Employment Laws in Pakistan: A Comprehensive Guide for 2026

What are the contractual agreements in Pakistan?

Employment contracts in Pakistan must clearly state the job duties, pay (base salary, allowances, and bonuses), work hours (usually 48 hours per week), leave rules, and how termination works. Employers must also follow legal rules such as the minimum wage and required social benefits.

What are the types of employment contracts in Pakistan?

Employment contracts in Pakistan are mainly controlled by the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, along with each province’s labor laws.

The law has six main types of employment contracts in Pakistan, which include:

• Permanent: Stable, long-term employment with full benefits.
• Probationary: Initial period to assess job suitability before becoming permanent.
• Badli (Alternate): Temporary replacement for a permanently absent employee.
• Temporary: Hired for specific projects lasting less than nine months.
• Apprentices: Undergoing formal training through an apprenticeship program.
• Contract Workers: Employed for a particular period and paid based on units produced, not the time spent.

What are the working hours and overtime rules in Pakistan?

Pakistan’s labor laws regulate working hours and overtime requirements, with specific rules depending on the applicable provincial legislation and the type of establishment.

Regular working hours

For workers covered by applicable factory legislation, normal working hours generally cannot exceed 48 hours per week. Daily working-hour limits and rest requirements may vary depending on the relevant labor law.

Work performed beyond the prescribed working-hour limits qualifies for overtime compensation.

Overtime regulations and compensation

Under the Factories Act, 1934, workers covered by the legislation are generally entitled to overtime wages at twice their ordinary rate of pay for work performed beyond the normal working-hour limits.

Overtime limits and eligibility requirements vary depending on the province, industry, and applicable employment legislation. Employers should review the relevant labor rules before determining overtime obligations.

What is the minimum wage in Pakistan?

The minimum monthly wage for an unskilled adult worker is PKR 40,000 in Punjab, Sindh, and Khyber Pakhtunkhwa, and PKR 37,000 in Balochistan and Islamabad.

Minimum wage rates are not uniform across the country and vary by province, industry, and worker category.

Each province (Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, plus Islamabad Capital Territory) has its own legal rules and regulations setting the minimum monthly wage for workers.

What are the factors affecting wage determination?

Minimum wage decisions in Pakistan consider factors such as inflation, cost of living, economic conditions, and other social and economic considerations.

For remote employees, employers should assess compensation requirements based on the applicable employment relationship, worker location, and relevant labor regulations.

What are the mandatory employee benefits in Pakistan?

Mandatory employee benefits in Pakistan include statutory leave, social security, and retirement contributions. Employers must enroll workers in the Employees' Old-Age Benefits Institution (EOBI) pension and the provincial social security scheme.

They must also provide group life insurance and either a gratuity or a provident fund. In addition, employers must give annual leave, sick leave, and maternity or paternity leave.

Statutory benefits

Eligible employees are entitled to benefits such as:

• Provident fund or gratuity: Applicable labor laws require employers to provide retirement-related benefits through a provident fund or gratuity arrangement, subject to statutory eligibility requirements.
• Retirement benefits: Employers need to comply with applicable retirement benefit obligations, including registration and contribution requirements under relevant laws.
• Trade union and collective bargaining rights: Employees have legal rights to form and join trade unions and participate in collective bargaining processes, subject to applicable industrial relations laws.

Employees may elect or participate in the selection of a Collective Bargaining Agent (CBA) through procedures established under industrial relations legislation.

Social security contributions and requirements

Employers in Pakistan need to register eligible employees with the Employees’ Old-Age Benefits Institution (EOBI) and comply with applicable social security contribution requirements.

EOBI contribution obligations generally apply to covered employers and employees under the Employees’ Old-Age Benefits Act, 1976.

Contribution rules, eligibility requirements, and provincial social security obligations vary depending on the applicable jurisdiction.

Employers managing remote employees should review the relevant employment location, worker classification, and applicable social protection requirements before determining benefit obligations.

What are the vacation and paid time-off rules in Pakistan?

Pakistan’s employment laws provide various leave benefits for eligible employees. Here’s a list of common leaves.

What are public holidays in Pakistan?

Pakistan observes several public holidays each year, which are announced through official government notifications. The number and dates of holidays may change annually, particularly for Islamic holidays that depend on the lunar calendar and official moon-sighting announcements.

Common public holidays in Pakistan include:

How does termination work in Pakistan?

Employment termination in Pakistan may occur due to employer dismissal, employee resignation, expiry of a fixed-term contract, retirement, or other legally recognized reasons.

Applicable termination procedures and employee protections depend on provincial labor legislation, establishment type, and worker classification.

Probation

For workers covered by applicable standing-orders legislation, the probation period is generally three months. Employers should review the relevant provincial requirements before applying probation terms.

During probation, termination, and notice requirements depend on applicable law and the employment contract.

What are the grounds for termination?

Employers may terminate employment for valid reasons. Here are a few common reasons for terminating an employee.

