There are multiple case laws that have, over time, developed the precedent regarding the transfer of

employee benefits (be it statutory or discretionary) and payouts in the case of the death of an employee.
Firstly, it is important to address the several points of determination that arise during matters of
transferring such payouts or benefits of the deceased employee. These include whether the benefits form
the estate of the deceased, what specific benefits are considered to fall under the deceased’s estate, how
the amount is to be distributed amongst their dependents or heirs, and the ratio as to which this amount is
to be distributed.
Initially, we must determine what type of benefits constitute the “Tarka,” that is, the estate of the
deceased employee. This has been discussed in several cases including Wafaqi Hakumat Pakistan v.
Awamunnas (PLD 1991 SC [Shariat Appellate Bench] 731), Messrs Pakistan International Airlines
Corporation v. Alia Siddiqa (2001 MLD 1), and Late Javed Iqbal Ghaznavi (PLD 2010 Kar 153).

The cited case law has developed key principles relevant to the subject of inheritance, that are:
i) A deceased person's estate includes their movable and immovable assets, rights, or benefits over
which they had control or entitlement to claim for transactions like sale, exchange, transfer, or
gift.
ii) Legal heirs inherit only from the deceased's estate; any property, right, or benefit outside of the
estate is not inheritable.
iii) The criterion for determining a deceased person's estate is based on what they owned or had
absolute legal rights to claim during their lifetime. On the contrary, anything that could not be
claimed during their lifetime does not constitute part of their estate.
In statutes and case law addressing this matter (notably the landmark case Federal Government of
Pakistan v. Public-at-large PLD 1991 SC 731), the courts consistently encourage the equitable division
of payouts or funds among the legal heirs of the deceased. However, questions arise regarding the specific
legal heir entitled to receive such funds, the allocation of such funds, and the legal validity of extending
eligibility beyond the legal heirs.
In various legal cases, courts have clarified the distribution of financial benefits, including group
insurances, benevolent fund, and provident fund, and remaining salaries following the death of an
employee.
In the case of Messrs Pakistan International Airlines v. Alia Siddiqa and others (2001 MLD 1), the
court ruled that any group insurance payments could not form Tarka of the deceased, and hence belonged
to the nominee of the deceased specifically named during the lifetime of the employee, and other legal
heirs could not contest this decision.
Similarly, in Naseem Akhtar alias Lali v. Khuda Bux Pechoho and others (2006 CLC 1589), the court
determined that benevolent fund and group insurance should be paid to the deceased's husband, while the
general provident fund (which was the amount deposited by the employee and to be received upon his
retirement) and outstanding salary were part of the deceased's estate to be inherited by legal heirs.
Once again, reinforcing the decision made in the aforementioned case, in Fauzia Noureen v.
Muhammad Asghar (2010 CLC 219), the court decided that group insurance payments do not constitute
part of the deceased's estate and should be exclusively paid to the nominee chosen by the deceased.
Lastly, in Shamim Akhtar and others (PLD 1994 Karachi 237), the court held that group insurance and
death claim insurance against provident fund payments belong to the nominees of the deceased, with no
entitlement for other legal heirs.

Additionally, we must also view Zaheer Abbas v. Pir Asif (2011 CLC 1528), which is a frequently
referenced precedent concerning the distribution of employee benefits after the death of employee. The
dispute among legal heirs in this case centered around the distribution of the deceased's service benefits,
which included gratuity, family pension, leave encashment, group insurance, and General Provident
Fund. The judge ruled that certain benefits, such as group insurance, family pension, and gratuity, were
to be paid after the employee's death as they were granted by the employer and did not constitute part of
the inheritance. Instead, they were to be received by the individual entitled to them according to the
employer's service rules and regulations.
Conclusively, insofar as group insurance payments and benevolent funds are concerned, such would not
constitute the Tarka, i.e, estate of the deceased employee and is to be given to the Nominee decided for
this amount during the time that such a benefit was availed by the deceased. On the other hand, the courts
have repeatedly considered provident funds and any remaining salaries as forming part of the deceased’s
estate, and hence the same are to be distributed amongst any legal heirs per the ratio set out in Islamic
Sharia law.
While identifying a Nominee and legal heirs might be a straightforward for determining the beneficiaries
of a deceased employee's benefits, it's important to also take into account varying perspectives on the
matter. In this regard, we will refer to the relatively recent ruling in Mehmooda Begum v. Zubair
Ahmed (2013 C L C 1834 Peshawar).
In this particular case, the court decided that the petitioners which consisting of the deceased's brother,
sister, mother, and widow, each had their rightful shares as per Sharia law. These rights, however, could
not be exceeded to deprive other heirs of their entitlement. The court also further specified that in case of
employee benefits that are payable after the death of the employee, Nomination will not act as a will or
gift; it will only grant the right to collect or receive money and cannot override the rights of other legal
heirs.
The judgement of Mehmooda Begum v. Zubair Ahmed (2013 C L C 1834 Peshawar) further referred
to a series of case law that clarify the position regarding the entitlement of Nominees as opposed to that of
any legal heirs. The first of these was Latifanbhai v. Mt. Sakinanbhai (AIR 1939 Sind 107), where a
division bench of the Sind Chief Court concluded that provident money belongs to the deceased and
passes on to his heirs nominated by him, forming part of his estate or subject to personal succession laws.
Secondly, the case of Noor Muhammad (PLD 1951 Sind 1) was used to add onto this and clarify that
the Provident Fund Act, 1925 only grants the nominee the right to receive the amount without
conferring full ownership rights.
Finally, the apex court’s judgement in Amat ul Habib's case was used to address the claim of widows or
nominees to receive benefits to the exclusion of other legal heirs beyond their entitlement as per Sharia
law. The court emphasized that nominees do not have the right to receive more than their entitled share
and act merely as representatives to collect the amount on behalf of all legal heirs. The nomination does
not confer full ownership rights, and it does not operate as a gift or will, thus not depriving other heirs of
their entitlement under succession laws. Section 5 of the Provident Funds Act, 1925, further reinforces
this view and grants the nominee the right to receive the amount but does not declare them as the owner.
This view has also been reaffirmed in the case of Naz Bibi v. Waheed Bux, where the court clarified that
any service benefits not yet due or granted by the employer after the employee's death (hence, not
forming part of the deceased’s Tarka) shall only be distributed to entitled family members as per
prevailing service rules or relevant laws.
Here, a specification made that had previously not been addressed was that the employer has discretion in
establishing rules for such distributions as long as they are not inconsistent with Shariah or existing
laws. In Clause 10 of his judgement, the judge clarifies that such posthumous service benefits do not
form part of the deceased employee's estate and are only payable to designated beneficiaries or nominees
specified by service rules or applicable laws. Other legal heirs not designated as beneficiaries or nominees
are not entitled to claim a share of these benefits.