Hire in Pakistan

Here’s where you get started with human resources best practices and hiring in Pakistan.

Ready to Hire? Get Started!

Last updated at June 15, 2022
beautiful scenery in the country of pakistan

Currency

Pakistani Rupee (PKR)

Capital

Islamabad

Time Zone

GMT+5

Key Country Facts

Introduction

Pakistan, officially the Islamic Republic of Pakistan, is a country in South Asia. It is the world’s fifth-most populous country, with a population exceeding 225.2 million, and has the world’s second-largest Muslim population. The economy is semi-industrialized, with centres of growth along the Indus River. Primary export commodities include textiles, leather goods, sports goods, chemicals, carpets/rugs and medical instruments.

Area

Pakistan spans 882K km2. It has a 1,046 km coastline along the Arabian Sea and Gulf of Oman in the south, and is bordered by India to the east, Afghanistan to the west, Iran to the southwest, and China to the northeast. It also shares a maritime border with Oman.

Climate

The climate varies from tropical to temperate, with arid conditions in the coastal south. There is a monsoon season with frequent flooding due to heavy rainfall, and a dry season with significantly less rainfall or none at all. There are four distinct seasons in Pakistan.

 

 

Culture

Civil society in Pakistan is largely hierarchical, emphasising local cultural etiquette and traditional Islamic values that govern personal and political life. There are numerous ethnic groups (Punjabis – 44.7%, Pashtuns – 15.5%, Sindhis – 14.1% Muhajirs – 7.6%) and they have been influenced by South Asian, Iranic, Turkic, Central & West Asia.

Religion

The state religion in Pakistan is Islam. Freedom of religion is guaranteed by the Constitution of Pakistan, which provides all its citizens the right to profess, practice and propagate their religion subject to law, public order, and morality. Most of Pakistanis are Muslims (96.47%) followed by Hindus (2.14%) and Christians (1.27%).

Official Language

Urdu and English are the official languages of Pakistan. English is primarily used in official business and government, and in legal contracts. Urdu, the national language is understood by >75% of Pakistanis. Punjabi is the most common language and the first language of 38.78% of the population.

 

 

 

Pakistan HR at a Glance

Employment Law

Labour law in Pakistan is broad and contains several ordinances, acts, rules and regulations and all other statutes relating to industrial, commercial and labour establishments.

 

The Islamic Republic with its federal capital at Islamabad is comprised of four provinces: Punjab, Sindh, Khyber Pakhtunkhwa and Baluchistan. In addition, the states of Azad Jammu & Kashmir and Gilgit Baltistan are also closely connected with open borders, shared laws and easy cross border trade / employment.

The Constitution of Pakistan provides a federal democratic State, based on Islamic principles of social justice and contains a range of provisions concerning labour rights:

  • the Constitution prohibits all forms of slavery, forced labour and child labour
  • the Constitution provides a fundamental right to exercise the freedom of association and the right to form unions
  • the Constitution proscribes the right of its citizens to enter upon any lawful profession or occupation and to conduct any lawful trade or business
  • the Constitution lays down the right to equality before the law and prohibition of discrimination on the grounds of sex.

The operating labour laws are mostly applicable on workmen or employees and does not specifically include white collar workers, but these are some of the most commonly used labour laws and their applicability:

  • The West Pakistan Shops and Establishments Ordinance 1969 – regulates the work hours and other conditions of work and employment of persons employed in shops and commercial, industrial and other establishments.
  • The West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968 – applies to all industrial and commercial establishments in Pakistan wherein twenty or more workmen are employed, directly or through any other person, whether on behalf of himself or another person. This is specifically applicable on workmen.
  • The West Pakistan Maternity Benefit Ordinance 1958 – regulates the employment of women in establishments in Pakistan. It does not specify if woman include the white-collar working woman.
  • The Employers’ Liability Act, 1938 – provides that certain defences shall not be raised in suits for damages in Pakistan in respect of injuries sustained by workmen.
  • The Employees Old-Age Benefits Act 1976 – provides for certain old age benefits for the persons who are employed in industrial, commercial and other organizations.
  • The Essential Personnel (Registration) Ordinance 1948 – provides for the compulsory registration of essential personnel at Employment Exchanges in Pakistan.
  • The Companies Profits (Workers Participation) Act, 1968 – provides for the participation of workers in the profits of companies.

The employment laws and statutes vary by province. For the purpose of this document, the employment law and regulations is focused on the province of Punjab.