• Willful disobedience
• Habitual negligence
• Theft or fraud
• Dishonesty or misappropriation
• Violence or misconduct
• Absence from work without approved leave
• Damage to company property
• Other acts recognized as misconduct under applicable law

Notice period and severance pay

The minimum notice period for permanent employees is usually 30 days. Probationary employees may have a shorter notice period (for example, 7–15 days or even 24 hours, depending on the offer letter).

If either the employer or the employee ends the contract without giving the required notice, they must pay an amount equal to the salary for the notice period instead.

Employers maintaining an approved provident fund arrangement may be permitted to provide that benefit instead of gratuity, subject to applicable legal requirements.

Handling employee termination in Pakistan requires careful attention to dismissal grounds, notice requirements, and severance calculations. Errors in documentation or offboarding steps can create employment risks and additional administrative work.

Skuad Shield helps businesses identify and address these compliance requirements throughout the employment lifecycle.

Here is what Skuad Shield helps with:

• Employment documentation workflows aligned with applicable labour requirements
• Worker classification checks to help flag potential employment risks
• Employment records management to support audit readiness
• Compliance monitoring across supported markets
• Support for termination and offboarding workflows, including notice and severance calculations as required locally

What are the workplace discrimination rules in Pakistan?

Pakistan’s Constitution recognizes equality before the law and equal protection of citizens. Employment protections against unfair treatment arise from constitutional principles, workplace harassment legislation, and applicable labor laws.

The Protection Against Harassment of Women at Workplace Act, 2010 establishes legal protections against workplace harassment and requires employers to follow prescribed procedures for addressing complaints.

Provincial employment legislation may also regulate employment conditions and worker protections. Employers should review the applicable laws based on their province, industry, and workforce structure.

Prohibitions against workplace discrimination

Employers should avoid discriminatory employment practices and ensure fair treatment of employees. Examples of potentially discriminatory practices include:

• Providing unequal wages or benefits based on prohibited grounds under applicable law
• Creating a hostile work environment through sexual, verbal, or mental harassment or discriminatory behavior is prohibited
• Restricting employment opportunities through unfair or unlawful practices

Organizations should implement appropriate workplace policies, complaint procedures, and compliance processes to support equal opportunity and lawful employment practices.

What are the health and safety regulations in Pakistan?

Pakistan’s occupational health and safety laws require employers to take appropriate measures to protect employees from workplace hazards.

Employers should:

• Provide a safe working environment and take reasonable measures to identify and reduce workplace risks.
• Inform employees about potential hazards and applicable safety procedures.
• Provide appropriate safety instructions, training, and supervision to help employees perform their duties safely.
• Comply with relevant occupational health and safety (OHS) regulations and provide required workplace facilities and protections.

Employers should review the relevant provincial OHS requirements to ensure compliance with the rules applicable to their workforce and workplace.

Stay compliant when hiring in Pakistan with Skuad

Hiring in Pakistan requires employers to ensure contracts reflect provincial labor laws, applicable standing‑orders requirements, and required tax withholdings.

Depending on the worker classification and province, businesses must also register employees with social protection schemes (such as EOBI and provincial social security), calculate gratuity/terminal benefits correctly, and meet notice and severance procedures to avoid compliance risks.

Skuad supports global teams hiring in Pakistan by helping with employment contracts, payroll processing, statutory contribution workflows, benefits administration, and termination requirements through a single platform. This helps businesses manage local employment requirements while hiring without setting up their own entity.

Book a demo to learn how Skuad supports hiring in Pakistan.

FAQs

What is an employer of record in Pakistan?

An Employer of Record in Pakistan is a local employment partner that hires workers on behalf of a foreign company while managing contracts, payroll, and statutory obligations.

How much does an EOR in Pakistan cost?

EOR costs in Pakistan usually depend on the provider, employee salary, and services required. Fees may range from monthly service charges plus employment costs, including contributions such as EOBI and provincial social security.

How can a foreign company hire employees in Pakistan without setting up an entity?

Foreign companies can typically hire through an EOR in Pakistan without incorporating a local company. The EOR becomes the legal employer and manages employment documentation, payroll, and registrations, while the company directs daily work.

What employment compliance requirements should companies know when hiring in Pakistan?

Companies hiring in Pakistan should consider provincial labour laws, written employment contracts, tax withholding, and statutory registrations. Compliance requirements involve EOBI, provincial Social Security Institutions, and the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, depending on employee location and classification.

What is the difference between using an EOR and setting up a legal entity in Pakistan?

Using an EOR in Pakistan usually allows companies to hire employees without creating a subsidiary, while entity setup involves registrations and ongoing administration with bodies such as the Securities and Exchange Commission of Pakistan (SECP). The better option depends on hiring volume, long-term plans, and operational needs.

How long does it take to hire employees through an EOR in Pakistan?

The onboarding timeline in Pakistan varies based on documentation, employee details, and registration requirements. Many EOR arrangements can complete hiring within one to two weeks, depending on circumstances. Processes include employment contracts, payroll setup, and applicable registrations with authorities such as EOBI.