The Court decides that marginal deficits can be made up using the statutory “rounding” mechanism provided for by law.
ISLAMABAD:
The Federal Constitutional Court (FCC) has upheld a series of judgments of the Lahore High Court (LHC) ordering the Employees’ Old Age Benefits Institution (EOBI) to provide monthly old age pension to workers who have completed more than 14 and a half years of insurable employment.
The court ruled that marginal deficits can be made up through the statutory “rounding up” mechanism provided by law.
A three-member bench headed by Justice Amin-ud-Din Khan and comprising Justice Syed Hasan Azhar Rizvi and Justice Syed Arshad Hussain Shah, dismissed five civil petitions filed by the EOBI against the LHC judgments. The detailed order was written by Justice Rizvi.
EOBI challenged the LHC decisions of August 29, 2024 and March 5, 2025, by which the High Court had allowed the written petitions of five policyholders and ordered EOBI to pay them old age pension.
He had argued that the workers were ineligible because they had not completed the mandatory 15 years of insurable employment required under section 22(1)(b) of the EOBI Act, 1976.
According to the facts recorded by the court, the respondents – Muhammad Rafique, Muhammad Yaqoob, Shahbaz Hussain, Imran Butt and Rasheed Anwar – had completed between 14 years and six months and 14 years and 11 months of insurable employment before retiring.
Their pension applications were rejected by the EOBI and, in some cases, by adjudicatory and appellate authorities under the law.
However, the LHC granted relief in reliance on the provision contained in the Schedule to the Act, which provides that a period of 6 months or more of insurable employment is to be treated as a full year.
Before the FCC, the EOBI argued that the scale applied only at the pension calculation stage and could not exceed the substantive eligibility condition of 15 full years.
It further relied on an internal circular issued in February 2022 clarifying that employment of 14.5 years or more could not be rounded up to determine eligibility and that such persons were only entitled to a lump sum old age allowance under section 22A.
Rejecting these arguments, the court held that the Act created two separate benefit schemes – a monthly pension under section 22 and a lump sum allowance under section 22A – but that the scale was an integral part of the statutory scheme and could not be separated from the question of eligibility.
The bench observed that a rigid and literal interpretation of Section 22(1)(b) would result in “unjust, harsh and disproportionate consequences” in denying pension to workers who had substantially complied with the law but had failed to do so by a negligible margin.
The FCC noted that the legislature consciously incorporated the rounding rule to avoid technical disqualifications and hardships in welfare legislation.
