Updated on: 2025/03/11 04:35 (UTC)
Overview
The main federal statutes governing employment law in Pakistan are the Factories Act, the Industrial and Commercial Employment (Standing Orders) Ordinance, the West Pakistan Shops and Establishment Ordinance, the Payment of Wages Act, and the Workmen’s Compensation Act.
In 2010, Pakistan’s federal government largely relinquished its authority over the country’s labor laws to the provincial governments. Many labor laws have subsequently been passed by the provinces containing provisions that are similar to the federal laws. In cases where a province has not passed a particular law, the relevant federal law will take precedence until a provincial law is established.
Hiring
Employment Contracts
Every employee at the time of their appointment, transfer, or promotion must be given a written document that specifies the terms and conditions of their employment.
Employers may not hire an employee under a fixed-term contract if the worker would be performing tasks of a permanent nature. The maximum duration of a fixed-term contract is nine months.
Probationary periods of up to three months are permitted. Employees become permanent workers following the completion of nine months of work including the probationary period.
The Workmen’s Compensation Act prohibits employers from writing employment contracts in which employees relinquish their right to compensation from the employer for personal injuries that may arise during the course of their employment.
Restrictions on Hiring
Pakistan’s constitution prohibits employers from employing children under the age of 14 in a factory, mine, or hazardous place of employment.
Employers may employ children in a factory provided that each child receives a certificate of fitness from a doctor. The employment of children in a factory must be limited to five hours a day.
Recordkeeping
Employers must preserve a record of all employees’ occupations, wages, attendance, dates of entry and exit, and registration numbers for two years.
Background Checks
Pakistan’s labor laws do not address background checks.
Noncompetition Agreements
Employers may include noncompete clauses in employment contracts, but they must be reasonable in duration and terms.
Reference Citations
Employment Contracts: Industrial and Commercial Employment Ordinance, 1968, § 2-A
Restrictions on Hiring: Factories Act, 1934 (as amended), §§ 50-52; Constitution of Pakistan, 1973, art. 11
Immigration and Work Permits
In General
Foreign workers intending to work in Pakistan generally must obtain a work visa at the Pakistani consulate in their country of citizenship. Work visas are granted for one year and are renewable on a yearly basis.
Visas and Work Permits
Foreign workers intending to work in Pakistan generally must obtain a work visa at the Pakistani consulate in their country of citizenship. Work visas are granted for one year upon approval by the Board of Investment and are renewable on a yearly basis.
Applicants must complete and submit the visa application form.
Citizens from 67 select countries may obtain a visa on arrival when travelling on business if they have a local sponsor who has received approval from the immigration authorities. Business visas are valid for five years (multiple-entry) and the duration of each stay is restricted to three months.
Reference Citations
Visas and Work Permits: Work Visa
Nondiscrimination
In General
Pakistan’s constitution prohibits discrimination on the basis of race, religion, caste, sex, residence, and place of birth.
Sexual Harassment
Employers are required to adopt a code of conduct and a complaint procedure aimed at ensuring a working environment free of intimidation and abuse for all working women. Employees who violate the law can be fined and the complainant may be eligible to receive a portion of the fine. Harassment also can be grounds for dismissal.
Reference Citations
Nondiscrimination: Constitution of Pakistan, 1973, art. 17
Sexual Harassment: Protection Against Harassment of Women at the Workplace Act, 2010, §§ 4, 11
Employee Privacy
Employee Data
There are no laws governing employee data, although the constitution establishes a right to privacy, which it defines as “freedom from unauthorized and unreasonable intrusion into the individuals’ personal affairs.”
Employee Monitoring and Surveillance
Pakistani law does not address employee monitoring and surveillance.
Reference Citations
Employee Data: Constitution of Pakistan, 1973
Compensation
Hours of Work
Rules governing work hours vary by industry. Employees who work in a factory generally cannot be required to work more than 48 hours per week. The limit increases to 50 hours a week if the factory is seasonal and 56 hours if the factory operates 24 hours a day. Daily limits are nine hours, 10 hours in case of a seasonal factory.
The weekly limit of 48 hours also applies to work performed in shops, commercial establishments, and mines.
Reduced working hours must be observed during Ramadan by employers in the manufacturing, commercial, and service sectors.
Minimum Wage
Pakistan does not have a national minimum wage. Effective since July 1, 2021, the province of Sindh has a monthly minimum wage of 25,000 rupees.
