The Ministry of Finance has issued a revised office memorandum that significantly narrows the scope of eligibility for the health allowance granted to federal government employees, aligning the policy with a recent Supreme Court judgment that clarified who qualifies as delivering health services. The decision marks an important regulatory shift in how allowances linked to healthcare roles are defined and implemented across federal departments.
The revision follows the Supreme Court’s ruling in Civil Appeals No. 302-315 of 2024, Federation of Pakistan versus Ehsan ul Haq, in which the court interpreted the phrase “delivering health services” in a more precise manner. According to the judgment, only those employees who are directly involved in patient care can be considered eligible for the health allowance, excluding administrative or support staff who do not provide clinical services.
In line with this interpretation, the Finance Division’s memorandum clearly states that the allowance will now be limited to employees who directly provide clinical care to patients. This includes doctors, nurses, allied health specialists, paramedics, pharmacists, and other professionals whose primary duties involve patient treatment and healthcare delivery. Employees whose roles are indirect or administrative in nature will no longer qualify under the revised criteria.
The memorandum also outlines the financial and administrative conditions attached to the allowance. The health allowance will remain taxable and will continue to be payable during periods of leave, including leave preparatory to retirement. However, it will not be counted as part of pension, gratuity, or house rent calculations, maintaining its status as a standalone allowance rather than a component of long-term retirement benefits.
Further clarifications have been provided regarding postings outside the country. Employees who are posted or deputed abroad will not be entitled to receive the health allowance during their foreign assignment. The allowance will only be restored once such employees return to Pakistan and resume duties that fall within the revised eligibility framework.
The rate of the health allowance itself has not been changed under the new memorandum. It will continue to be governed by existing Finance Division notifications issued in February 2012 and July 2015. These earlier notifications remain the reference point for determining the applicable amounts for eligible employees.
To ensure compliance, the Finance Division has directed the Controller General of Accounts to immediately discontinue payments to employees who no longer meet the eligibility requirements. At the same time, departments have been instructed to reassign the Disparity Reduction Allowance to qualifying employees in accordance with previously issued Finance Division guidelines, where applicable.
All ministries and attached departments have been asked to implement the revised policy strictly and submit compliance reports within 15 days. The Finance Division has also withdrawn an earlier memorandum issued on December 2, 2025, citing a technical error in the system, and clarified that the latest notification should be treated as the authoritative directive on the matter.
The move underscores the government’s intent to align fiscal benefits with clearly defined service delivery roles, while ensuring that judicial interpretations are fully reflected in administrative policy.
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