Hiring in Pakistan

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Currency Used in Pakistan

Pakistani Rupee (PKR)

The Capital of Pakistan

Islamabad

Time Zone in Pakistan

GMT+5

Important Facts About the Country of Pakistan

A General Introduction to the Country of Pakistan

Situated in South Asia, Pakistan, officially known as the Islamic Republic of Pakistan, stands as the world’s fifth-most populous nation, boasting a population exceeding 225.2 million. It holds the distinction of harboring the world’s second-largest Muslim population. The country’s semi-industrialized economy features growth hubs along the Indus River. Key export commodities encompass textiles, leather goods, sports equipment, chemicals, carpets/rugs, and medical instruments.

A Look at Pakistan’s Geography

Covering an expansive area of 882,000 square kilometers, Pakistan boasts a 1,046-kilometer coastline along the Arabian Sea and Gulf of Oman to the south. Its borders are demarcated by India to the east, Afghanistan to the west, Iran to the southwest, and China to the northeast. Additionally, Pakistan shares a maritime border with Oman.

The Climate of Pakistan

Pakistan experiences a diverse climate, ranging from tropical to temperate, with arid conditions prevalent in the coastal south. The country witnesses four distinct seasons, featuring a monsoon season characterized by heavy rainfall, often leading to frequent flooding. In contrast, the dry season is marked by significantly reduced or entirely absent rainfall.

Experience the Culture of Pakistan

The structure of civil society in Pakistan predominantly adheres to a hierarchical framework, placing emphasis on local cultural norms and traditional Islamic values that influence both personal and political aspects of life. The population comprises various ethnic groups, with the following major percentages:
– Punjabis: 44.7%
– Pashtuns: 15.5%
– Sindhis: 14.1%
– Muhajirs: 7.6%

The cultural landscape of Pakistan reflects influences from neighboring South Asian, Iranian, Turkic, Central Asian, and West Asian cultures.

Religions Practiced in Pakistan

Islam is the official state religion of Pakistan. The Constitution of Pakistan ensures freedom of religion, granting all citizens the right to profess, practice, and propagate their faith, with due consideration to law, public order, and morality. The majority of Pakistan’s population adheres to Islam (96.47%), with Hindus (2.14%) and Christians (1.27%) representing significant minority communities.

Official & Common Languages Spoken in Pakistan

Pakistan recognizes Urdu and English as its official languages. English is predominantly employed in official business, government affairs, and legal contracts. Urdu, as the national language, is comprehensible to over 75% of the Pakistani population. Additionally, Punjabi stands out as the most prevalent language in the country, serving as the first language for 38.78% of the population.

Pakistan Human Resource Laws & Practices at a Glance

Pakistan Employment Laws You Should Know

Labor laws in Pakistan encompass a wide range of ordinances, acts, rules, and regulations related to industrial, commercial, and labor establishments. The country, officially the Islamic Republic with its federal capital in Islamabad, consists of four provinces: Punjab, Sindh, Khyber Pakhtunkhwa, and Baluchistan. Additionally, the states of Azad Jammu & Kashmir (AJK) and Gilgit Baltistan maintain close connections with open borders, shared laws, and easy cross-border trade and employment.

The Constitution of Pakistan establishes a federal democratic state grounded in Islamic principles of social justice, featuring provisions safeguarding labor rights. Notably, it prohibits slavery, forced labor, and child labor, ensures the freedom of association and the right to unionize, guarantees the right to enter any lawful profession or occupation, and prohibits discrimination based on gender.

