Hiring in Pakistan
Here’s where you get started with human resources best practices and hiring in Pakistan.
Currency Used in Pakistan
The Capital of Pakistan
Islamabad
Time Zone in Pakistan
Important Facts About the Country of Pakistan
A General Introduction to the Country of Pakistan
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 of more than 225.2 million people. Pakistan is home to the world’s second-largest Muslim population. The country’s economy is semi-industrialized, with centers of growth along the Indus River. Primary export commodities include textiles, leather goods, sports goods, chemicals, carpets/rugs and medical instruments.
A Look at Pakistan's Geography
Pakistan spans 882,000 square kilometers, with a 1,046 kilometer coastline along the Arabian Sea and Gulf of Oman in the south. The country is bordered by India to the east, Afghanistan to the west, Iran to the southwest and China to the northeast. Pakistan also has a maritime border with Oman.
The Climate of Pakistan
The climate of Pakistan varies from tropical to temperate, with arid conditions in the coastal south. There are four distinct seasons in Pakistan, including a monsoon season with frequent flooding due to heavy rainfall. The dry season has significantly less rainfall or none at all.
Experience the Culture of Pakistan
Civil society in Pakistan is largely hierarchical, prioritizing local cultural etiquette and traditional Islamic values that govern personal and political life. There are numerous ethnic groups including:
Punjabis – 44.7%
Pashtuns – 15.5%
Sindhis – 14.1%
Muhajirs – 7.6%
Pakistan has been influenced by neighboring South Asian, Iranic, Turkic, Central Asian and West Asian cultures.
Religions Practiced in Pakistan
The state religion of Pakistan is Islam. Freedom of religion is provided by the Constitution of Pakistan, which guarantees all the country’s citizens the right to profess, practice and propagate their religion. This is subject to law, public order and morality. Most Pakistanis are Muslims (96.47%) followed by Hindus (2.14%) and Christians (1.27%).
Official & Common Languages Spoken in Pakistan
Urdu and English are Pakistan’s official languages. English is primarily used in official business and government, and in legal contracts. Urdu, the national language, is understood by more than 75% of Pakistanis. Punjabi is the most common language in the country and the first language of 38.78% of the population.
Pakistan Human Resource Laws & Practices at a Glance
Pakistan Employment Laws You Should Know
Labor law in Pakistan is broad and contains several ordinances, acts, rules and regulations and all other statutes relating to industrial, commercial and labor establishments.
The Islamic Republic, with its federal capital at Islamabad, comprises four provinces: Punjab, Sindh, Khyber Pakhtunkhwa and Baluchistan. In addition, the states of Azad Jammu & Kashmir (AJK) and Gilgit Baltistan are also closely connected with open borders, shared laws and easy cross border trade and employment.
The Constitution of Pakistan provides a federal democratic state based on Islamic principles of social justice. It contains a range of provisions concerning labor rights. The constitution:
- prohibits all forms of slavery, forced labor and child labor
- provides a fundamental right to exercise the freedom of association and the right to unionize
- prescribes the right of its citizens to enter into any lawful profession or occupation and to conduct any lawful trade or business
- lays down the right to equality before the law and prohibits discrimination on the grounds of sex
The operating labor laws mostly apply to workmen or employees. The framework does not specifically include white collar workers. The following are some of the most commonly used labor laws and their applicability:
- The West Pakistan Shops and Establishments Ordinance 1969 – regulates the working hours and other working conditions of persons employed in shops as well as 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 specifically applies to workmen.
- The West Pakistan Maternity Benefit Ordinance 1958 – regulates the employment of women in establishments in Pakistan. It does not specify if ‘women’ is to include white-collar working women.
- The Employers’ Liability Act, 1938 – provides that certain defenses will 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 people who are employed in industrial, commercial and other organizations.
- The Essential Personnel (Registration) Ordinance 1948 – provides for the mandatory registration of essential personnel with 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.
Rules Governing Employment Contracts in Pakistan
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 the 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 probationary 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 Required in Pakistan
The Labor Law requires every employer to provide every employee with an employment contract, showing terms and conditions of their service. The employer is responsible for providing 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 in employment relationships by statutes and case law. Each province has its own laws 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 in Pakistan
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.
The Duration of Probation Period / Trial Period in Pakistan
Pakistan’s Working Hours Prohibition
Overtime Rules and Conditions in Pakistan
If an employee works beyond the stipulated working hours, they are entitled to an overtime pay rate that is double the rate of their ordinary pay.
