According to recent World Bank rankings, Pakistan is one of the best places to do business in the APAC region. The government has implemented nearly 300 reforms since 2016 to improve its ease of establishing companies and hiring talent. The Islamic country has improved significantly in its standings since 2018, reflecting its employment processes.
Pakistan adopts an employee-friendly labor code for its 240 million-plus citizens and residents. These laws protect workers from unfair employment treatment regarding payments, benefits, and leave entitlements.
Besides the standard leave policy in the labor code, employers can design their own leave policies. However, they must ensure their internal leave arrangements do not infringe on their employees' rights.
This article defines and explains the employee entitlements and leaves policy in Pakistan for businesses wanting to hire employees.
Pakistan Employment Law and Leave Entitlements
Workers in this Islamic nation get certain days off duty and public holidays. Employers should grant their staff leave without repercussions, from maternity to pilgrimage leave. Pakistan has a growing workforce participation rate. The percentage of labor force involvement increased from 32% in 2020 to 32.3% in 2021. Meanwhile, the majority of its entire workforce operates in the agriculture sector.
Certain aspects of the leave policy can be tricky for foreign employers to apply. That's why you need to partner with a global employer of record like Skuad. Skuad can help you design a leave policy that suits your Pakistani team and helps you comply with local legislation.
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Public holidays in Pakistan are different from most parts of the world. Employees have a right to stay away from work-related activities on these days. However, there are instances where the employer may refuse to allow an employee to observe some of these holidays.
In Pakistan, the government divides holidays into three categories: public holidays, bank holidays, and optional holidays. Pakistan observes 10 public holidays. Employees have the right to be absent from work without repercussions on public holidays. In contrast, banks halt operations for the public on bank holidays, but employees may resume work.
Pakistan celebrates many Muslim holidays that depend on moon sightings. Thus, the dates are tentative and only confirmed upon the moon's appearance. Employees wanting to observe optional holidays must make an official request to their employer beforehand. While Muslims get one optional holiday in a calendar year, non-Muslim employees get three days of additional holiday in a year.
The law permits employers to only grant leave to eligible employees. To be eligible for annual leave in Pakistan, an employee must have worked for the same organization for at least 12 consecutive months. An employer may judge a worker to have completed 12 months of consecutive service despite the following interruptions;
- A legal strike action
- A lockout or lockdown
- An illness or accident (90 days or less)
- Any authorized leave (90 days or less)
- Involuntary unemployment (30 days or less)
Annual leave in Pakistan lasts 14 days. Employees wanting to take annual leaves must inform the employer beforehand. If employees fail to take leaves due to them in a fiscal year, they can add those days to their leave days for the coming year.
Until recently, employees in Pakistan, especially males, hardly got time to bond with their newborn children. To improve this situation, the Pakistani senate passed the Maternity and Paternity Act bill in 2020. They designed this act to ensure that new parents can take time off to care for their infants.
According to this act, female employees have a right to maternity leave in Pakistan. Maternity leave is separate from other types of leave a female employee should get by law. If the employee chooses, they will get leave with full pay for the births of up to three children.
The employee would get 180 work-free days for the first childbirth, 120 days for the second, and 90 days for the third. A female employee may not get any more maternity leave while in service after having the third child. The exception will be if the employer grants the employee maternity leave as "extraordinary leave" without pay.
The Maternity and Paternity Act also ensures that male employees can take some time off upon the birth of their newborn. Unlike maternity leave, paternity leave in Pakistan is optional. It is for male employees expecting their wives to give birth. If the employer grants paternity leave, the employee gets up to 30 days off duty while receiving their full salary. This leave period does not affect their leave account for the year.
Like maternity leave, male employees can only take this leave on three separate occasions while in active service. If the employee seeks a leave after three childbirths, they may take it out of their leave account for the year. The employer may also grant them special leave without pay.
Employers who deny their workers this right may face any of these severe punishments:
- Prison sentence of up to six months
- 100,000-rupee fine
- Prison sentence and fine
Foreign employers are susceptible to breaking these laws due to their limited knowledge of Pakistani laws and culture. Perhaps the best way to avoid a prison sentence or hefty fine is to partner with a global employment platform like Skuad. Skuad specializes in international employee management to help you achieve full compliance with leave policies in Pakistan.
Perhaps the most all-inclusive leave policy in Pakistan is casual leave. It serves a multipurpose function and encompasses various leave types an employee can take. Employees get 10 days of casual leave in Pakistan. This leave is for eligible employees needing an urgent break to handle personal engagements.
Employees can take casual leave for reasons such as mourning the loss of a close relative or attending a funeral. Companies may also grant employees days off as casual leave in case of a sudden illness or accident.
Statutory Minimum mandate Medical leaves of eight(8) days.
- Leaves not availed shall lapse at the end of the year.
- Sick leaves may be carried forward, but the total accumulation of such leaves cannot exceed sixteen days at any one time. Employee does not have any option or the right to ask for the payment against the un-availed sick leave.
Pakistan encourages religious freedom and penalizes employers who may discriminate against its workers on the grounds of religion. Thus, the government makes it mandatory for employers to grant their staff special leave for religious purposes and pilgrimages.
Muslim employees have a right to leave for religious pilgrimages, such as Hajj and Ziarat. Leave for pilgrimage may last up to 60 days, and employers allow their staff to observe them.
Reduced Working Hours During Ramadan
As an Islamic nation, religion plays a significant role in the leave policy and employment entitlements. Pakistani Muslims observe the yearly Ramadan fast, and the government endeavors to make this period bearable for participants. As a result, employers, especially those in the manufacturing and services industries, must reduce the working hours for Muslim staff. Despite working fewer hours, employees get their full salary for the month.
Easily Navigate Leave Policy in Pakistan with Skuad
Navigating the leave policy in Pakistan can be tricky due to the influence of its culture and religion. Even with the best intentions, you may make mistakes with significant consequences unless you partner with an EOR like Skuad. Speak to a Skuad expert today and discover how we can help you set up an employee-friendly and compliant leave policy.