Effective since July 1, 2021, the province of Khyber Pakhtunkwha has a monthly minimum wage of 21,000 rupees.
Effective since July 1, 2021, the province of Punjab and the Islamabad Capital Territory have a monthly minimum wage of 20,000 rupees.
Effective since July 1, 2019, the province of Balochistan has a monthly minimum wage of 17,500 rupees.
Overtime
Employees must be paid double their regular rate of pay if they are required to work overtime. Contract employees are not entitled to extra pay for overtime hours worked.
Wage Payment
Wage periods cannot exceed one month. Employees should be paid before the end of the seventh day after the last day of the wage period. All payment of wages must be made on a working day.
Mandatory Bonuses
Employers who have made a profit in any given year must pay employees a bonus within three months of the end of that year. If profits are equal to or exceed one month’s payroll, employers must pay all employees a bonus equal to one month’s pay subject to a maximum of 30 percent of the profit. If profits do not exceed one month’s payroll, the bonus may not be less than 15 percent of total profits.
Employees who have worked for a continuous period of 90 days are eligible for bonus pay.
Reference Citations
Hours of Work: Factories Act, 1934 (as amended), § 34; West Pakistan Shops and Establishments Ordinance, 1969, § 8; Mines Act, 1923, § 22A
Overtime: Factories Act, 1934 (as amended), § 47; Mines Act, 1923, § 25A; West Pakistan Shops and Establishments Ordinance, 1969, § 9
Wage Payment: West Pakistan Shops and Establishments Ordinance, 1969, § 11; Payment of Wages Act, § 5
Mandatory Bonuses: Industrial and Commercial Employment Ordinance, 1968, § 10-C
Benefits
Vacation
Employees covered by the Factories Act and the West Pakistan Shops and Establishment Ordinance are entitled to 14 days’ paid annual leave if they have completed 12 months of continuous service. The annual leave must be consecutive. Up to 14 days of leave can be carried over to the following year. Employees covered by the Mines Act are entitled to one day of leave for every 17 days of work below ground during the previous 12 months and one day of leave for every 20 days of work above ground during the previous year.
Employees who resign or are dismissed must be compensated for unused annual leave.
Holidays
The following paid public holidays are observed in Pakistan:
- Feb. 5: Kashmir Solidarity Day
- March 23: Pakistan Day
- May 1: Labor Day
- Eid Al Fitr (three days)
- Aug. 14: Independence Day
- Eid al Azha (two days)
- Ashura Holiday (two days)
- The Prophet’s Birthday
- Dec. 25: Quaid-e-Azam’s Birthday / Christmas Day
Employees required to work on a public holiday are entitled to a compensatory holiday with full pay and an additional substitute holiday.
Maternity Leave
Female employees who have worked for their employers for at least four months are eligible for up to 12 weeks of paid maternity leave. New mothers must take leave during the six-week postnatal period.
Employees must give notice to employers before taking leave. After having given notice, employees are prohibited from working until their leave entitlement is completely used.
Maternity leave benefits are paid by the employer. Employees who are on maternity leave enjoy special protections from dismissal.
An employer’s responsibility to provide maternity leave benefits does not end if the worker dies on the day she delivers a child or during the period of pregnancy. In such cases, the remaining benefits due to the employee must be paid to the individual(s) designated by the worker.
Paternity Leave
Pakistan’s labor laws do not address paternity leave.
Sick Leave
The Factories Act and the Provincial Employees’ Social Security Ordinance are used to determine leave benefits in different industries. Under the Factories Act, employees are entitled to 16 days’ sick leave with half pay and eight days with full pay in a year.
Under the Provincial Employees’ Social Security Ordinance, employees are eligible for paid sick leave up to 121 days in case of ordinary ailments and 365 days in case of cancer or tuberculosis. To be eligible, employees must have made at least 90 days of contributions to the social security system in the last six months. Employees receive 75 percent of their earnings (50 percent in Khyber Pakhtunkhwa and Balochistan provinces) for ordinary ailments; 100 percent for tuberculosis and cancer (50 percent in Khyber Pakhtunkhwa and Balochistan provinces). The benefit is paid after a two-day waiting period. The illness must be certified by a medical professional.
Employers cannot dismiss workers on sick leave.