If the employee works for more than eight or nine hours in a day (nine including lunch and prayer time in hours of work) or more than 48 hours in a week, they are eligible for overtime pay. The cap for weekly overtime hours is 12 hours.
If the employee is working in a seasonal factory, the employee is eligible for the overtime rate of pay when working hours are more than 50 hours in a week. Again, this is compensated at double the employee’s 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).
Established Terms Regarding Bonus Pay in Pakistan
In 1972, the payment of a bonus was made a legal obligation in Pakistan. It is conditional on the profitability of a company. This is also termed as Statutory or Profit Bonus as it is regulated by law. The Statutory or Profit Bonus differs 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:
- The worker is defined as a workman and has worked at least 90 days in the organization in the preceding year.
- The organization is a commercial or industrial establishment with at least 20 workers.
- The organization declared a profit in the year for which bonus is to be awarded.
The bonus must be paid within a period of three months from the closing of the financial year. It can be paid either in the form of cash or through National Investment Trust Units of equivalent value.
Rules Regarding Termination in Pakistan
The 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 occurs under certain circumstances such as the death of the employee or the completion of the project or the contract for which an employee was hired.
- An employee may resign from employment to avail a better work opportunity or when the work circumstances are not supportive and there is a material breach of contract on the part of the employer.
- A termination initiated by an employer can be based on fair or unfair grounds.
The Labor 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.
Valid reasons for employment termination, other than misconduct, include serious illness, inability to perform the job to the required standards as well as financial and economic changes impacting the organization.
Serious misconduct suffices as a reason for dismissal. However, 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 can 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 be able to 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. This occurs in writing through the shop steward or through the trade union within three months of the occurrence of the termination.
Notice Period Obligations & Entitlements in Pakistan
Either party can terminate an employment contract by 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 a payment in lieu) if their services are terminated. Similarly, they are not required to serve a notice before leaving the employer.
In the case of an employee terminating the contract, the notice period is 30 days or the payment of 30 days’ pay.
The notice of termination must be concluded in writing by the employer, including the reason for termination which must be specified.
Compulsory Redundancy / Severance Pay in Pakistan
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 can substitute a provident fund (type of pension) for a gratuity. However, if an employee’s services were terminated on account of misconduct, the gratuity would no longer be payable to the employee.
The rate of gratuity is 30 days’ wages for every completed year of service (or any period in excess of six months). If an employment period exceeds six months, it will be considered as one year. The basis for determining wages is either “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 Labor Laws made the payment of the gratuity compulsory.
Pakistan’s Post-Termination Restraints / Restrictive Covenants
According to Section 27 of the Contract Act, 1872, any agreement that restricts a person from exercising a lawful profession, trade or business is not valid. However, the courts of Pakistan have made decisions in the past in favor of such restrictive clauses, given that the restrictions are “reasonable.” The definition of “reasonable” will depend on the time period, geographic scope and the designation of the employee.
Policies Regarding Fixed Term Contracts in Pakistan
The Labor Law prohibits hiring fixed-term contract employees for tasks of permanent nature. The maximum length of a fixed-term contract in Pakistan is nine months (includes renewals).
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.
What You Need to Know About Taxes and Social Security in Pakistan
Pakistan’s Personal Income Tax Rates
| 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 |
Laws Governing Social Security in Pakistan
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 conditions:
- The employee is 60 years of age (in the case of a woman, the age limit is 55 years; the age limit is also 55 years for male miners engaged in mining for at least 10 years of employment).
- Contributions were paid for at least 15 years.
If an insured employee has retired five years before reaching the retirement age, they will be entitled to an early but reduced old-age pension. In this case, the employee’s pension will be reduced by 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 by GoGlobal 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 (can be general or special order authorized)
- Deductions for the recovery of advances or for the 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
Guidelines Regarding Employees in Pakistan
Salary Payment Requirements for Employers
- Employees whose pay is calculated based on an annual or monthly sum must be paid at least once per month.
- An establishment with less than 1000 employees must pay its employees before the seventh day from the last day of wage period. Establishments employing more than 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 check are not permitted under the law.
Rules About Issuing Payslips
PIFRA monthly payslip is a project that is designed by the government of Pakistan. All employees can download their slips directly from their email inboxes by registering with PIFRA online. The monthly payment slip is the payment record of a 30-day cycle.
Timesheets & Record Keeping Guidelines for Employers
- Employers must maintain 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 as well as 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, occupational injuries, 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 Entitlements for Employees
- 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 will be allowed holidays for a period of 14 consecutive days (during the subsequent period of 12 months).