Labor laws primarily pertain to workmen or employees, with white-collar workers not explicitly covered. Noteworthy labor laws include:

The West Pakistan Shops and Establishments Ordinance 1969:** Regulates working hours and conditions in shops, commercial, industrial, and other establishments.
The West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968:** Applies to establishments with twenty or more workmen, outlining specific provisions for workmen.
The West Pakistan Maternity Benefit Ordinance 1958:** Regulates the employment of women in establishments, without a clear indication of its applicability to white-collar working women.
The Employers’ Liability Act, 1938:** Limits certain defenses in suits for damages in cases of injuries sustained by workmen.
The Employees Old-Age Benefits Act 1976:** Provides old-age benefits for those employed in industrial, commercial, and other organizations.
The Essential Personnel (Registration) Ordinance 1948:** Mandates the registration of essential personnel with Employment Exchanges.
The Companies Profits (Workers Participation) Act, 1968:** Facilitates the participation of workers in company profits.
It’s important to note that employment laws and statutes vary by province, and this document focuses on the employment law and regulations in the province of Punjab.

Rules Governing Employment Contracts in Pakistan

In Pakistan, employment contracts can take the form of either written or verbal agreements. Typically, employers opt for a written contract or appointment letter to formalize the terms and conditions of the employment arrangement. These contracts, if in English (provided the employee comprehends the language), must include the following details:

Both the employer and employee must be clearly identified.
The commencement date of employment should be specified.
For indefinite contracts, the anticipated duration must be outlined; for fixed-term contracts, both the start and end dates are required.
A concise job title or description of the work should be included.
The workplace location needs to be specified.
Wages and any pertinent terms and conditions concerning work hours or days must be clearly stated.
The notice period for termination should be defined.

Employment contracts can be classified as the following:

Permanent
Probationary employees
Alternate (‘Badlis’) – an individual appointed temporarily to fulfill the role of a permanent or probationary employee during their temporary absence
Temporary – engaged for projects concluding within a nine-month timeframe
Apprentices – individuals undergoing training as part of an apprenticeship program
Contract worker – employees working on a piece-rate basis for a defined period

Contract Terms Required in Pakistan

The Labor Law mandates employers to furnish each employee with an employment contract delineating the terms and conditions of their service. The responsibility lies with the employer to provide this contract upon appointment, transfer, or promotion.

Upon dismissal, discharge, retrenchment, or retirement, every employee is entitled to receive a written certificate of service.

For fixed-term contract workers handling tasks of a permanent nature, the maximum duration is limited to nine months.

Employment relationships inherently involve implied terms as dictated by statutes and case law. Each province in Pakistan has its own set of employment laws, including:

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 dedicated law overseeing background checks, and such checks can be conducted, particularly with the applicant’s consent.

Nevertheless, the Constitution of Pakistan explicitly forbids discrimination based on union affiliations and political views. Consequently, it is advisable to refrain from conducting background checks related to these aspects.

The Duration of Probation Period / Trial Period in Pakistan

The probationary period may last up to three months, with the possibility of extension for an additional three months. Within this period, either the employer or the employee has the right to terminate the employment contract without prior notice.

Pakistan’s Working Hours Prohibition

Typically, an employee’s regular working hours should not surpass 48 hours per week.

Overtime Rules and Conditions in Pakistan

If an employee exceeds the designated working hours, they are entitled to an overtime pay rate that is twice their regular pay.

For hours worked beyond eight or nine in a day (nine, inclusive of lunch and prayer time within working hours) or more than 48 hours in a week, employees qualify for overtime pay, with a weekly cap set at 12 hours.

In the case of employees in seasonal factories, overtime pay is applicable when weekly working hours exceed 50, compensated at twice the employee’s ordinary rate of pay.

Employees are obligated to work overtime at the employer’s request. If unable to do so, they must provide valid reasons for their inability.

Working on a public holiday warrants a compensation of 300% of the normal wage rate, which includes the regular pay for the holiday, a paid substitute holiday, and one day’s paid compensatory holiday.

Established Terms Regarding Bonus Pay in Pakistan

In 1972, the payment of a bonus became a legal obligation in Pakistan, contingent upon a company’s profitability. This form of bonus, known as Statutory or Profit Bonus, is regulated by law. It distinguishes itself from other bonuses, such as those based on production, attendance, or Eid.

