Hire a Remote Team in Pakistan: A Comprehensive Guide for 2026

Introduction

Hiring a remote team in Pakistan means working within the Industrial and Commercial Employment (Standing Orders) Ordinance and the Factories Act, alongside pension contributions to the Employees' Old-Age Benefits Institution (EOBI) and salary tax withheld at source for the Federal Board of Revenue. Written appointment letters and statutory leave apply from the first hire.

Labour legislation was devolved to the provinces under the 18th Amendment. Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan each notify their own minimum wage rates and run their own social security institutions, with separate ceilings and deadlines.

A team split across Karachi, Lahore, and Islamabad has to follow different provincial rules, which makes payroll and compliance more challenging.

Companies assuming one national rulebook usually find the gap after their second hire, when back payments and compliance issues start showing up. An employer of record already has a registered local entity in each jurisdiction, which helps manage those rules for you.

In this guide, we cover the three hiring routes, employment laws, payroll and tax, leave entitlements, and hiring costs.

How to hire remote employees in Pakistan?

There are three routes into the Pakistani hiring market, and the right one depends on headcount, timeline, and how permanent the presence needs to be.

Let’s take a closer look at what each of these three methods means.

Set up your own entity

Foreign companies choose between three structures, and that choice limits what the business can do.

• Branch office: Established by a foreign company to fulfil its contractual obligations with the public or private sector in Pakistan. Activity is restricted to the work named in the agreement, and commercial or trading activity is off the table.
• Liaison office: Established for promotion of products, provision of technical advice and assistance, and exploring market possibilities. Non-commercial by design.
• Subsidiary: A private limited company incorporated under the Companies Act 2017, with full commercial capacity.

Board of Investment (BOI) permission is mandatory before opening a branch or liaison office.

A subsidiary follows the standard incorporation route instead. The registration sequence looks like this:

• Reserve the name and incorporate it with the Securities and Exchange Commission of Pakistan (SECP).
• Obtain a National Tax Number. Registration with the Federal Board of Revenue is a precondition for withholding and remitting salary tax
• Register with Employees' Old-Age Benefits Institution (EOBI).
• Register with the provincial social security institution. A separate registration applies in each province where staff are based
• Open a local bank account to fund payroll in Pakistani rupees

On timelines, BOI processes branch and liaison office cases in seven weeks and circulates them to security agencies for input. Make sure you build that into your launch plan instead of treating registration as just a formality

Ongoing obligations continue even after registration. A foreign company files changes in registered particulars within thirty days, files annual accounts covering both its Pakistan operations and its global accounts along with the list of Pakistani members and places of business, and applies to renew its BOI permission when the validity period expires.

How to hire employees through an AOR in Pakistan?

An AOR or agent of record is usually one of the most sought-after options when hiring and managing international contractors.

They handle all legal and compliance matters, including payouts and classifications, and help you stay compliant with local labor laws.

However, hiring contractors in Pakistan carries classification risk. A contract does not settle the status of workers in Pakistan. Where someone works fixed hours under your direction, on work central to your business, authorities can treat the arrangement as employment, whatever the paperwork says.

That’s where Skuad’s AOR and contractor management solution can help so that you can engage contractors in Pakistan on compliant terms, or move them onto employment where the working arrangement requires it, without carrying the classification risk yourself.

Here is what Skuad helps with:

• Locally compliant contractor agreements that reduce misclassification exposure across supported markets
• Worker classification checks that flag risk before a contract is signed
• Invoice generation, approval workflows, and payment processing in local currency
• Multi-currency contractor payouts across 70+ currencies with no manual reconciliation
• Contractor records, contracts, and payment history in a single dashboard alongside full-time employees
• Support for converting a contractor to full-time employment through Skuad's EOR when the relationship changes

How to hire employees through an employer of record in Pakistan?

Hiring in Pakistan without a local entity can be challenging for foreign employers. The other option is to set up your own Pakistani company. SECP registration usually takes about 5 to 10 working days for a private limited filing.

