Employment and labor laws vary from country to country. This guide is intended to provide the most up to date information available. We will update this guide as needed when changes are made to the laws.
Employment Contracts
Employers are legally required to provide formal written contracts for all employees that include salary/wage, termination terms, job title, etc. The contracts must be written in Urdu and use the Pakistan Rupee currency (PKR).
Working Hours
The maximum working week in Pakistan consists of 48 hours a week, 9 hours a day.
Overtime
All work more than the standard working hours a week is to be paid as overtime and is regulated by employment contract/collective agreements. When an employee is requested to work overtime or work on holidays, there are maximums in relation to the number of hours allowed.
Anytime worked over 9 hours per day is considered overtime and needs to be paid at a rate of 200% salary. Employees receive compensation equivalent to 300% of their typical pay for overtime hours worked on public holidays.
Public Holidays
The local government decides each year if holidays falling on the weekend are lost or moved to a working day in lieu.
Religious holidays are determined by the lunar cycle and will show as tentative until they are confirmed nearer the date of the holiday.
For the year 2024:
- Jan 1 – Monday: New Year’s Day (Optional Holiday)
- Feb 5 – Monday: Kashmir Day
- Feb 7 – Wednesday: Shab e-Meraj (Tentative / Optional)
- Feb 8 – Thursday: General Election Day
- Feb 14 – Wednesday: Basant Panchami (Optional Holiday)
- Feb 25 – Sunday: Shab e-Barat (Tentative / Optional)
- Mar 23 – Saturday: Pakistan Day
- Mar 24 – Sunday: Holi (Optional Holiday)
- Mar 29 – Friday: Good Friday (Optional Holiday)
- Apr 1 – Monday: Easter Monday (Optional Holiday)
- Apr 10 – Wednesday: Eid-ul-Fitr
- Apr 11 – Thursday: Eid-ul-Fitr Holiday (Tentative)
- Apr 12 – Friday: Eid-ul-Fitr Holiday (Tentative)
- Apr 13 – Saturday: Eid-ul-Fitr Holiday / Baisakhi (Tentative / Optional Holiday)
- Apr 21 – Sunday: Ridván (Optional Holiday)
- May 1 – Wednesday: Labour Day
- Jun 17 – Monday: Eid al-Adha (Tentative)
- Jun 18 – Tuesday: Eid al-Adha Holiday (Tentative)
- Jun 19 – Wednesday: Eid al-Adha Holiday (Tentative)
- Jul 16 – Tuesday: Ashura (Tentative)
- Jul 17 – Wednesday: Ashura Holiday (Tentative)
- Aug 14 – Wednesday: Independence Day
- Aug 26 – Monday: Chelum (Tentative / Optional)
- Sep 15 – Sunday: Giarhwin Sharief (Tentative / Optional)
- Sep 16 – Monday: Eid Milad un-Nabi (Tentative)
- Oct 11 – Friday: Durga Puja (Optional Holiday)
- Oct 13 – Sunday: Dussehra (Optional Holiday)
- Oct 17 – Thursday: Birthday of Guru Balmik Sawami Ji (Optional Holiday)
- Nov 1 – Friday: Diwali/Deepavali (Optional Holiday)
- Nov 9 – Saturday: Iqbal Day
- Dec 25 – Wednesday: Christmas Day / Quaid-e-Azam Day
- Dec 26 – Thursday: Day After Christmas (Christians only)
Annual leave (vacation)
In Pakistan, employees are entitled to 14 calendar days of fully paid annual leave following 12 months of consecutive service. This leave cannot be taken in part and must be taken in its entirety; leave of up to 14 days can be carried over into the following vacation year.
Sick Days
Employees are entitled to 10 days of casual sick leave upon contingent situations such as sudden illness or other urgent purposes.
Every employee is entitled to 10 days of Casual Leave (in addition to the annual leave) with full pay. This leave is granted upon certain situations such as sudden illness.
A further 16 days of leave is entitled for Sick or Medical leave and paid at a rate of 50% of pay. Sick Leave requires a medical certificate to be issued.