To be eligible for the Profit Bonus, a worker must meet the following three conditions:

The worker is categorized as a workman and has completed at least 90 days of employment within the organization in the preceding year.
The organization is a commercial or industrial establishment employing a minimum of 20 workers.
The organization has declared a profit in the year for which the bonus is to be awarded.

The bonus must be disbursed within three months from the conclusion of the financial year. It can be provided either in cash or in the form of National Investment Trust Units of equivalent value.

Rules Regarding Termination in Pakistan

The conclusion of an employment contract may take the form of termination with notice or termination due to misconduct. Additionally, termination can be classified into three categories:

Automatic Termination:** This occurs under specific circumstances, such as the employee’s death, completion of a project, or the fulfillment of the contract for which the employee was hired.
Voluntary Resignation:** An employee may resign due to the pursuit of a better work opportunity, unsupportive work circumstances, or a material breach of contract by the employer.
Employer-Initiated Termination:** This can be grounded in fair or unfair reasons. The Labor Law mandates a written termination letter specifying the reasons, applicable to both termination with a notice period and dismissal based on misconduct.

Valid reasons for termination, excluding misconduct, encompass severe illness, inability to meet job standards, and financial or economic changes affecting the organization.

Dismissal is justified in cases of serious misconduct, but the employee must be afforded an opportunity to respond to the charges. All forms of service termination must be documented in writing, providing the reasons.

Employers can terminate a contract by issuing a required notice and paying severance. However, if an employee is dismissed with notice for “arbitrary” reasons, the employee may seek compensation.

In cases of dissatisfaction with a termination order, employees can address their grievances to the employer in writing through the shop steward or the trade union within three months of the termination occurrence.

Notice Period Obligations & Entitlements in Pakistan

Either party has the authority to terminate an employment contract by providing one month’s notice. Failure to serve the required notice obligates the employer to compensate the employee with one month’s wages in lieu of notice. This notice requirement specifically applies to permanent workers, who are obligated to give and receive notice before terminating an employment contract.

Temporary workers, ‘badlis,’ and probationers, on the other hand, are not entitled to any notice (or payment in lieu) if their services are terminated. Likewise, they are not obliged to serve a notice before leaving their employer.

In cases where an employee initiates the contract termination, the notice period is set at 30 days or the payment equivalent to 30 days’ wages.

The employer must formalize the notice of termination in writing, explicitly stating the reason for termination.

Compulsory Redundancy / Severance Pay in Pakistan

An employee whose employment is terminated for reasons other than misconduct is entitled to receive a “severance pay or gratuity” equivalent to 30 days’ wages for each completed year of service or any part thereof exceeding six months.

Employers have the option to replace a gratuity with a provident fund (a type of pension). However, if an employee’s termination is a result of misconduct, the gratuity is no longer payable.

The gratuity rate stands at 30 days’ wages for each completed year of service or any period exceeding six months. For calculation purposes, any employment duration surpassing six months is considered as a full year. The basis for determining wages is either the “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.”

It’s essential to note that gratuity serves as a benefit for past services rendered, and its payment is mandatory under the Labor Laws.

Pakistan’s Post-Termination Restraints / Restrictive Covenants

As per Section 27 of the Contract Act, 1872, any agreement limiting an individual from pursuing a lawful profession, trade, or business is deemed invalid. Nevertheless, past court decisions in Pakistan have upheld restrictive clauses if they are considered “reasonable.” The interpretation of “reasonable” hinges on factors such as the time duration, geographic extent, and the employee’s designation.

Policies Regarding Fixed Term Contracts in Pakistan

The Labor Law explicitly forbids the engagement of fixed-term contract employees for responsibilities of a permanent nature. In Pakistan, the maximum duration for a fixed-term contract is capped at nine months, inclusive of any renewals.