After incorporation, you also need to handle Federal Board of Revenue (FBR) National Tax Number filings, monthly sales tax returns at the 18% federal rate or the relevant provincial services tax, EOBI registration, provincial Social Security Institution registration, Labour Department filings, and corporate income tax compliance with the Federal Board of Revenue.

For a small team or a market-entry test, that overhead is hard to justify. Leveraging an Employer of Record like Skuad would be a smart choice here.

Skuad acts as the legal employer in Pakistan, so you can hire, pay, and run statutory compliance for Pakistani employees without registering locally.

Here is what Skuad helps with:

• Employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements
• Payroll processing in 70+ currencies with accurate tax withholding and statutory deductions
• Statutory contribution workflows across supported markets, covering applicable social insurance and pension obligations
• Statutory benefits administration across supported markets, including maternity, paternity, sick, and annual leave entitlements
• Termination and offboarding support aligned with local notice, severance, and disciplinary requirements
• Contractor onboarding and management with built-in classification risk flags across 160+ countries

Book a demo to see how quickly Skuad can onboard your first Pakistani hire.

What are the employment laws in Pakistan?

Employment laws in Pakistan require employers to follow the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, the Factories Act, 1934, and provincial labour laws administered by relevant labour departments.

The law defines obligations related to employment contracts, wages, working hours, social security, and employee protections across different industries and provinces.

Employment in Pakistan is governed by a mix of federal statutes and provincial legislation.

What is the minimum wage in Pakistan?

The minimum wage in Pakistan ranges from PKR 37,000 to PKR 40,000 per month, depending on the province.

Minimum wage is set under the Minimum Wages Ordinance 1961 and notified by provincial minimum wage boards through official gazette notifications. Rates vary by province and by skill category, with separate floors for unskilled, semi-skilled, and skilled workers.

The statutory minimum tells you what is lawful. It says little about what a candidate in Karachi or Lahore will accept. Skilled roles in Pakistan price well above any provincial minimum, and salaries for senior people can go even higher because Gulf employers compete for the same talent.

Teams that convert salary range into rupees usually land on an offer that is either uncompetitive or well above market.

Skuad's salary benchmarking tool helps close that gap before the offer goes out. Explore salary benchmarks for roles in Pakistan.

What are the working hours and overtime rules in Pakistan?

Women workers may be employed between 6 AM and 7 PM; where the employer arranges transport, a woman may work until 10 PM in two shifts with her consent. The minimum age for factory work is fourteen.

How do employment contracts affect worker classification in Pakistan?

Written terms of employment are mandatory across Pakistan, though the governing statute differs by province.

For example, in Sindh, Standing Order 3 of the Sindh Terms of Employment (Standing Orders) Act 2015 requires every worker to receive an appointment letter at the time of appointment, stating the terms and conditions of employment including wages, and a written order on transfer or promotion. Verbal arrangements leave the employer exposed in any dispute.

The Standing Orders Ordinance classifies workers into six categories, and the category drives the entitlements:

• Permanent: Engaged on work of a permanent nature likely to last more than nine months, after satisfactorily completing three months of probation
• Probationer: Provisionally employed against a permanent vacancy and has not yet completed three months of service
• Temporary: Engaged on work of an essentially temporary nature likely to finish within nine months
• Badli: Appointed against the post of a permanent worker or probationer who is temporarily absent
• Apprentice: An apprentice under the Apprenticeship Ordinance 1962
• Contract worker: Works on a contract basis for a specific period, with remuneration calculated on a piece rate basis

Six worker categories, provincial Standing Orders that differ from Sindh to Punjab to Khyber Pakhtunkhwa, and appointment letter requirements that carry real exposure if left verbal; getting worker classification wrong in Pakistan is an easy way to end up in a dispute you didn't see coming.