- The 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 must be consecutive and not split into segments. 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/Medical Leave Policies
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 a sudden illness or any other urgent purpose. It should be obtained on prior application unless the urgency prevents this from happening.
All employees are entitled to the following maximum paid sick leave supported by a medical report:
- 121 days (in a calendar year) in the case of an ordinary illnesses
- 365 days (in a calendar year) in the case of cancer or tuberculosis
Sick leave may be extended on an unpaid basis.
The sickness benefit for ordinary illnesses requires the employer to pay 75% of wages last drawn. For cancer and tuberculosis, an employee must 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 with full pay in the event of the death of a first level relative (father, mother, spouse, child, sister or brother). A proof of document (obituary papers) should be provided.
Marriage Leave for Employees
Employees are granted two days’ paid leave for their marriage. This is only for “one time” during their employment with the company.
Rules Regarding Maternity & Parental Leave and the Sindh Act
Women with at least four months’ employment in an establishment immediately preceding the day of delivery are eligible for a total of 12 weeks of maternity leave. This is taken six weeks before and six 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 following 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 must be remunerated accordingly.
The Act provides four weeks of prenatal 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 the establishment of a daycare center in organizations employing 10 or more employees. The employee must be allowed to visit the center four times during the work 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 can be taken only two times during the employee’s entire service. A paternity leave of 10 days is available to employees of Sindh Police and National Commission on the Status of Women.
Public Holidays Celebrated in Pakistan
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 (such as International Labor Day, Pakistan Day and Quaid-i-Azam Day) are celebrated according to the Gregorian calendar.
Benefits to the Employee in Pakistan
Statutory Benefits Paid to Pakistan Employees
The State provides the 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 an invalidity benefit in the case of non-occupational accident, injury or disease resulting in 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 will be entitled to invalidity pension if they have:
- at least 15 years of contributions
- at least five years of contributions (of which at least three years must be in insurable employment)
The invalidity pension must 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 (the requirement of at least 15 years of contributions is 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’s earnings for each year of insured employment.
An Overview of Rules About Visas and Foreign Employees in Pakistan
General Information About Working Legally in Pakistan
Foreign employees will need to obtain 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 authorizes 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 two years)
- Pakistan Missions must receive and approve entry work visas within a time frame of 48 hours.
Process for Obtaining Visa Extensions
Once a work visa has been granted for three months, the applicant can seek an extension with multiple entries for up to two years.
The Ministry of Interior receives applications and decides with due feedback from the stakeholders.
A Board of Investment’s letter of recommendation is mandatory for work visa extension cases.
The applicant’s family members can also be included in the visa application.
Upon receipt of a complete application on the portal, the Board of Investment’s Work Visa Recommendation Letter will be issued within seven working days.
The permit process to obtain a work visa in Pakistan can take three to four months.
Individuals with a valid visa who live in Pakistan can extend their visas for one year at a time. This will require the resubmission of business documents. The Ministry of Interior may grant longer extensions in certain circumstances.
Conversion of a business visa into a work visa (and vice versa) is allowed on a payment of 100 US Dollars.
Public Holidays Observed in Pakistan in 2023
| S.No | Occasion | Date |
|---|---|---|
| 1 | Kashmir Day | 05.Feb.2023 |
| 2 | Pakistan Day | 23.Mar.2023 |
| 3 | Easter Monday1 | 10.Apr.2023 |
| 4 | Eid ul-Fitr | 22.Apr.2023 |
| 5 | Eid ul-Fitr Holiday | 23.Apr.2023 |
| 6 | Eid ul-Fitr Holiday | 24.Apr.2023 |
| 7 | Labour Day | 01.May.2023 |
| 8 | Eid ul-Azha | 29.Jun.2023 |
| 9 | Eid ul-Azha holiday | 30.Jun.2023 |
| 10 | Ashura | 28.Jul.2023 |
| 11 | Ashura | 29.Jul.2023 |
| 12 | Independence Day | 14.Aug.2023 |
| 13 | Milad un-Nabi | 28.Sep.2023 |
| 14 | Christmas Day1 | 25.Dec.2023 |
| 15 | Quiad-e-Azam Day | 25.Dec.2023 |
| 16 | Day after Christmas1 | 26.Dec.2023 |
Hire New Talent in Pakistan with Help From Our Hiring Services
Our international hiring services let you hire anyone in any country without the investment needed to establish a local entity.