An employee attains permanent status if they have been continuously employed for the preceding nine months and have successfully completed the probationary period.

Legislation in Khyber Pakhtunkhwa and Sindh permits the hiring of employees on a contractual basis, provided that the contract explicitly specifies the term of employment.

What You Need to Know About Taxes and Social Security in Pakistan

Pakistan’s Personal Income Tax Rates

Below are the income tax brackets and rates applicable to the tax year from July 2023 to June 2024.

Annual Taxable Income (PKR)	Income Tax
0 – 600,000	Nil
600,001 – 1,200,000	2.5% of excess over 600,000
1,200,001 – 2,400,000	15,000 + 12.5% of excess over 1,200,000
2,400,001 – 3,600,000	165,000 + 22.5% of excess over 2,400,000
3,600,001 – 6,000,000	435,000 + 27.5% of excess over 3,600,000
Over 6,000,001	1,095,000 + 35% of excess over 6,000,000

Laws Governing Social Security in Pakistan

Employers are obligated to make the following contributions:

Social Security:** Amounting to 6% of the minimum wage for insurable employees.
Employees Old-Age Benefits Institution (EOBI):** Comprising 5% of the minimum wage for insurable employees.

Additionally, employees are responsible for a monthly contribution of Rs. 130 (1% of the minimum wage) to EOBI, in addition to the employer’s contribution. Typically, employers deduct this amount from the salary and remit it to the EOBI Institution on behalf of their employees.

Under social security laws, both full and reduced old-age pensions are provided based on the following conditions:

The employee is 60 years of age (55 years for women, and 55 years for male miners with at least 10 years of employment in mining).
Contributions were made for a minimum of 15 years.
For insured employees who retire five years before the retirement age, they are entitled to an early but reduced old-age pension. The reduction is 0.5% per month (6% annually). This applies to early male retirees aged 55 to 59 and female retirees aged 50 to 54.

The minimum monthly pension has been increased from PKR 3600 to PKR 5250.

The “Workers Welfare Fund” is a federally managed fund under the Ministry of Human Resource Development. It operates as an autonomous organization with representation from all tripartite partners.

Note: The provided rates are general guidelines; actual rates charged by GoGlobal may vary.

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

Penalties
Deductions due to absence from duty
Deductions resulting from damages to or loss of goods explicitly entrusted to the employee for safekeeping (or loss of money, when such damage or loss stems directly from neglect or default)
Deductions for employer-provided housing
Deductions for amenities and services provided by the employer, as authorized by a general or special order from the Provincial Government
Deductions for the recovery of advances or to rectify overpayments of wages
Deductions for income tax owed by the employed person
Deductions mandated by the order of a court or other competent authority
Deductions for subscriptions to and repayment of advances from any approved Provident Fund
Deductions for payment to co-operative societies approved by the Provincial Government (or to an insurance scheme maintained by the Pakistan Post Office)
Deductions made with the written consent of the employed person to support any war savings scheme approved by the Provincial Government

Guidelines Regarding Employees in Pakistan

Salary Payment Requirements for Employers

Employees receiving compensation on an annual or monthly basis must receive payment at least once a month.
For establishments with fewer than 1000 employees, payment must be made by the seventh day from the last day of the wage period. Larger establishments, with over 1000 employees, have until the 10th day from the last day of the wage period to fulfill payment obligations. The legal stipulation mandates that wages be disbursed on a working day and in current coin or currency notes exclusively.
The law prohibits wage payments through checks.

Rules About Issuing Payslips

The PIFRA monthly payslip project is a government initiative in Pakistan. All employees can access their payslips directly from their email accounts by completing online registration with PIFRA. The monthly payslip serves as the payment record for a 30-day cycle.

