s contribution from his wages.
12- In Section 44(2)(1) the word “chairman” has been substituted by the word “president”.
On careful perusal of these amendments and changes, except for a few minor changes mentioned above, all changes and amendments made are only for the benefit of the Institution having huge funds giving no benefit to the employees, curtailing benefits and creating more hurdles/obstacles for the employers to keep them away from the self-assessment scheme.
You may carefully study the above alongwith the Act and the Ordinance. The Ordinance and this Circular are available on our above website.
(S. M. Yaqoob & S. M. Iqbal)
Industrial Relations Advisers &
Labour Laws Consultants