Skuad helps with this by supporting employment contract generation aligned with local labor laws across 160+ countries, so contracts reflect the correct worker category and provincial requirement from the start rather than being fixed after a problem surfaces.

Skuad's hiring guide goes into more detail on what compliant hiring in Pakistan actually involves.

Read Skuad's Pakistan hiring guide.

How does payroll and tax work in Pakistan?

Payroll in Pakistan splits across two levels of government. Income tax is federal, administered by the Federal Board of Revenue, and withheld from salary at source by the employer under section 149 of the Income Tax Ordinance 2001.

Pension contributions run through the Employees' Old-Age Benefits Institution. Social security is provincial, with a separate institution, contribution ceiling, and payment deadline in each province.

The tax year runs 1 July to 30 June. Salaries are paid in Pakistani rupees on a monthly cycle, and statutory contributions are assessed on capped bases rather than actual salary, which keeps employer cost flat across salary bands.

The table gives a quick view of the main payroll costs and compliance rules in Pakistan.

Managing payroll in Pakistan means following income tax withholding rules, paying Employees' Old-Age Benefits Institution (EOBI) contributions, and complying with provincial labor laws.

Skuad’s global payroll solutions help address these requirements by automating payroll calculations, managing statutory contributions, and ensuring compliance with local labor and tax regulations.

What are the challenges of hiring in Pakistan?

Hiring remote employees in Pakistan can be challenging if not done correctly. Pakistan offers a large, young, English-capable talent pool at costs well below regional tech hubs. The challenges are mostly administrative rather than about talent availability.

Let's take a look at a few of the challenges foreign employers face:

Compliance is fragmented across four provinces

This is the challenge foreign employers underestimate most often. The 18th Amendment gave provinces control over labor law, so Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan each notified their own minimum wage rates and ran their own social security institutions with their own contribution ceilings and payment deadlines.

A team of ten split across Karachi, Lahore, and Islamabad involves separate registrations, separate contribution calculations, and separate filing calendars.

Getting one province right tells you nothing about whether the other two are covered. Companies used to operating in single-jurisdiction markets frequently discover this after the first hire in a second city.

Contractor arrangements carry real classification exposure

Pakistan has a large freelance and gig workforce, which makes contractor engagement the obvious starting move. It is also where the exposure concentrates.

Standing Order 20 holds the employer of the establishment personally responsible for following the Standing Orders even if the workers are hired through contractors.

The Sindh social security regulations make the principal answerable for contribution payments by the contractor. Where a contractor works fixed hours under your direction, the arrangement can be treated as employment regardless of what the agreement says, bringing back contributions, unpaid statutory benefits, and gratuity with it.

Entity setup takes longer time

Board of Investment permission is mandatory before a foreign company opens a branch or liaison office, and BOI processes those cases in seven weeks, circulating them to security agencies for input. Work visa cases run to four weeks on the same basis.

Registration is only the start. A foreign company then files changes in registered particulars within thirty days, files annual accounts covering both its Pakistan operations and its global accounts, and applies to renew its BOI permission when the validity period expires.

Setting up a company in Pakistan usually takes longer than people expect. Even after approval, you still have to handle ongoing filings and renewals, so it is not a quick two-week process.

Cross-border payments involve procedural steps

Paying people in Pakistan means moving money into Pakistani rupees through a local banking relationship, and foreign exchange transactions sit under the procedural requirements of the State Bank of Pakistan's Foreign Exchange Manual.

Credential verification deserves attention

Employment history and qualifications warrant direct verification rather than acceptance of candidate-supplied documents. Confirm degrees with the awarding institution and prior roles with the former employer.

In Pakistan, official data show that the National Database and Registration Authority (NADRA) blocked more than 71,000 computerized national identity cards over five years, with 44,460 later restored after verification, illustrating the importance of identity verification.

Skuad supports background checks as part of the hiring workflow, covering identity verification, employment history, criminal records, and education credentials, so you know who you are onboarding before contracts are signed.

How much does it cost to hire an employee in Pakistan?

