High Court Orders 20% Revenue Allocation for Employee Welfare Funds–Sindh Local Government Notification

Sindh Local Government Directs Keamari District Councils to Establish Employee Welfare Funds:

The Local Government Department, District Keamari, Karachi, has issued an urgent directive to all Union Committees within its jurisdiction regarding the establishment of Provident, Pension, and Benevolent Funds for their employees. This move comes in compliance with Section 125(1) of the Sindh Local Government Act, 2013, which mandates councils to create and maintain these funds for employee benefits.

The Sindh High Court has recently issued a verdict (Constitutional Petition No. D-3393/2023) on March 12, 2025, emphasizing that 20% of the revenue generated from own sources within the council’s jurisdiction must be deposited into a separate account exclusively for these funds.

To ensure immediate compliance, the Deputy Director of Local Government, District Keamari, has instructed all councils to open separate accounts for these funds and deposit 20% of their total income, along with deductions from employee salaries where applicable.

Strict action will be taken against non-compliance.

All Union Committees must ensure compliance within three (03) days.

OFFICE OF THE
DEPUTY DIRECTOR (DISTRICT KEAMARI)
LOCAL GOVERNMENT DEPARTMENT, KARACHI

No. DDLG-3(24)/2025 Karachi,
dated: 20^th of March, 2025

COURT MATTER
MOST URGENT

To

The Secretary/Chief Executive, Union Committee (All),
District Keamari, Karachi.

SUBJECT:             ESTABLISHMENT OF PENSION FUND, PROVIDENT FUND AND SOCIAL INSURANCE.

                              Your attention is drawn towards the Section 125 (1) of the Sindh Local Government Act, 2013 that mandates the council to establish and maintain a provident, pension and benevolent funds for the benefit of its employees.

                              Recently, the Hon ‘able High Court of Sindh, Karachi has given its verdict viz. Const. Petition No. D-3393 of 2023 dated: 12.03.2025 wherein, specifically para 11 of the aforesaid decree that expresses the devised i.e., out of the reasonable amount of the total income generated through own sources from the area under jurisdiction, 20% of its is paid into its separate account and not to be drawn except for the purpose mentioned above.

                              In pursuance thereof, the Government letter no. SO-V (LG)/1-78/2019 dated: 18^th March, 2025 issued by Section Officer V, Local Government & Housing Town Planning Department, Government of Sindh and subsequent letter bearing no. RDLG-2(16)/2024 dated: 18th of March, 2025 issued by Regional Director (Karachi Division), Local Government Department, Karachi has given directions in the light of above to establish and maintain the aforesaid funds.

                              Therefore, you are required to establish separate accounts of the funds enlisted from (a) to (c) hereinbelow and maintain the same by depositing 20% of all income as well as contributions/deductions from the salaries of the employees of the councils, as applicable:

(a) Provident Fund,

(b) Pension Fund,

(c) Benevolent Fund.

                              Compliance with the instructions expressed vide this letter may please be made within three (03) days from this letter.

DEPUTY DIRECTOR
LOCAL GOVERNMENT DEPARTMENT
DISTRICT KEAMARI, KARACHI.

Strengthening Employee Welfare: Ensuring Financial Security for Local Government Staff:

The establishment of Provident, Pension, and Benevolent Funds is a critical step towards securing the financial future of local government employees in Sindh. By enforcing the Sindh Local Government Act, 2013, and following the Sindh High Court’s directives, the government aims to provide long-term financial benefits to its workforce.

The requirement to allocate 20% of council revenue for these funds ensures that employees receive their rightful benefits without financial delays or administrative hurdles. Additionally, these measures align with global best practices in government employee welfare programs.

All Union Committees are urged to act swiftly in setting up these funds to comply with legal requirements and safeguard employee rights. The government remains committed to enhancing financial stability and social security for its workforce.

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