When you’re running a business in Punjab, ensuring the financial well-being of your employees isn’t just good ethics—it’s also becoming a legal necessity. One of the most critical areas where this applies is Group Life Insurance (GLI).
Employers today are expected to do more than just provide salaries. The rising cost of living, growing social awareness, and labor laws are pushing organizations to prioritize social security and employee benefits. Group Life Insurance is one such tool that protects workers’ families in case of the worst, while also safeguarding your business from reputational and legal risks.
But what does the law actually require? And how can you, as a business owner or HR leader, implement GLI in a compliant and cost-effective manner? This guide breaks it all down.
What is Group Life Insurance (GLI)?
Group Life Insurance is a life insurance policy purchased by an employer to provide coverage to a group of employees. The policy typically pays a fixed sum to the nominee or family of an employee in case of death during the term of employment.
This is not a benefit limited to large corporations. In fact, GLI has become a standard offering across industries, ranging from banks and textile mills to e-commerce startups and IT firms.
If you’re still new to the concept, visit our guide What is Group Term Life Insurance and How Does It Work?
Is Group Life Insurance Mandatory in Punjab?
Yes, it is—under specific circumstances.
According to Section 33-C of the Punjab Industrial Relations Act, 2010, every industrial or commercial establishment in Punjab employing 20 or more workers is legally required to provide Group Life Insurance to its employees.
This includes:
- Insuring all permanent employees (contractual or part-time workers may be included optionally)
- Providing a minimum coverage of Rs. 500,000 in the event of natural death
- Ensuring the benefit remains active throughout the employee’s tenure
Failure to comply can result in penalties or fines during labor inspections, and more importantly, could damage the employer’s image in the job market.
The SECP’s Perspective on GLI as Social Security
The Securities and Exchange Commission of Pakistan (SECP), the country’s insurance regulator, has repeatedly highlighted GLI as a cornerstone of workplace social security.
In its report titled “Insurance as a Tool of Social Security: Landscape of Pakistan,” the SECP outlines the gaps in compliance and the potential of group insurance to reduce dependency on public welfare systems.
Key findings include:
- Compliance with GLI laws is inconsistent in Punjab, especially in small and mid-sized firms
- GLI can significantly reduce the financial burden on families and serve as a vital part of private-sector-led social protection
- The SECP encourages insurers and employer associations to conduct awareness drives and simplify enrollment procedures
Why Should Employers Take This Seriously?
There are three strong reasons:
- Legal compliance – Non-compliance can attract penalties and inspections.
- Talent acquisition and retention – Offering GLI helps you attract and retain skilled workers, especially when competing with MNCs and larger brands.
- Reputation and goodwill – Supporting your employees’ families builds trust and a positive employer brand.
Employers looking to create a complete employee benefits package often combine GLI with long-term saving tools like Provident Funds, which help employees plan for their future.
To know more about provident fund requirements and benefits, visit Understanding the Benefits of a Provident Fund: A Guide for Pakistani Employees
How to Set Up Group Life Insurance in Punjab
Getting started with a GLI plan is simpler than it sounds. Here’s a step-by-step approach:
- Contact a licensed insurance company or broker
Look for providers that specialize in group insurance and understand local labor law compliance.
- Audit your workforce
You must cover all permanent employees. Some employers extend coverage to full-time contractors or interns as an added benefit.
- Choose your policy features
Basic coverage for natural death is mandatory. Many businesses also add riders such as:
- Accidental death benefits
- Disability coverage
- Funeral and last rites expenses
- Negotiate premium rates
Premiums are generally very affordable, often costing less than Rs. 1,000 per employee per year, depending on age and coverage.
- Document and communicate
Ensure your HR department keeps records of policy agreements, payment receipts, and employee nominations. Conduct orientation sessions so employees are aware of their coverage.
Clearing Some Common Misconceptions
While there are several misconceptions about group life insurance and its regulatory requirements, it will not be possible to address them all here. We will just address a few common myths:
- Myth: Only big companies need to offer GLI
- Fact: False. If you have 20 or more employees, you must comply with Punjab law.
- Myth: It’s too expensive
- Fact: Actually, GLI premiums are among the lowest across insurance products. They’re calculated on group risk, not individual health.
- Myth: Only factories are covered
- Fact: Any commercial business in Punjab with 20+ employees is required to comply, whether you’re running a textile unit or a software house.
Penalties for Non-Compliance
Labor departments in Punjab have the regulatory authority to:
- Ask for proof of insurance
- Serve compliance notices
- Impose monetary penalties under labor laws
With increasing focus on labor rights, routine inspections are expected to rise, especially in export-driven and urban industrial zones.
Final Thoughts: Turn Compliance into Care
Offering Group Life Insurance isn’t just about ticking a legal checkbox. It’s about creating a workplace culture that values security and care. In a time when inflation is rising and job security is uncertain, even a basic GLI policy can go a long way in showing your employees they matter.
If you’re an HR professional or a business owner in Punjab, don’t wait for an audit or labor inspection. Get proactive, get informed, and most important of all, get insured.
Sadia Zaheer holds a Masters in Business Administration from IBA, Karachi. After working in several financial institutions in Client Management, Corporate Lending, Islamic Banking and Product Management she jumped careers to pursue a career in writing.
She is a Finance, Business and HR Development writer with four years of experience. She reads a lot and takes care of her multiple cats to remain calm.