Other Leave
Employees are also entitled to 10 days of casual leave, which is designed to enable workers to attend to unforeseen events or circumstances. Casual leave cannot be granted for more than three days at a time and may not be accumulated.
Pensions and Social Security
Men can qualify for a full pension at age 60, women at age 55, and miners at age 50 with at least 15 years of contributions. Except in Sindh province, early retirement is available for men at age 55 and women at age 50 with at least 15 years of contributions.
Social benefits in Pakistan are covered by two separate programs—the Employees’ Old Age Benefits Institution, a federal program administered throughout Pakistan, and the Provincial Employees’ Social Security Institutes, which are provincial programs in the Balochistan, Khyber Pakhtunkhwa, Punjab, and Sindh provinces.
While all the ESSI schemes are governed by the Provincial Employees’ Social Security Ordinance of 1965, each province can amend the ordinance and modify rates and thresholds. EOBI provides employees with an old-age pension, a survivor’s pension, an invalidity pension, and an old-age grant, while ESSI provides employees with sick leave, maternity leave, funeral grants, medical care, survivor’s pensions, disability benefits, and workers’ compensation.
All employers with at least five employees must participate in the Employees’ Old Age Benefits Scheme, while those with fewer employees may participate voluntarily.
Workers’ Compensation
Several laws govern workers’ compensation in Pakistan.
Under the Workmen’s Compensation Act, employers must compensate employees for any injuries arising out of and in the course of employment. If the injury results in death or total disability, the employer must pay the worker up to 500,000 rupees depending on the provisions established in each province.
Employees who incur a temporary injury are entitled to half their monthly wages for up to one year or one-third of their monthly wages for up to five years in case of a chronic lung disease.
Employers are not liable for injuries that result in partial disability lasting less than four days. Employers also are not liable in cases where the worker at the time of the injury was drunk, willfully disobeyed orders, or willfully disregarded safety rules or other measures provided for the safety of workers.
The Standing Orders Ordinance requires industrial and commercial establishments with 50 or more employees to provide workers’ compensation insurance for permanent workers. The Employees Social Security Ordinance provides income replacement for employees who suffer a workplace injury.
Reference Citations
Vacation: Factories Act (as amended), 1934, § 49-B; West Pakistan Shops and Establishments Ordinance, 1969, §§ 14-15; Mines Act, 1923, § 28B
Maternity Leave: Punjab Maternity Benefit Ordinance, 1958, §§ 3-7
Sick Leave: Provincial Employees’ Social Security Ordinance, 1965, §§ 35, 72
Pensions and Social Security: Provincial Employees’ Social Security Ordinance, 1965, §§ 35-39
Workers’ Compensation: Workmen’s Compensation Act, 1923, §§ 3-7; Industrial and Commercial Employment Ordinance, 1968, § 10-B
Labor Relations
In General
Pakistan’s constitution provides for the right to form unions. Unions must be registered. Any employer with 50 or more workers must establish a works council. If negotiation and conciliation cannot resolve a labor dispute, employees may strike and employers may institute lockouts.
Right to Organize
Pakistan’s constitution provides for the freedom of association and the right to form unions. Registration of a trade union must be made under the Industrial Relations Ordinance.
Union participation has been on a steady decline and only a small percentage of the workforce is unionized.
Works Councils
Any employer with 50 or more workers must establish a works council. Councils are limited to 10 members, 40 percent of whom must be workers’ representatives.
The councils are meant to address issues such as productivity, efficiency, safety, and settlement of differences through bilateral negotiations.
Dispute Resolution
A collective labor dispute begins when either the employer or a collective bargaining agent notifies the other party in writing that an industrial dispute has arisen or is likely to arise. The other party then has 15 days (or more if agreed) to try to negotiate a settlement.
If no settlement is reached, either party may within 15 further days serve a notice of conciliation on the other party. If the dispute is settled before the conciliator or a tripartite board of conciliators, a report is sent to the provincial or federal government with the memorandum of settlement.
If the conciliation fails, the parties must refer their dispute to an arbitrator. The arbitrator will give his or her award within a period of 30 days or a period agreed upon by the parties. The award of the arbitrator is final and valid for a period not exceeding two years.
Strikes and Lockouts
If no settlement is reached during conciliation proceedings and the parties do not agree to refer the dispute to arbitration, workers may go on strike provided they have given written notice to the employer within seven days and employers may declare a lockout.
