Hire in Pakistan

Employer of record in Pakistan

If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in Pakistan, an employer of record may be the best option for achieving your global growth objectives.

An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in Pakistan ―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity.

Learn about the hiring, employment, payroll and benefits requirements for workers in Pakistan and how our employer of record service, EOR, and local HR experts can help you manage your international employment needs.

Hiring in Pakistan

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 relinquished its authority over the country’s labor laws to the provincial governments. Several labor laws have subsequently been passed by the provinces containing provisions that are the same as 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.

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.

Employment contracts in Pakistan

As you look to hire employees in Pakistan, here are some standard regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs.

Working hours

Work hours vary by industry; factory workers can generally work no more than 48 hours per week. There is a limit of 10 hours per day and 50 hours per week in the case of a seasonal factory. If the factory operates 24 hours a day, the daily limit is nine hours and 56 hours.

The weekly limit of 48 hours also applies to work performed in shops, commercial shops, and mines.

Reduced working hours are observed during Ramadan by employers in the manufacturing, commercial, and service sectors.

Compensation

As you consider the appropriate salary to offer new employees, keep in mind:

• Pakistan does not have a national minimum wage.
• 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 periods cannot exceed one month and employees should be paid before the end of the seventh day after the last day of the wage period.

As your employer of record in Pakistan, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer.

Bonuses

Profit-making employers are required to pay bonuses within three months of the end of the year. A bonus equal to one month's pay must be paid to all employees if profits are equal to or exceed one month's payroll, up to 30%. If profits do not exceed one month’s payroll, the bonus may not be less than 15% of total profits.

Employees who have worked for a continuous period of 90 days are eligible for bonus pay.

Probationary period

Probationary periods of up to three months are permitted and employees become permanent after 9 months of employment including the probationary period.

Termination and severance

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.

Employees who wish to resign must give their employers 30 days’ notice.

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% 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.

Employees who resign or are dismissed must be compensated for unused annual leave.

Employee benefits and paid leave in Pakistan

When negotiating terms of an employment contract with a candidate in Pakistan, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.

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.

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.

Vacation

Employees covered by the Factories Act and the West Pakistan Shops and Establishment Ordinance are entitled to 14 days of 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.

Holidays

The following paid public holidays are observed in Pakistan:

• Kashmir Solidarity Day
• Pakistan Day
• Labor Day
• Eid Al Fitr (three days)
• Independence Day
• Eid al Azha (two days)
• Ashura Holiday (two days)
• The Prophet’s Birthday
• 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.

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 of 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% of their earnings (50% in Khyber Pakhtunkhwa and Balochistan provinces) for ordinary ailments; and 100% for tuberculosis and cancer (50% in Khyber Pakhtunkhwa and Balochistan provinces).

The benefit is paid after a two-day waiting period and the illness must be certified by a medical professional.

Health coverage

Men can qualify for a full pension at 60, women at 55, and miners at 50 with at least 15 years of contributions. Except in Sindh province, early retirement is available for men at 55 and women at 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
• The Provincial Employees’ Social Security Institutes - 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.

Additional benefits

In addition to healthcare benefits, employees in Pakistan are entitled to pension, which is funded by government tax revenues, as well as workers compensation, which is covered through mandated employer insurance.

Employer social costs will cover a large portion of employee benefits in Pakistan, but we can consult with you about supplemental coverage options, such as additional pension contributions or life insurance if needed.

Updated: January 29, 2024

Employee onboarding with an employer of record in Pakistan

We write and validate all local employment contracts, streamlining the onboarding process for you and your Pakistan employees—all you have to do is provide relevant information and review and approve the employment agreement. As your employer of record in Pakistan, we will:

• Schedule a welcome call to discuss HR and employment information for Pakistan, as well as answer any questions
• Prepare a customized employment contract in English or other local language
• Share the employment contract and benefits information with the new employee for signature and review
• Gather tax and banking information from the employee to set up payroll
• Provide a local point of contact to the employee to answer any questions regarding their employment, local HR or payroll

The entire onboarding process for the employee is often completed in as little as two weeks.

Partner with Safeguard Global as your Pakistan employer of record and PEO

With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on EOR, our employer of record solution, to expand and hire in 170+ countries around the world, quickly and compliantly.

We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in Pakistan. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone.

Additionally, as a global payroll provider we support payroll administration—including payments, filings and other calculations— all around the world and can accommodate the payroll outsourcing needs of any size organization.

Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today.

Disclaimer

The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.