EOBI contribution: how much employers and workers pay

EOBI is the one deduction most small employers get wrong in the same way: they work it out on the actual salary. It is not. EOBI is paid on the notified minimum wage, whatever the worker earns. Here is how it works, with the numbers.

The EOBI and provident fund calculator does it for your whole staff.

Who pays what

• Employer: 5% of the minimum wage, every month, for each insured worker.
• Worker: 1% of the minimum wage, cut from the salary.

The employer's 5% is the employer's cost. It must not be taken from the worker's pay.

A worked example

With a minimum wage of Rs 40,000 a month:

For 5 workers that is Rs 12,000 a month, whether they earn Rs 40,000 or Rs 1,00,000.

Which minimum wage?

The minimum wage is fixed by the federal government for Islamabad and by each province for its own area, and it usually changes with the budget in July. Use the figure notified for where your business is, for the current year. When it changes, your EOBI amount changes from that month.

Registering and depositing

1. Register the business with EOBI once you employ workers covered by the law.
2. Register each worker with their CNIC.
3. Deposit the contribution every month by the due date, and keep the challan.

Late deposits can bring additional charges, so set a monthly reminder.

What the worker gets

Contributions build an old-age pension for the worker, plus invalidity and survivors' benefits. A worker who changes jobs keeps the years already paid, as long as each employer registered and paid for them. That's why workers ask about EOBI when they join.

Keep it with payroll

In Munshi HR & payroll, deductions like EOBI sit on every salary slip with advances and loans, so the worker sees the 1% and you see the month's total to deposit.

Check your numbers in the EOBI calculator, or start free and run your next payroll in Munshi.