 

EMPLOYMENT CONTRACT

 

Employment contracts in Pakistan may be written or verbal. It is common for employers to execute a written contract or appointment letter that establishes the terms and conditions of the employment relationship. Employment contracts can be in English (as long as employee understands English) and must state:

 

  • the names of both parties (employer and employee)
  • the starting date of employment
  • in case of indefinite contract, the expected duration; if it is a fixed-term contract, the starting and end date
  • the job title or a brief description of the work
  • the place of work
  • the wages
  • any terms and conditions relating to hours or days of work
  • the notice period for termination

Employment contracts can be classified as the following:

  • Permanent
  • Probationers
  • Badlis (Alternate) – an employee who was appointed in the post of a permanent or probationer employee who is temporarily absent
  • Temporary – hired for a project ending within nine months
  • Apprentices – a person undergoing training through the system of apprenticeship
  • Contract worker – an employee who works on a piece rate basis for a specific period of time

 

Contract Terms

The Labour Law requires every employer to provide every employee with an employment contract, showing terms and conditions of their service. The employer is responsible to provide this contract at the time of appointment, transfer or promotion.

Every employee is entitled to a written certificate of service at the time of dismissal, discharge, retrenchment or retirement from service.

The maximum duration for a fixed-term contract worker doing tasks of permanent nature is nine months.

Terms are implied into the employment relationship by statute and case law, and each province has its own law relating to employment:

  • Industrial and Commercial Employment (Standing Orders) Ordinance 1968 (applicable in Balochistan and Punjab)

  • Sindh Terms of Employment (Standing Orders) Act 2015

  • Khyber Pakhtunkhwa Industrial and Commercial Employment (Standing Order) Act 2013

Exempt and Non-Exempt Employees

There is no specific law governing background checks and any check may be carried out, especially once the consent of the applicant has been obtained.

However, the Constitution of Pakistan prohibits discrimination on the basis of union affiliations and also political views. These checks should therefore be avoided.

Probation Period / Trial Period

The duration of probation period can be up to 3 months, which can be further extended for another 3 months. During this time, the employer or employee may terminate the employment contract without prior notice.

Working Hours

Employees’ normal working time must not generally exceed 48 hours per week.

Overtime

If an employee works beyond the stipulated working hours, they are entitled to an overtime pay that is double the rate of their ordinary pay.

If the employee works for more than 8-9 hours/day (9 including lunch and prayer time in hours of work) or more than 48 hours/week, they are eligible for overtime pay. The maximum weekly overtime hours are 12 hours.

If the employee is working in a seasonal factory, the employee is eligible for overtime rate of pay when working hours are > 50 hours/week, also at double the ordinary rate of pay.

The employee is obligated to work overtime whenever the employer requires them to do so. If the employee cannot perform overtime work, they have to provide supporting reasons as to why they are unable to do so.

If an employee works on a public holiday, the employee is paid 300% of the rate of the normal wages (normal wage for working on public holiday + paid substitute holiday + one day’s paid compensatory holiday).

Bonus

In 1972, payment of bonus was made a legal obligation, conditional on the profitability of a company. This is also termed as Statutory or Profit Bonus as it is regulated by law. Statutory or Profit Bonus is different from other bonuses that workers may receive on the basis of production, attendance, or Eid.

A worker is entitled to Profit Bonus if the below three conditions are satisfied:

  • Worker defined as a workman and must have worked at least 90 days in the organization in the preceding year.

  • Organization is a commercial or industrial establishment with at least 20 workers.

  • The organization must have declared a profit in the year for which bonus is to be awarded.

The bonus must be paid within a period of 3 months from the closing of the financial year, and can be paid either in the form of cash or National Investment Trust Units of equivalent value

Termination

Termination of an employment contract may be either termination on grounds with a notice, or termination on account of misconduct.

Termination can also be categorized in the following three categories.

  • “Automatic termination” where an employment contract is terminated automatically in circumstances such as death of an employee or completion of the project/ contract for which an employee was hired.

  • An employee may resign from employment to avail some better work opportunity or when the work circumstances are not supportive and there is material breach of contract on the part of employer.

  • Termination initiated by an employer, which may be based on fair or unfair grounds.

The Labour Law requires a written employment termination letter stating the specific reasons for termination. This is applicable to both termination with notice period and dismissal on the ground of misconduct.

Other valid reasons for employment termination other than misconduct include serious illness, inability to perform the job to the required standards, and financial and economic changes impacting the organisation.

Serious misconduct suffices as reason for dismissal, but the employee must be given an opportunity to respond to the charges.

All terminations of service in any form must be documented in writing stating the reasons.

