PESSI vs SESSI: Which Social Security Applies to Your Pakistani Company?

Two of the most frequently confused acronyms in Pakistani HR: PESSI and SESSI. Both are provincial social security institutions. Both provide health and medical benefits to registered workers. But they are governed by different laws, have different thresholds, and the penalties for non-compliance are different.

If your company operates in Punjab, you deal with PESSI. If you're in Sindh, you deal with SESSI. If you operate in both provinces, you need separate registrations — and separate monthly remittances.

This guide clarifies exactly who is responsible for what, how to calculate the right numbers, and how to stay on the right side of each institution.

The Quick Difference

Note: EOBI is federal and applies in addition to both PESSI and SESSI. These three institutions are separate — you may owe contributions to all three simultaneously.

PESSI — Punjab Employees Social Security Institution

Who Must Register with PESSI?

Any establishment in Punjab that:

• Has 10 or more employees (industrial establishments)
• Engaged in specified industries listed in the Social Security Ordinance
• Pays wages up to the insurable wage ceiling

Since the 2018 PESSI Act amendments, coverage was extended to include service sector establishments, which means most SMEs in Punjab now fall under PESSI jurisdiction regardless of whether they're manufacturing companies.

Practically: if you have 10+ employees and your registered office is in Punjab, you register with PESSI.

PESSI Contribution Rate

Employer pays 6% of the employee's monthly wages (up to the wage ceiling).

The insurable wage ceiling for 2026 is PKR 30,000/month. If an employee earns more than PKR 30,000, you still only calculate the 6% on PKR 30,000.

Employees pay nothing — there is no employee-side deduction for PESSI.

PESSI Calculation Example

For employees earning above PKR 30,000, your PESSI cost is capped at PKR 1,800 per employee per month. For employees below the ceiling, it's 6% of their actual wage.

PESSI Payment Deadline

PESSI contributions must be paid by the 15th of the following month, same as EOBI.

Late payment surcharge: 1% per month on unpaid amount. PESSI is known for issuing notice-to-explain letters relatively quickly for defaulting establishments — typically within 60 days of a missed payment.

SESSI — Sindh Employees Social Security Institution

Who Must Register with SESSI?

Establishments in Sindh with 5 or more employees in specified industrial or commercial activities. SESSI's coverage criteria are slightly broader than PESSI — the threshold is 5 employees, not 10.

If you have your registered office in Karachi, Hyderabad, Sukkur, or anywhere in Sindh with 5+ employees: register with SESSI.

SESSI Contribution Rate

Same structure as PESSI: 6% employer-only contribution, calculated on wages up to the insurable wage ceiling of PKR 30,000/month.

No employee deduction.

SESSI Calculation Example

For a 20-person Karachi office:

SESSI vs. PESSI Registration

SESSI registration requires submitting Form SS-1 (establishment registration) to the nearest SESSI office in Sindh. The digital portal at sessi.gos.pk allows form download but most registrations still require in-person document submission in Karachi.

KPK and Balochistan: ESSI

For completeness: establishments in Khyber Pakhtunkhwa and Balochistan fall under ESSI (Employees Social Security Institution) under their respective provincial frameworks. The structure is similar — employer-only contributions, provincial institutions, wage ceilings — but the thresholds and rates differ slightly. If you operate in KPK or Balochistan, contact the provincial Labour Department for current rates.

Operating in Both Punjab and Sindh?

If your company has offices in Lahore and Karachi, you have two separate compliance obligations:

1. Register with PESSI for your Punjab-based employees
2. Register with SESSI for your Sindh-based employees
3. Remit separately to each institution every month
4. Maintain separate employer codes for each

The employees in each province are covered by their respective institution. A Lahore employee cannot claim SESSI benefits; a Karachi employee cannot claim PESSI benefits.

PESSI/SESSI Benefits for Employees

This is worth understanding because employees sometimes ask HR about what they're actually getting.