Total cost is gross salary plus statutory employer contributions. Both mandatory contributions run on capped bases rather than actual salary, so they land around PKR 4,000 to 4,300 per employee monthly regardless of pay. Gratuity accrues separately and does scale. For senior hires, salary dominates everything else.

Estimating these costs up front can be complex and time-consuming, making accurate budgeting difficult. Skuad supports companies through its global employment infrastructure, enabling them to manage payroll, statutory contributions, and compliance in Pakistan without establishing a local legal entity.

Calculate your cost of hiring in Pakistan.

Customer story: how RemoteLock hired 26 tech professionals across six countries with Skuad

RemoteLock is a Denver-based software company building cloud access control for multifamily, vacation rental, and commercial properties. Expanding its tech team into Europe, Africa, and South Asia meant onboarding full-time staff and consultants in six countries without local entities, alongside misclassification risk and multi-currency payments. Skuad supported compliant onboarding, worker classification, and payroll through one centralised HR dashboard. RemoteLock brought on 26 people across Romania, Kenya, Nigeria, Ghana, India, and Egypt.

"Partnering with Skuad has transformed our international hiring and onboarding processes. Their streamlined approach has enabled our tech team to scale effortlessly and efficiently." - Jon Santavy, Managing Partner, RemoteLock

Read the full case study

Ready to hire a remote team in Pakistan?

By now, you have an understanding of the hiring process, employment laws, payroll requirements, hiring costs, and key compliance considerations in Pakistan. This can help you evaluate the right approach for hiring and managing employees in the country while staying aligned with local labor regulations and statutory obligations.

Choosing the right hiring model depends on your operational needs, workforce structure, and the level of administrative responsibility you are prepared to manage. Each option comes with its own compliance requirements that must be handled correctly to ensure proper and consistent employment practices.

For companies looking to manage hiring, payroll, and compliance in one place, Skuad helps organizations build and manage a compliant workforce in Pakistan without setting up a local entity, handling onboarding, payroll processing, and ongoing workforce administration.

Start hiring in Pakistan without entity setup. Book a demo.

FAQs

1. What is an employer of record in Pakistan?

An employer of record in Pakistan is a third party that legally employs your staff on your behalf. It takes on payroll, income tax withholding under Federal Board of Revenue rules, EOBI registration, and provincial labour obligations, while you direct the daily work.

2. How much does it cost to hire employees in Pakistan through an EOR?

EOR platform fees in Pakistan typically range from around USD 199 to USD 800 per employee each month, depending on the provider and scope. That sits above gross salary and employer statutory costs, mainly EOBI at 5% of the notified minimum wage and provincial social security at roughly 6%.

3. Can a foreign company hire employees in Pakistan without a local entity?

Foreign companies can typically hire in Pakistan through an EOR without registering with the Securities and Exchange Commission of Pakistan, because the EOR holds the employment relationship on its own entity. Direct hiring generally requires SECP incorporation and, for branch offices, Board of Investment permission.

4. What happens if a worker in Pakistan is misclassified as a contractor?

Misclassification generally exposes employers to back payment of EOBI and provincial social security contributions, unpaid income tax, and claims for statutory benefits such as gratuity and leave. Where pay falls below the notified provincial floor, penalties under the Minimum Wages Ordinance 1961 can also apply.

5. Is an EOR or a local entity better for hiring in Pakistan?

This usually depends on headcount and timeline. Direct entity setup involves SECP incorporation under the Companies Act 2017, an FBR National Tax Number, and provincial labour registrations, with foreign branch approvals often running four to six weeks. An EOR generally suits smaller teams testing the market first.

6. How long does it take to onboard an employee in Pakistan through an EOR?

Onboarding timelines vary, but most EOR providers in Pakistan quote between two days and two weeks once contracts and documents are ready. Provincial differences in labour registration and EOBI enrolment can extend that, particularly for hires based outside Punjab and Sindh.