The employer may terminate an employment contract by giving a required notice and paying severance.

However, if the employer dismisses an employee with notice for “arbitrary” reasons, the employee may claim compensation.

If an employee is aggrieved by an order of termination they may proceed and bring the grievance to the attention of the employer, in writing, through the shop steward or through the trade union within three months of the occurrence of the termination.

Notice Period

Either party may terminate an employment contract giving one month’s notice. If one month’s notice is not served, an employee must be paid one-month’s wages in lieu of notice. Only permanent workers are required to give (and be served notice) before terminating an employment contract.

Temporary workers, badlis and probationers are not entitled to any notice (or pay in lieu) if their services are terminated. Similarly, they are not required to serve a notice before leaving the employer.

In the case of employee terminating the contract, the notice period is 30 days or paying of 30 days’ pay.

The notice of termination shall be given in writing by the employer, including the reason for termination which must be specified.

Redundancy / Severance Pay

An employee whose employment has been terminated for any reason other than misconduct is entitled to a “severance pay or gratuity” which is equivalent to 30 days’ wages for every completed year of service, or any part thereof in excess of six months.

An employer may substitute a provident fund (type of pension) for gratuity. However, if an employee’s services were terminated on account of misconduct, gratuity would no longer be payable to the employee.

Rate of gratuity is 30 days’ wages for every completed year of service, or any period in excess of six months. Any employment period exceeding six months will be considered as one year. The basis for calculation of wages is “wages admissible to a fixed-rate worker in the last month of service” or “the highest drawn pay by a piece-rate during the preceding 12 months”.

The gratuity is actually a benefit for services rendered in the past. The Labour Laws made payment of gratuity a legal obligation.

Post-Termination Restraints / Restrictive Covenants

According to Section 27 of the Contract Act, 1872, any agreement that restrains a person from exercising a lawful profession, trade or business is void.[22] However, courts of Pakistan have made decisions in the past in favour of such restrictive clauses given that the restrictions are “reasonable”.[23] The definition of “reasonable” depends on the time-period, geographical location and the designation of employee.

Fixed Term Contracts

The Labour Law prohibits hiring fixed-term contract employees for tasks of permanent nature. The maximum length of a fixed-term contract including renewal is 9 months.

An employee will become permanent if the employee has been working for the last nine months and has satisfactorily completed the probationary period.

Khyber Pakhtunkhwa and Sindh legislation allows hiring employees on contract where the term of the contract is specified by the contract itself.

Tax and Social Security

Personal Income Tax

Taxable Income Base (PKR) Range to (PKR) Tax on Base (PKR) Tax on Excess (%)
0 600,000   0.0
600,000 1,200,000   5.0
1,200,000 1,800,000 30,000 10.0
1,800,000 2,500,000 90,000 15.0
2,500,000 3,500,000 195,000 17.5
3,500,000 5,000,000 370,000 20.0
5,000,000 8,000,000 670,000 22.5
8,000,000 12,000,000 1,345,000 25.0
12,000,000 30,000,000 2,345,000 27.5
30,000,000 50,000,000 7,295,000 30.0
50,000,000 75,000,000 13,295,000 32.5
75,000,000   21,420,000 35.0

SOCIAL SECURITY

The following are payable by employers:

  • Social Security – 6% of minimum wage of insurable employees

  • Employees Old Age Benefit (EOAB) – 5% of minimum wage of insurable employees

For EOAB, employees are also liable to pay Rs. 130 per month, being 1% of the minimum wage, in addition to the contribution made by the employer. Usually, employers deduct this amount from the salary and pay it over to the EOAB Institution on behalf of their employees together with the employer’s contribution

Social security laws provide for both full and reduced old-age pension as per the below condition.

  • The employee is 60 years of age (in case of a woman, age limit is 55 years; age limit is also 55 years for male miners engaged in mining for at least 10 years of employment)

  • Contributions in respect of them were paid for at least 15 years.

If an insured employee has retired five years before reaching the retirement age, they shall be entitled to an early but reduced old-age pension. In that eventuality, the pension will be reduced by half a percent (0.5%) on a monthly basis or 6% on a yearly basis. A reduced pension can be paid to early male retirees from the age of 55 to 59 and female retirees from the age of 50 to 54.

The minimum monthly pension has been raised from PKR 3600 to PKR 5250 per month.

“Workers Welfare Fund” is a federally managed fund, under the administrative control of the Ministry of Human Resource Development. It is an autonomous organization, run by a governing body with representation from all tripartite partners.