If a strike or lockout has lasted more than 15 days and poses a serious hardship to the community, the government may prohibit the work stoppage at any time within 30 days. In such cases, the National Industrial Relations Commission or the Labor Court will render a decision on the dispute within 30 days from the date on which the dispute was referred to it.
Successorship Clauses
Pakistan’s labor laws do not address successorship clauses.
Reference Citations
Right to Organize: Constitution of Pakistan, 1973, art. 17
Dispute Resolution: Industrial Relations Ordinance, 2002, §§ 25-27
Strikes and Lockouts: Industrial Relations Ordinance, 2002, § 31
Safety, Health and Security
In General
The Factories Act establishes general provisions on health and safety in factories addressing issues such as cleanliness, ventilation, lighting, and disposal of wastes. The law gives inspectors the right to enter and inspect any factory for possible violations. There are no laws restricting an employer from administering drug or alcohol tests, although employee consent is required.
Workplace Safety and Health
The Factories Act establishes general provisions on health and safety in factories addressing issues such as cleanliness, ventilation, lighting, and disposal of wastes. The law gives inspectors the right to enter and inspect any factory for possible violations.
Pakistan also has laws protecting workers in mines, docks, and ships. Women are prohibited from working underground in mines, and workers under 18 years of age cannot be employed in any part of a mine unless they present a certificate of fitness from a qualified medical practitioner.
Drug and Alcohol Use
There are no laws restricting an employer from administering drug or alcohol tests, although employee consent is required.
Reference Citations
Workplace Safety and Health: Factories Act (as amended), 1934, §§ 13-33; Mines Act, 1923, §§ 17-22; Constitution of Pakistan, 1973, art. 17
Termination
Termination by Employer
Under the Industrial and Commercial Employment Ordinance, employers may terminate an employment contract without notice in cases of employee misconduct. Employers must provide one month’s notice when dismissing permanent employees on grounds other than misconduct. In lieu of notice, employers may give an employee one month’s wages calculated as the average of the preceding 3 months.
When dismissing a permanent employee, regardless of reason, the employer must give the worker a written letter specifying the reasons for the termination.
Termination by Employee
Employees who wish to resign must give their employers 30 days’ notice.
Plant Closings and Mass Layoffs
Employers seeking to dismiss more than 50 percent of the workforce or shut down a plant must receive permission from the Labor Court.
Payment on Termination
Permanent workers who are terminated and have been employed for at least 12 months must be given 30 days’ pay for each year of service. Any employment period exceeding six months will be considered a year. Employers who contribute to a provident fund for their employees are exempt from this severance payment.
If employers cease all operations, they must pay employees 50 percent of their daily wages for 14 days. If after 14 days they have not resumed operations, employers must provide employees with the required notice or pay in lieu of notice.
Unemployment Insurance
There are no provisions in Pakistan’s employment laws for unemployment insurance.
Reference Citations
Termination by Employer: Industrial and Commercial Employment Ordinance, 1968, § 12
Termination by Employee: Industrial and Commercial Employment Ordinance, 1968, § 12
Payment on Termination: Industrial and Commercial Employment Ordinance, 1968, § 12
Personal Taxes
Residency Requirements
Residents are defined as those who have resided in Pakistan for 183 days in a given tax year.
Taxable Income
Residents are taxed on their global income and nonresidents only on their Pakistani-sourced income.
Taxable income includes any pay, wages, or other remuneration provided to an employee.
Tax Rates
Income tax rates are levied on a progressive scale for individuals, with rates applicable to employment income ranging, effective starting July 1, 2019, from zero to 35 percent.
Provinces in Pakistan require a social security contribution from employers and employees. For the Employees Old Age Benefit Institution, 5 percent of the salary of insurable employees is contributed by employers. Employees make a monthly contribution to the EOBI equivalent to 1 percent of the minimum wage.
Reference Citations
Tax Ratesr: Withholding Tax Rates
Web References
Law and Regulation
Constitution of Pakistan
Factories Act
Industrial and Commercial Employment Ordinance
Industrial Relations Ordinance
Protection Against Harassment of Women at the Workplace Act
Provincial Employees’ Social Security Ordinance
Punjab Maternity Benefit Ordinance
West Pakistan Shops and Establishments Ordinance
Government Websites and Publications
Board of Investment
Ministry of Interior