Khyber PakhtunkhwaLabour LawsSocial SecurityComments on K.P.K. Employees Social Security Act, 2021 Made by the Government of K.P.K

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Date: 16-11-2021

Circular Number: C-195

Comments on Khyber Pakhtunkhwa Employees Social Security Act, 2021 Made by the Government of K.P.K

After the 18^th amendment of the Constitution of Pakistan abolishing the Concurrent List, all subjects of the Concurrent List, including the Labour have gone exclusively in the jurisdiction of the provinces and, thereafter, the Provincial Governments make Labour Laws for the establishments functioning in their respective Provinces.

Khyber Pakhtunkhwa Employees Social Security Act, 2021 is the copy of the Employees Social Security Ordinance, 1965 with major amendments. We shall explain major changes only in our comments:

• Khyber Pakhtunkhwa Employees Social Security Act, 2021 has been passed by the KPK assembly on 24-8-2021 and has been assented by the Governor on 09-09-2021.

• In definition of employee, section 2 (k) (e) and its proviso, an employee whose wages above 60% of the minimum wages declared by the KPK Government shall be covered and once covered shall remain be covered irrespective of fact that wages exceed the coverage limit (above 60% of the minimum wages). Currently minimum wage in KPK is Rs. 21,000/= per month, therefore, employees who are getting wages up to 33600/= per month shall be covered.

• The provisions of Self-Assessment have been removed.
• In Management of the Institution, (section 3 to 19) the name of the Institution has been changed to “Khyber Pakhtunkhwa Employees Social Security Institution” and major changes have been made in the Governing Body and the Management of the Institution.

• In contribution, section 20 (1) of the Act, 6% contribution is to be paid on the Minimum Wages. The proviso under section 20 (1) of the Act not defined on what amount of contribution not to be paid in excess of the minimum wages and it has to be determined by the Governing Body in section 12 of the Act.

• Section 22 of the Act is about the procedure and manner for registration of the establishment under the Act but not given the number of employees (working in the establishment) for registration. Failure to register by the employer shall be punishable to one month or fine to the extent of 200,000/= but not less than 20,000/= or with both. The registration procedure has been confusing and disputed as Section 1 (3) says that Act shall apply to the industries and establishments through Notification by the Commissioner.

• Section 23 is about the checking of records by the Institution and almost identical to the provision of the Employees Social Security Ordinance, 1965.

• Section 25 is about the refund of the contribution paid erroneously and almost identical to the provision of the Employees Social Security Ordinance, 1965.

• From section 35 to 51 provides the benefits for the secured employees, its implication, application, calculations procedures and manner.

• Section 60 is about the complaint by any aggrieved employer or secured person and its provisions are almost identical to the Employees Social Security Ordinance, 1965 except the complaint shall be heard by the Vice Commissioner and employer is required to deposit 25% of the demand/assessment of contribution.

• Section 61 is the appeal against the decision passed by the Vice Commissioner before Commissioner of the Institution instead of Social Security Court, a proper judicial forum like Employees Social Security Ordinance, 1965. Both the forums (Complaint and appeal) are useless as these persons (Vice Commission & Commission) are interested parties and are responsible for the Management of the Institution, budget, target of recoveries/contributions etc. of the Institution.

• Section 62 & 63 are about the offenses and prosecution and its provision are almost identical the provision of the Employees Social Security Ordinance, 1965 except the fine has been increased to Rs. 50,000/=

• From section 64 to 67 new provision of recovery officers (Collector Grade I) was introduced, appeal against the decision of the recovery officer to the Labour Court with 50% compulsory deposit of the demand and further appeal to the High Court made difficult and complicated to get justice on black mailing on exaggerated demands by the Institution.

You are requested to carefully pursue the provisions above three laws and may consult your Labour Laws Consultant on the matter.

For M/s S. M. Yaqoob