*The above rates serve as a broad guideline. Actual rates charged will differ.

DEDUCTIONS FROM PAY

According to the Payment of Wages Act, the following deductions can be made from a worker’s wages.

  • Fines

  • Deductions for absence from duty

  • Deductions for damages to or loss of goods expressly entrusted to the employee for custody, or for loss of money, where such damage or loss is directly attributable to neglect or default.

  • Deductions for house accommodation supplied by the employer.

  • Deductions for such amenities and services supplied by the employer as the Provincial Government may by general or special order authorize.

  • Deductions for recovery of advances or for adjustment of overpayment of wages.

  • Deductions of income tax payable by the employed person.

  • Deductions required to be made by order of a Court or other authority competent to make such order.

  • Deductions for subscriptions to, and for repayment of advances from, any approved Provident Fund.

  • Deductions for payment to co-operative societies approved by the Provincial Government or to a scheme of insurance maintained by the Pakistan Post Office.

  • Deductions made with the written authorization of the employed person, in furtherance of any war saving scheme approved by the Provincial Government.

Employees

Salary Payment

  • Employees whose pay is calculated based on an annual or monthly sum must be paid at least once per month.

  • Any establishment with <1000 employees has to disburse pay to its employees before the 7th day from the last day of wage period. Establishments employing >1000 employees have until the 10th day from the last day of wage period to disburse pay. The law also requires that wages are to be paid on a working day and in current coin or currency notes only.

  • Wage payments through cheque are not permitted under the law.

Payslip

PIFRA monthly payslip is a project that is designed by the government of Pakistan. All employees can download their slips direct from their email inboxes by register with PIFRA online. The monthly payment slip is a payment record of 30 days cycle.

Timesheets & Record Keeping

  • A payroll record stating for all employees the date employment started and ended, the days worked, the amount of daily, weekly or monthly wages paid, fringe benefits, and any piecework or commission payments.

  • Employers must keep a file for each employee, stating their name, occupation, age, nationality, address, marital status, date of employment, wages (and any adjustments to them), any disciplinary sanctions penalties imposed, and occupational injuries and diseases sustained, and the date of and reasons for termination of employment. The file must include a leave card, recording annual leave, sick leave and other leave taken.

Annual Leave

  • Employees are entitled to paid annual leave after they have completed one year’s service with an employer.

  • Employees who have completed a period of 12 months’ continuous service in a factory shall be allowed, during the subsequent period of 12 months, holidays for a period of 14 consecutive days.

  • This law does not indicate whether paid annual leave increases with longer service or seniority.

  • During the annual leave, the employer must pay the employee their basic wage and any allowance that forms part of their remuneration. The annual leave has to be consecutive and may not be split. However, if an employee fails to avail themself of their whole leave during the 12 months, it can be carried forward to the next year. No more than 14 days of leave can be carried forward.

Sick Leave

Employees are entitled to 10 days’ casual leave with full pay and further 16 days’ sick or medical leave on half pay.

Casual leave is granted upon contingent situations such as sudden illness or any other urgent purpose. It should be obtained on prior application unless the urgency prevents the making of such application.

All employees are entitled to the following maximum paid sick leave supported by a medical report:

  • 121 days (in a calendar year) in case of ordinary illnesses

  • 365 days (in a calendar year) in case of cancer or tuberculosis

Sick leave might be extended on an unpaid basis.

The sickness benefit for ordinary illnesses requires the employer to pay 75% of wages last drawn, while for cancer and tuberculosis, an employee has to be paid 100% of their last wages.

An employee has the right to draw 100% wages for a period of 180 days in the case of work accidents.

Compassionate & Bereavement Leave

Bereavement Leave

Employees are granted paid leave of one day in the event of the death of a first level relative: father, mother, spouse, child, sister, or brother with full pay.

Proof of document (obituary papers) should be provided.

Marriage Leave

Employees are granted 2 days’ paid leave for their marriage, and this is only for “one time” during their employment with the company.

Maternity & Parental Leave

Women with at least four months’ employment in an establishment immediately preceding the day of delivery are eligible a total of 12 weeks of maternity leave, 6 weeks before and 6 weeks after the childbirth. The leave is granted with payment of full salary and the employer is prohibited from dismissing the services of a woman during this time. There is no limit to the number of times a woman may avail herself of the maternity leave during her employment with the same employer.

On resumption of work after maternity leave, a woman is to be provided with one or more daily breaks or daily reduction of hours of work to breastfeed her child. These are to be counted as working time and remunerated accordingly.

