ISLAMABAD, Oct 28 (Wealth Pakistan) – The Board of Directors (BoD) of the Utility Stores Corporation (USC) has approved a severance and compensatory package worth around Rs19 billion for its over 6,000 employees, marking a major step in the government’s ongoing restructuring of the state-run enterprise.
According to official documents available with Wealth Pakistan, the decision was made in a recent BoD meeting chaired by Secretary Industries and Production Saif Anjum. The package, valued between Rs16 billion and Rs19.5 billion, follows the directions of the Economic Coordination Committee (ECC).
Compensation for 6,480 laid-off workers
The documents confirm that about 6,480 USC employees who were laid off on September 1 this year will receive the severance package and terminal dues. Each employee has been informed individually about their entitlement, which will be disbursed according to a cash flow plan.
Payment of the package is contingent on the release of funds by the federal government. The Board approved recommendations from the human resource committee that defined eligibility criteria for both the severance and compensatory packages.
Strict eligibility and disciplinary conditions
The package will not be extended to employees facing disciplinary proceedings until those cases are resolved. Similarly, staff members who retired or were dismissed before August 31, 2025, will not qualify for the payout — except for those specifically terminated under the corporation’s restructuring plan.
Employees found involved in embezzlement or responsible for shortages will have the corresponding amounts recovered or adjusted against their terminal dues. In addition, any employee pursuing legal action against USC management must withdraw their cases before receiving payment.
Rules for employees on deputation
The documents also clarify the status of USC employees currently serving in other government departments on deputation. Under the approved criteria, if their borrowing departments have permanently absorbed them, they will not be eligible for the repatriation or severance package and will be deemed terminated from USC service.
For those still officially under USC’s employment, their deputation period will be considered concluded, making them eligible for severance payments once funds are released by the federal government. However, payment will depend on a no-objection certificate (NOC) from the parent organization.
Letters communicating these terms will be sent to the concerned employees and their respective departments, ensuring procedural transparency and accountability.
Government restructuring and closure of utility stores
Earlier this year, the government decided to shut down USC’s nationwide network of utility stores as part of a broader restructuring plan aimed at reducing financial losses and improving efficiency. The closure led to the removal of around 11,406 employees across the country.
Established in 1971, the Utility Stores Corporation operated as a public sector entity providing essential goods at subsidized rates through retail outlets nationwide. For decades, the USC served as an important price stabilization mechanism, particularly for low- and middle-income consumers.
However, persistent operational losses, supply chain inefficiencies, and the rise of private retail chains have increasingly challenged its sustainability. The new compensation plan seeks to conclude the restructuring process while addressing the financial concerns of affected employees.
Path forward for USC employees
Officials noted that the severance package is designed to ensure fair treatment for employees while enabling the government to complete USC’s downsizing process responsibly. Once the federal funds are received, payments will be prioritized according to the approved schedule and verified eligibility.
The Industries and Production Division is expected to continue monitoring the implementation of the payout framework to maintain transparency and prevent disputes. Analysts believe the move, while painful in the short term, could pave the way for more efficient management of government-backed retail and subsidy programs in the future.