THE Provincial Employees Social Security Ordinance of 1965 had introduced a scheme of providing benefits to certain employees and their dependents in the event of sickness, for maternity reasons, employment injury or death. This was the first-ever labour welfare law introduced in Pakistan with the intention of fulfilling the medical needs of employees in the lower-income group.
In order to operate the scheme, the respective provincial governments had constituted institutions under the ordinance. The scheme applies only to those industries or establishments, and from such date, as the respective provincial governments may specify through a notification.
Since the prime objective of the social security scheme was to provide treatment to sick employees and their families, it would be extended only to those industries and establishments, in which they could conveniently access the medical assistance provided by dispensaries and hospitals administered by the institution. Other criteria were related to the provision of medical cover for employees of factories that lacked medical facilities.
Funds for managing the scheme are generated through contributions received from the employers, the rate for which has been prescribed under Section 20. For more than a decade, the emphasis of the bigger institutions in Sindh and Punjab has shifted from catering to the medical needs of employees and their families, to the collection of maximum funds from the employers. Since the devolution of labour laws in 2010, the rate of monthly contributions has been increased from six per cent of Rs10,000 per employee per month to 6pc of Rs22,000 in Punjab and 6pc of Rs16,200 in Sindh. By virtue of this amendment, provinces have put in place their respective laws repealing the 1965 ordinance.
The Sindh Employees Social Security Institution must review its policy.
The Sindh Employees Social Security Institution had increased the amount of monthly contribution payable on behalf of every employee covered under the act, (referred to as ‘secured employee’) from 6pc of Rs10,000 to 6pc of employees’ wages between Rs10,000 and Rs22,400. On strong protest by the Employers’ Federation of Pakistan (EFP), Sessi withdrew the notification. Later, the contribution was increased to 6pc of Rs15,000, which was the minimum wage then, through an amendment brought into the Sindh Employees Social Security Act, 2016.
In a meeting organised by EFP in July 2018, the then commissioner Sessi told a large gathering of his directors and representatives of employers that, under the revised law, the rate of Sessi contributions would be 6pc of Rs16,200 per month, which was the minimum wage fixed by the Sindh government effective July 1, 2018. The employers started paying the contributions and continue to do so. This amount of monthly contribution is based on the rate prescribed in Section 20 of the act relating to the “amount and payment of contribution”, the relevant text of which is reproduced below:
“Subject to the other provisions of this chapter, the employer, shall in respect of every employee, whether employed by him directly or through any other person pay to the institution a contribution at such times, at such rate [not more than 6pc] and subject to such conditions as may be prescribed;
“Provided that no contribution shall be payable on so much of an employee’s wages as is in excess of the upper wage limit determined under section 75:
“Provided further that the rate of contribution shall be the minimum wage rate prevailing at the time of paying the contribution under the Sindh Minimum Wage Act, 2015.”
Recently, the employers received notices from Sessi, requiring them to pay the contribution in the range of 6pc from Rs16,200 to Rs21,200 with retroactive effect from July 1, 2018. This salary range has been primarily prescribed under Section 75 of the act to guarantee the rate of benefits payable to the secured employees, which is the responsibility of Sessi to disburse. Sessi continues to pay these benefits to employees earning up to Rs5,000 a month since 2008.
Under the law, Sessi must allow eight types of benefits to secured employees. These, as I have previously noted, are “sickness benefit, maternity benefit, death grant, injury benefit, disablement pension, disablement gratuity, survivors’ pension, death grant in case of death while in receipt of injury benefit or total disablement pension”. These benefits are largely paid at the rate of the employee’s full salary or as a percentage of the employee’s total salary.
In view of this, Sessi is requested to withdraw its demand and let the employers continue to pay a contribution of 6pc of Rs16,200. Besides, the institution should pay the benefits to employees in accordance with their actual salary falling within the range of Rs16,200 and Rs21,200, instead of the existing Rs5,000.
The writer is an industrial relations professional.
Published in Dawn, March 14th, 2019