Medical benefits covered:

• Outpatient treatment at designated PESSI/SESSI dispensaries and hospitals
• Inpatient care, surgeries, and specialist referrals
• Maternity benefits (60 days' full wages for female employees)
• Death grant (lump sum to dependents on employee death)
• Disability benefit for work-related injuries

The network of PESSI hospitals in Punjab includes major facilities in Lahore, Faisalabad, Gujranwala, and Multan. SESSI runs hospitals and dispensaries across Karachi and major Sindh cities.

The catch: Benefits are only available at PESSI/SESSI designated facilities, not private hospitals. Many employees don't use the benefits because they prefer private medical care — but that doesn't reduce your compliance obligation.

Common PESSI/SESSI Mistakes

Mistake 1: Registering only with EOBI and assuming social security is covered

EOBI and PESSI/SESSI are completely separate. Paying EOBI does not satisfy PESSI or SESSI obligations. Many SMEs register only with EOBI and discover the gap during a Labour Department inspection.

Mistake 2: Applying PESSI rates to Sindh employees

This happens when HR manages payroll centrally from Lahore for a company with a Karachi office. The system is set up for PESSI. Karachi employees are enrolled in PESSI instead of SESSI — which means wrong institution, wrong employer code, and benefits unavailable to those employees.

Mistake 3: Calculating on gross salary above the ceiling

If an employee earns PKR 120,000, some HR systems calculate 6% of PKR 120,000 = PKR 7,200 and remit that amount. The correct contribution is PKR 1,800 (6% of PKR 30,000 ceiling). The excess remittance is difficult to recover.

Mistake 4: Missing new employee enrollment

PESSI and SESSI require each new eligible employee to be enrolled within 7 days of joining. Missing this window doesn't just create a compliance risk — if an employee has a medical emergency before enrollment, they have no coverage, and the employer can face a negligence claim.

Penalties for Non-Compliance

Both PESSI and SESSI can impose:

• Fines up to PKR 50,000 for non-registration
• 1% monthly surcharge on unpaid contributions
• Prosecution under the Social Security Ordinance for repeated default
• Attachment of assets in extreme cases of persistent non-payment

Labour inspectors are empowered to audit PESSI/SESSI compliance during routine inspections. If you're caught unregistered, back-contributions plus penalties are assessed from the date you first met the threshold (number of employees), not the date of inspection.

PESSI + SESSI + EOBI: The Full Picture

For a Punjab company with 15 employees (average salary PKR 55,000, all above the PESSI wage ceiling):

This means for every PKR 55,000 salary, you're paying an additional PKR 3,650 in compliance contributions (PESSI + EOBI employer shares) — roughly 6.6% on top of gross payroll.

Frequently Asked Questions

Q: Is PESSI/SESSI contribution tax-deductible? A: Yes. PESSI and SESSI employer contributions are deductible business expenses under the Income Tax Ordinance 2001.

Q: What if an employee is already enrolled with a previous employer's PESSI account? A: PESSI enrollments are employer-specific. When an employee joins you, you create a new enrollment under your employer code. Their benefits history from the previous employer does not transfer directly.

Q: Do seasonal employees trigger PESSI/SESSI? A: If a seasonal employee works for 3 or more months and your total workforce including seasonals exceeds the threshold, they are covered. This is frequently disputed in audit proceedings.

Q: Can employees opt out of PESSI/SESSI? A: No. Enrollment is mandatory. Neither the employer nor the employee can opt out once the threshold conditions are met.

Q: Is there a PESSI/SESSI equivalent for remote workers in other provinces? A: There is no national provincial social security institution. Remote employees working from a different province than your registered office fall under the social security institution of the province where the work is primarily performed, not where your head office is.

Handling This Automatically

Managing three separate compliance calculations (PESSI, SESSI, EOBI) across employees in multiple provinces, with different wage ceilings, different institutions, and different payment portals, is a recurring source of errors.

Workflow Engine's HRMS assigns each employee a province at onboarding, calculates the correct compliance contributions automatically (PESSI or SESSI depending on province, plus federal EOBI), generates separate pre-filled challans for each institution, and flags employees approaching enrollment deadlines.

The total monthly compliance report — showing exactly what's owed to PESSI, SESSI, and EOBI broken down by employee — is available with one click.

Book a 30-minute demo to see the compliance dashboard live.