If you employ staff in Pakistan, two statutory schemes usually apply: the Employees' Old-Age Benefits Institution (EOBI), which is federal, and the Sindh Employees' Social Security Institution (SESSI) if your business operates in Sindh. Both are frequently misunderstood by SME owners handling payroll manually, so here's what actually matters in practice.

Who needs to register for EOBI

EOBI registration is generally required for businesses with a minimum number of employees as defined under the Employees' Old-Age Benefits Act. Once registered, contributions are required for every eligible employee — not just some of them, and not only once a threshold headcount is reached in a given month.

Contributions are split between employer and employee, with the employer share being the larger portion. Both are calculated as a percentage of a defined minimum wage figure, not the employee's actual salary — this is one of the most common points of confusion, since many business owners assume the contribution scales with actual pay.

SESSI: what's different

SESSI applies to businesses operating within Sindh and covers medical and social security benefits for employees. Like EOBI, it requires monthly employer contributions, and registration is mandatory once your business meets the applicable employee threshold — it isn't optional based on business size alone.

A common mistake: assuming SESSI and EOBI are alternatives to each other. They're not — a business operating in Sindh with eligible staff typically has obligations under both schemes simultaneously, and they're calculated and paid separately.

Common mistakes SMEs make

  • Treating contributions as optional for "informal" staff — if someone is a genuine employee, the obligation generally applies regardless of how casually the arrangement started.
  • Missing monthly deadlines — both schemes require monthly contributions, and late payments typically accrue penalties.
  • Calculating contributions on actual salary instead of the statutory minimum wage base — this leads to either overpaying or underpaying, both of which create reconciliation headaches later.
  • Not keeping contribution records tied to individual employee files — if an employee later claims benefits, missing contribution history becomes the employer's problem to resolve.
This is general guidance, not legal advice. Contribution rates and thresholds are set by EOBI and SESSI regulations and can change. Confirm current rates directly with EOBI/SESSI or a labor law consultant before filing.

Why this is worth automating, not tracking by hand

Because EOBI and SESSI are calculated on a statutory base rather than actual salary, and apply per-employee every single month, they're exactly the kind of calculation that's easy to get subtly wrong in a spreadsheet — and hard to notice until an audit or an employee dispute forces a review. A payroll module that calculates these automatically, tied to each employee's record, removes the monthly manual recalculation entirely.