FCC upholds LHC orders in pension case

Court rules that marginal shortfalls can be cured through statutory 'rounding-off'mechanism provided in law

ISLAMABAD:

The Federal Constitutional Court (FCC) has upheld a series of Lahore High Court (LHC) judgments directing the Employees Old-Age Benefits Institution (EOBI) to grant a monthly old-age pension to workers who had completed more than 14 and a half years of insurable employment.

The court has ruled that marginal shortfalls can be cured through the statutory "rounding-off" mechanism provided in the law.

A three-member bench led 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 EOBI against the LHC judgments. The detailed order was authored by Justice Rizvi.

EOBI challenged LHC rulings dated August 29, 2024, and March 5, 2025, whereby the high court had allowed writ petitions of five insured persons and directed EOBI to pay them old-age pension.

It 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 retirement.

Their pension claims were rejected by EOBI and, in some cases, by the adjudicating and appellate authorities under the act.

However, the LHC granted relief by relying on the proviso contained in the schedule to the act, which provides that a period of 6 months or more of insurable employment shall be treated as a full year.

Before the FCC, EOBI maintained that the schedule applied only at the stage of pension computation and could not override the substantive eligibility requirement 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 off for determining eligibility and that such persons were entitled only to a lump-sum old-age grant under Section 22A.

Rejecting the arguments, the court held that the act created two distinct benefit regimes — monthly pension under Section 22 and a lump-sum grant under Section 22A — but that the schedule formed an integral part of the statutory scheme and could not be divorced from the question of eligibility.

The bench observed that a rigid, literal interpretation of Section 22(1)(b) would lead to "unjust, harsh and disproportionate consequences" by denying pension to workers who had substantially complied with the law but fell short by a negligible margin.

The FCC noted that the legislature had consciously incorporated the rounding-off rule to avoid technical disqualifications and hardship in social welfare legislation.