Timesheets & Record Keeping Guidelines for Employers

Employers are required to uphold a comprehensive payroll record detailing key information for each employee, including the commencement and conclusion dates of employment, the number of days worked, the amount of daily, weekly, or monthly wages, fringe benefits, and any additional piecework or commission payments.
Additionally, employers must maintain an individualized file for each employee containing essential details such as name, occupation, age, nationality, address, marital status, date of employment, wages (along with any adjustments), records of disciplinary sanctions or penalties imposed, details of occupational injuries or diseases incurred, and the date and reasons for the termination of employment. The file should also encompass a leave card, documenting annual leave, sick leave, and other types of leave taken by the employee.

Annual Leave Entitlements for Employees

The commencement of the leave period typically aligns with the start of the calendar year, and employment contracts usually outline the terms of leave entitlements. Under the Factories Act, employers are mandated to grant all factory workers one day of leave with pay for every 20 days worked (e.g., 18 days of paid time off for every 240 working days). This entitlement is prorated for new joiners and those leaving during the year. Additionally, other conditions of leave are covered by the Employees’ State Insurance Act, 1948. In India, annual leave is commonly referred to as earned leave or privilege leave.
Eligibility for annual leave varies by location, and workers may carry over their annual leave; however, the accumulation of earned leave is typically capped at a maximum of 45 days.
If an employment contract expires before a worker can take their annual leave, compensation for the leave is calculated proportionately based on the number of months worked and the number of working hours per week.

Sick/Medical Leave Policies

Employees have the right to 10 days of casual leave with full pay and an additional 16 days of sick or medical leave with half pay.

Casual leave is granted for unforeseen circumstances, such as sudden illness or urgent matters, and should be requested in advance unless the urgency prevents prior application.

Employees are eligible for the following maximum paid sick leave, supported by a medical report:

121 days (in a calendar year) for ordinary illnesses
365 days (in a calendar year) for cancer or tuberculosis

Sick leave may be extended on an unpaid basis.

For ordinary illnesses, the employer is required to pay 75% of the last drawn wages as sickness benefits. In the case of cancer and tuberculosis, the employee must receive 100% of their last wages.

In the event of work accidents, an employee has the right to draw 100% wages for a period of 180 days.

Compassionate & Bereavement Leave

Bereavement Leave

In the unfortunate event of the passing of a first-level relative (father, mother, spouse, child, sister, or brother), employees are entitled to one day of paid leave with full pay. Documentation, such as obituary papers, is required for verification.

Marriage Leave for Employees

Employees are granted two days of paid leave for their own marriage. This provision is applicable only once during their tenure of employment with the company.

Rules Regarding Maternity & Parental Leave and the Sindh Act

Maternity Leave

Female employees with a minimum of four months’ tenure in an establishment preceding the delivery date are entitled to a 12-week maternity leave. This period is evenly distributed, with six weeks taken prior to childbirth and the remaining six weeks post-childbirth. The leave is granted with full salary, and the employer is prohibited from terminating the services of the woman during this period. There is no restriction on the number of times a woman may avail herself of maternity leave during her employment with the same employer.

Upon returning to work after maternity leave, a woman is entitled to one or more daily breaks or a daily reduction of work hours to facilitate breastfeeding. These breaks are considered as working time and must be remunerated accordingly.

For a woman who has completed a continuous one-year service before the anticipated delivery date, the Act provides four weeks of prenatal and 12 weeks of postnatal leave with full salary.

The Sindh Act mandates the establishment of a daycare center in organizations with 10 or more employees. The employee is allowed four visits to the center during the workday for nursing, weaning, and feeding the child.

Under the Sindh Employees Social Security Act 2016, a woman covered by the Act is eligible for a 12-week maternity leave if contributions in her name were made for no less than 180 days.

Paternity Leave

Employees are granted a maximum of seven days of paternity leave, either on or immediately before the child’s birth. This leave can be utilized twice during the employee’s entire service. However, employees of Sindh Police and the National Commission on the Status of Women are entitled to a 10-day paternity leave.

Public Holidays Celebrated in Pakistan

Pakistan’s holidays comprise a mix of Islamic, national, and other religious observances.

