Applicability and important definitions of employees old age benefit act, 1976

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Q-1:     Describe the applicability and important definitions of employees old age benefit act, 1976.

Ans:     APPLICABILITY OF ACT [Section 1(4)]

The Employees Old Age Benefit Act, 1976 applies to every industry or establishment:

(a)        Wherein 10 or more persons are employed directly or indirectly, or were employed on any day during the preceding 12 months.

(b)        Shall continue to apply even if the minimum number has subsequently reduced to less than 10.

(c)        Where m less than 10 persons are employed, if such industry or establishment voluntarily applies for application of the Act.

(d)        Which the Federal Government specifies by notification,



(a)        BENEFITS [Section 2(a)]

Benefits means old-age pension, invalidity pension, window’s pension, old-age grant and such ether payments as may be determined by the Federal Government.

(b)       CONTRIBUTION [Section 2(b)]

Contribution1 means the sum of money payable to the institution by the employer or by the Federal Government m respect of an insured person under the provisions of the Act.

(c)        EMPLOYEE [Section 2(bb)]

Employed means any person employed, whether directly or through any other person, for wages or otherwise, to do 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-

(d)       EMPLOYER [Section 2(C)]

Employer, in relation to an industry establishment, means any person who employs, either directly 0r” through any other person, any employee, and includes:

(i)         In the case of 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.

(e)       ESTABLISHMENT [Section 2(e)]

Establishment means:

1.         An establishment to which the West Pakistan Shops and Establishments Ordinance, 1969 (West Pakistan Ordinance No. VIII of 1969), for the time being applies, and, notwithstanding anything contained in Section 5 thereof, includes clubs, hostels, organizations and messes not maintained for profit or gain and establishments, including hospitals, for the treatment or care of sick, infirm, destitute or mentally unfit persons.

2.         A construction industry as defined in West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968 (West Pakistan Ordinance No. VI of 1968);

3.         A factory as defined in the Factories Act 1934 (XXV of 1934);

4.         A mean as defined in the Mines Act. 1923 (IV of 1923);

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

(f)        INSURABLE EMPLOYMENT [Section 2(1)]

“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



(g)       INVALIDITY [Section 2(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 be unable to earn from his usual or other occupation more than one-third of the normal rates of earning in his usual occupation.

(h)       WAGES [Section 2(p)]

“Wages” means remuneration for services paid or payable in cash or in kind to an insured person, not being less than the remuneration based on the minimum rates of wages declared under the Minimum wages Ordinance, 1961 (XXXIX of 1961), without taking account of deductions for any purpose, under a contract of service or apprenticeship, express or implied, and shall be deemed to include any dearness allowance or other addition in respect of the cost of living, and any payment by the employer to an insured person in respect of any period of authorized leave, illegal lockout or legal strike; but does not include:

1.         Any payment for overtime; or

2.         Any sum paid to the employee to defray special expenses entailed by the nature his employment; or

3.         Any gratuity payable on discharge: or any sum paid as bonus.


(i)         INSURED PERSONS (Section 3-8)

All employees in an industry or establishment shall be insured in the prescribed manner, The Federal Government has been vested with powers to establish or nominate the Employees Old- Age Benefits Institution shall vest in Board. The Board of Trustees will have the following powers:

1.         To approve the budget estimate, the audited accounts and the annual report of the institution for submission to the Federal Government in accordance with the provision of the Act; and

2.         To call of any information or direct any research to be made for the furtherance of the objects of the Act.

The Federal Government shall appoint the Chairman on such terms and conditions as it may determine. The Board of Trustees shall consist of the following to be appointed by the Federal Government:

1.         The Secretary or Addition Secretary in the Labour Division, who shall also be the President of the Board of Trustees;

2.         Four person to represent the Federal Government, one each from the Ministries of Finance, Commerce, Industries and Labour;

3.         Four person to represent the Provincial Governments, one to be nominated by each of the Provincial Government;

4.         Four person to represent employers;

5          Four persons to represent insured person; and

6.         Two persons to represent the institution.

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