Section 22 (2) of Employees’ Old-Age Benefits Act: SC explains how an insured person can avail exception

ISLAMABAD: The Supreme Court held to avail the exception under Section 22 (2) of the Employees’ Old-Age Benefits Act, 1976, the insured person must satisfy that he was in employment in the industry or establishment on 1st July 1976 or on the day the Act became applicable to such an industry or establishment.

A three-judge bench, headed by Justice Syed Mansoor Ali Shah and comprising Justice Aminuddin Khan and Justice Jamal Khan Mandokhail, on Tuesday, released its reserved judgment on the petitions of the insured persons.

It said that an insured person cannot avail the exception under Section 22 (2) if he was employed after the cut-off date, i.e., the first day of July 1976, or after the date when the under Section 22 (1) of the Act became applicable to the industry or establishment under Section 1(4) of the Act.

The question about the EOBI pension had arisen before the Supreme Court out of two sets of judgments from different High Courts. Through judgments dated 27.04.2021 and 19.06.2023 passed by the Islamabad High Court (IHC) and the Peshawar High Court (PHC), Peshawar, respectively, the matter was decided in favour of the Employees’ Old-Age Benefits Institution (EOBI) and against the insured persons (respondents).

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Through judgments dated 03.04.2023 and 30.11.2022 passed by the IHC and the Sindh High Court (SHC), Karachi, respectively, the matter was decided against the EOBI and in favour of the respondents. Hence there have been conflicting opinions of the respective High Courts on the interpretation of Section 22 (2) of the Act.

Under Article 38 of the Constitution, it is the duty of the State to promote social and economic well-being of the people by, inter alia, providing for all persons employed in the service of Pakistan or otherwise, social security by compulsory social insurance or other means. It was in discharge of this responsibility that the Act was enacted by the Federal Legislature under Entry 26 of the erstwhile Concurrent List of the Constitution and implemented on 1st July 1976 to provide old-age benefits to persons employed in industrial, commercial and other organisations. The Act is a beneficial statute intended to provide security and old-age benefits to employees of industrial, commercial or other organisations covered by it and, therefore, its provisions have to be construed liberally in order to advance its objective.

The Act applies to every industry or establishment as described in Section 1 (4) of the Act.

The Court noted that Section 22 (1) provides that an insured person is entitled to monthly old-age pension if (a) he is over 60 years of age, or over 55 years of age in the case of a woman, and (b) the contribution in respect of such insured person was paid by the employer for not less than fifteen years. It is only when both these conditions are fulfilled that an insured person is entitled to monthly old-age pension under the said provision.

It further observed that an exception is provided under Section 22(2) of the Act whereby the number of years of contribution paid by the employer on behalf of the insured person is reduced to seven and five years, respectively instead of fifteen years under section 22’(2) if on the first day of July, 1976 or on any day thereafter on which the Act becomes applicable to an industry or establishment; (i) the insured person is over 40 years of age, or over 35 years of age in the case of a woman or (ii) the insured person is over 45 years of age, or over 40 years in the case of a woman.

The first cut-off date; i.e., first day of July 1976 is the date when the Act was implemented. As per section 9 of the Act, the first contribution was paid by the employer on the said date. The second cut-off date is when the Act becomes applicable to an industry or establishment.

Section 1 (4) of the Act provides three different modes through which the Act becomes applicable to an industry or establishment. It is at these two points in time when the age of the insured person in terms of Section 22 (2) (i) and (ii) becomes relevant for invoking the exception of reduced years of contribution under the said provision.

The age of the insured person alone is not the determining factor for the case to fall within the exception under Section 22(2) but it is also that the age must be so at the relevant cut-off dates.

Copyright Business Recorder, 2024