Maternity and Paternity
Maternity Leave
Female employees are entitled to three months of paid maternity leave following four months working for a single employer before giving birth. The employee must take a six-week post-natal leave period.
Employees are protected during their maternity leave and cannot be terminated during this time.
To receive benefits, the employee must have at least 180 days of contributions in the year before the child’s expected birth.
Paternity Leave
Fathers are eligible for one month of leave following the birth of their first three children.
Parental Leave
There are no provisions in the law regarding parental leave.
Other Leave
Employees in Pakistan are entitled to Iddat leave. Iddat leave is applicable if a secured person dies while in receipt of a sickness or injury benefit. In this case, their survivors are entitled to a death grant equal to the daily rate of sickness benefit multiplied by 30, but it should not be less than 1500 PKR.
Iddat leave is also applicable if a female employee loses her husband.
Employee Severance and Terminations
Termination Process
The termination process varies according to how the Employment Agreement and Collective Agreement are in place and is based on the type of contract and reason for termination. Both employees and employers should provide terminations in writing, and the reasoning for dismissal must be sufficient.
Notice Period
Both employees and employers require a notice period of one month to terminate an employment contract. Advanced notice is not necessary for temporary workers.
If advanced notice is not provided, then an employer must pay a monthly salary in its lieu.
Severance Pay
Except in the circumstance of misconduct, employees receive severance pay amounting to 30 days’ wages for each year of completed service following their discharge from work.
Probation Period
In Pakistan, probation periods are outlined in the employees’ employment contracts. The probation period is typically three months long.
Payroll Cycle
In Pakistan, the payroll frequency can be daily, weekly, bi-monthly or monthly. The employee must pay salaries at least once a month.
The national minimum wage in Pakistan is 25,000 PKR per month. The province of Punjab revised the minimum wage from PKR 25,000 to PKR 32,000. The wages of semi-skilled, skilled, and highly skilled workers will also be raised, reaching PKR 35,000.
13th Salary
13th-month payments are not legally required.
Contributions
Employer Payroll Contributions
| Contribution Type | Rate |
|---|---|
| Pension | 5.00% |
| Total Employment Cost | 5.00% |
Employee Payroll Contributions
| Contribution Type | Rate |
|---|---|
| Pension | 1% |
| Healthcare | 40-rupee flat rate each month |
| Total Employee Cost | 1% plus 40-rupee per month |
Employee Income Tax
| Income Range (PKR) | Tax Rate |
|---|---|
| 0 – 600,000 | 0% |
| 600,001 – 1,200,000 | 2.5% |
| 1,200,001 – 2,400,000 | 15,000 PKR (+12.50% on excess) |
| 2,400,001 – 3,600,000 | 165,000 PKR (+22.50% on excess) |
| 3,600,001 – 6,000,000 | 435,000 PKR (+27.50% on excess) |
| 6,000,001 – 12,000,000 | 1,095,000 PKR (+35.00% on excess) |
Super Tax Rates (2022 & Onwards)
Super tax is imposed on high-earning persons having income of more than PKR 150 million. Income of a person for that matter comprises of their taxable income under all heads of income including profit on debt, dividend, capital gain, brokerage/commission, and imputable income.
An enhanced super tax rate of 10% is applicable for certain specified sectors for the tax year 2022 or 2023 only:
| Income Range (PKR) | Tax Rate |
|---|---|
| 150 million – 200 million | 1% |
| 200 million – 250 million | 2% |
| 250 million – 300 million | 3% |
| Above 300 million | 4% |
VISA
Work visas are usually granted for one year once approved by the Board of investment; these must be renewed and re-approved annually. Pakistan has several specific visa applications for particular countries – each with differing requirements and levels of responsibility.
Foreign Workers looking to work in Pakistan must obtain their working visa at the Pakistani Consulate in their country of residence. An essential requirement for the visa is an Official Invitation/Letter from the Chamber of Commerce and Industry on behalf of sponsoring company in Pakistan. The letter must indicate the length of stay, place of stay, etc.
Once a work visa is granted for three months, an applicant can seek an extension of up to 2 years with multiple entries.
Following the completion of 2 years, an employee can apply for permanent status.
VAT
The standard rate of VAT in Pakistan is 17.00%