Religious festivals like Eid adhere to the Islamic calendar, while national holidays such as International Labor Day, Pakistan Day, and Quaid-i-Azam Day follow the Gregorian calendar.

Benefits to the Employee in Pakistan

Statutory Benefits Paid to Pakistan Employees

The State extends four types of benefits to insured individuals or their beneficiaries, financed through social security and mandatory social insurance:

1. Old-Age Pension (or Reduced Pension)
2. Survivors’ Pension
3. Invalidity Pension
4. Old-Age Grant (provided the employee is ineligible for a pension)

Under the Invalidity or Disability Benefit Act, provision is made for an invalidity benefit arising from non-occupational accidents, injuries, or diseases resulting in permanent disability.

In cases of employment-related injuries (as defined in the Act) leading to an earning capacity loss of at least 67%, the Act establishes entitlement to an invalidity or disability pension. To qualify, an employee must have:

A minimum of 15 years of contributions
Alternatively, a minimum of five years of contributions (with at least three years in insurable employment)

The invalidity pension is disbursed for the duration of the invalidity. If an employee has received disability pension for at least five years, they become eligible for an invalidity pension for life. When an individual reaches retirement age while receiving an invalidity pension, it automatically converts into an old-age pension.

The old-age grant is allocated to employees who do not meet the eligibility criteria for an old-age pension (i.e., at least 15 years of contributions). Nevertheless, if these employees have completed a minimum of two years in insurable employment, they are entitled to a lump sum payment equivalent to 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 individuals intending to reside and work legally in Pakistan are required to secure work visas. This necessitates having a job offer and fulfilling specific criteria for visa application.

The Ministry of Interior empowers Pakistan Missions abroad to issue entry work visas to foreign expatriates based on recommendations from the Board of Investment. These visas are initially granted for one year with multiple entries, and their validity can be extended annually within Pakistan.

The Work Visa Entry allows for a single entry for up to three months, extendable for an additional two years.
The Pakistan Missions are mandated to receive and approve entry work visas within a 48-hour timeframe.

Process for Obtaining Visa Extensions

Upon the initial grant of a three-month work visa, applicants have the option to apply for an extension, allowing multiple entries for a duration of up to two years.

The Ministry of Interior reviews applications with input from stakeholders, necessitating a mandatory letter of recommendation from the Board of Investment for work visa extension cases.

Family members of the applicant can be included in the visa application, and upon the submission of a comprehensive application on the portal, the Board of Investment issues the Work Visa Recommendation Letter within seven working days.

The process to obtain a work visa in Pakistan typically takes three to four months. For individuals residing in Pakistan with a valid visa, extensions can be sought for one year at a time, requiring the resubmission of relevant business documents. In certain circumstances, the Ministry of Interior may grant longer extensions.

Additionally, the conversion of a business visa to a work visa (and vice versa) is permissible upon payment of a fee of 100 US Dollars.

Public Holidays Observed in Pakistan in 2024

	Occasion	Date
1	Kashmir Day	February 5
2	Pakistan Day	March 23
3	Eid ul-Fitr	April 10
4	Eid ul-Fitr Holiday	April 11
5	Eid ul-Fitr Holiday	April 12
6	Labour Day	May 1
7	Eid ul-Adha	June 17
8	Eid ul-Adha Holiday	June 18
9	Eid ul-Adha Holiday	June 19
10	Ashura	July 16
11	Ashura	July 17
12	Independence Day	August 14
13	Eid Milad un-Nabi	September 16
14	Allama lqbal Day	November 9
15	Quiad-e-Azan Day/Christmas Day	December 25
16	Day after Christmas *	December 26

*Christmas holidays are commemorated exclusively by Christians.

Note: Regarding Islamic holidays, the dates are projected and contingent upon the moon’s appearance, for which a separate notification will be issued by the Cabinet Division.

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