The Act provides four weeks of pre-natal and 12 weeks of postnatal leave on full salary to a woman who has worked for a continuous period of one year preceding the expected date of delivery.

The Sindh Act also provides for establishing a daycare centre in organisations employing 10 or more employees. The woman employee is permitted to visit the centre four times during the day to nurse, wean and feed the child.

The Sindh Employees Social Security Act 2016 provides that a woman secured under the Act will be allowed a total of 12 weeks’ maternity leave provided contributions in respect of her were paid for not less than 180 days.

Paternity Leave

Employees are granted a maximum seven days of paternity leave on or immediately before the birth of a child. This leave is admissible only two times during the entire service.

Paternity leave of 10 days is available to employees of Sindh Police and National Commission on the Status of Women.

Public Holidays

Pakistan holidays are a combination of Islamic, national and other religious holidays.

Religious festivals like Eid are celebrated according to the Islamic calendar whereas other national holidays like International Labour Day, Pakistan Day, and Quaid-i-Azam Day are celebrated according to the Gregorian calendar.

Benefits to the Employee in Pakistan

Statutory Benefits

The State provides following four types of benefits to insured persons or their survivors, funded by social security and compulsory social insurance:

  • Old-Age Pension (or Reduced Pension)

  • Survivors’ Pension

  • Invalidity Pension

  • Old-Age Grant (if an employee is not eligible for pension)

The Invalidity or Disability Benefit Act provides for invalidity benefit in the case of non-occupational accident, injury, or disease resulting into permanent invalidity.

The Act provides for invalidity or disability pension if an employee sustains an employment injury, as defined in the Act, and suffers an earning capacity loss of at least 67%. The employee is entitled to invalidity pension provided they have:

  • at least 15 years of contributions

  • at least 5 years of contributions, of which at least 3 years must be in insurable employment.

The invalidity pension has to be paid as long as invalidity persists. If an employee has been receiving disability pension for at least five years, the employee becomes entitled to invalidity pension for life. If a person reaches retirement age while receiving invalidity pension, the invalidity pension automatically converts into old-age pension.

Old age grant is paid to those employees who are not eligible for old-age pension (requirement of at least 15 years of contributions not met). However, if these employees have at least completed two years of insurable employment, they are entitled to a lump sum payment of one month of earnings for each year of insured employment.

Visas and Foreign Workers

General Information

Foreign employees will need work visas to live and work in Pakistan legally. They must have a job offer and meet certain requirements to apply for the visa.

The Ministry of Interior authorises the Pakistan Missions abroad to grant entry Work Visas to foreign expatriates on the recommendations of Board of Investment for one-year (multiple) validity, extendable on a yearly basis in Pakistan.

  • Work Visa Entry — single entry up to three months which will be extendable further up to 2 years.

  • Pakistan Missions has to receive and approve entry work visa within a time frame of 48 hours.

VISA EXTENSION

Once a Work Visa has been granted for three months, the applicant can seek an extension for up to two years with multiple entries.

Ministry of Interior to receive and decide with due feedback from the stakeholders.

Board of Investment’s letter of recommendation is mandatory for Work Visa extension cases.

Family members can be included in the Visa Application.

On receipt of complete application on Portal, the Board of Investment’s Work Visa Recommendation Letter will be issued within 7 working days.

The permit process can take three to four months to obtain a Work Visa in Pakistan.

People with a valid Pakistan visa who live in the country can extend their visas for one year at a time and will require the re-submission of business documents. Longer extensions may be granted by the Ministry of Interior in certain circumstances.

Conversion of Business Visa into Work Visa and vice versa is allowed on a payment of 100 US Dollars.

Public Holidays in 2022

S.No Occasion Date
1. Kashmir Day February 5th
2. Pakistan Day March 23rd
3. Easter Monday* April 18th
4. Labour Day May 1st
5. Eid ul-Fitr May 3rd
6. Eid ul-Fitr Holiday May 4th
7. Eid ul-Fitr Holiday May 5th
8. Eid ul-Adha July 10th
9. Eid ul-Adha Holiday July 11th
10. Eid ul-Adha Holiday July 12th
11. Ashura August 7th
12. Ashura August 8th
13. Independence Day August 14th
14. Milad un-Nabi October 8th
15. Christmas Day* December 25th
16. Quiad-e-Azam Day December 25th
17. Day after Christmas* December 26th

*Easter and Christmas holidays are observed by Christians only.

Hire New Talent in Pakistan

Our international hiring services let you hire anyone in any country without the investment needed to establish a local entity.

Get Started