Country Information

The Islamic Republic of Pakistan is a southeastern Asian country. It is one the world’s most populous countries. There are more than 60 different languages spoken regionally however Urdu is enjoys the designation of being the official language. Historically, the Pakistani economy has revolved around agriculture, yet in recent years vast potential has been uncovered in service-based industries.

Employment Contracts

Employment contracts in Pakistan may be written or verbal. It is common for employers to execute a written contract or appointment letter that establishes the terms and conditions of the employment relationship.

Written contracts should have:

  • Names of employer and employee
  • Start date of employment
  • Duration of employment (if for a fixed term)
  • Job description
  • Probation period (if applicable)
  • Position assigned
  • Salary and payment details
  • Work hours
  • Vacation days
  • Sick leave
  • Deductions from wages (fines, absence, damage, taxes)
  • Any other applicable terms and conditions

Contracts must not include a clause that discriminates against a person for having a membership with a trade union.

Working Hours

The standard work period in Pakistan is nine hours a day and 48 hours a week over six days. Employees receive a one hour break each day and must not work more than six hours continuously without a break. Employees who work more than eight and a half hours a day are entitled to at least two breaks. Female employees are not allowed to work past 7 p.m. Seasonal employees can work as many as 50-56 hours a week, provided there are technical reasons for the additional hours. Overtime cannot exceed 12 hours per day and is paid at twice the ordinary rate. It is illegal to have an employee work 10 consecutive days without receiving a holiday. No employee can work on Sunday unless he or she is given a substitute holiday within the following or the previous three days.

Sick Leave

An employee receives up to 90 days of sick leave per calendar year, if contributions were made on the employee’s behalf during the last six months immediately preceding the sickness.In the case of death during sick leave, the designated next of kin will be entitled to a death grant equal to the daily rate of sick leave benefits multiplied by 30. There is a minimum payment.

Maternity/Paternity Leave

Female employees are entitled to 12 weeks of paid maternity leave. Six weeks of leave is taken before the birth and six weeks is taken after the birth.

Eligibility for leave varies depending on the applicable law:

  • Under the West Pakistan Maternity Benefits Ordinance, 1958, female employees must be employed for four months preceding delivery
  • Under the Mines Maternity Benefits Act, 1981, generally pertaining to mine workers, female employees must be employed for six months preceding delivery

Female employees may also be entitled to 12 weeks of maternity leave through Pakistan’s social security system if contributions were made for at least 180 days during the 12 months preceding leave. Employees must provide written notice to employers of the pregnancy. Benefits generally are paid six weeks before the due date and six weeks after the due date. Female employees are entitled to medical care before, during and after the pregnancy if they are entitled to receive paid leave, and if contributions were made for at least 90 days in the six months preceding the claim. Female civil servants receive 90 days of fully paid maternity leave.

Compensation

Industrial and commercial employers with 20 or more employees are required to pay a bonus to employees based on the financial performance of the company. The bonus is referred to as the Profit Bonus or 10C Bonus, depending on the region. Employees qualify for bonuses after 90 continuous days of service within the fiscal year. The bonus is paid to “workers,” or employees who are not on a supervisory role that would include tasks such as hiring, approving leave, or terminating employment.

Vacation Leave

Employees receive 14 consecutive days of paid annual leave after one year of service. Any days that are not used during a calendar year can be carried over to the following year, provided the days carried over do not exceed 14 days. Before an employee’s holiday starts, the employer must pay half the total payment due for the holiday period. Any accrued but unused vacation days are paid to the employee upon separation of service.

Public Holidays

Pakistan observes the following public holidays:

  • Kashmir Day
  • Pakistan Day
  • Labor Day
  • Eid ul-Fitr
  • Eid ul-Azha
  • Independence Day
  • Ashura
  • Birthday of Prophet Muhammad (Eid Milad un-Nabi)
  • Birthday of Muhammad Iqbal
  • Christmas Day
Health Insurance Benefits

There is no public health insurance, so private insurance is recommended.

Employment / Termination / Severance

Either party can terminate the contract by giving one month’s notice to the other party. However, the same rule shall not apply to temporary workers, “badlis” (alternate employee working in place of an absent permanent worker or probationer), and probationers. They are not entitled to a one-month notice. An employee who has been terminated for any reason other than misconduct shall receive a severance payment of a month for every completed year of service or any part thereof excess of six months.

One month’s wages that are calculated on the average of the last three months of service before the termination must be immediately paid by the next day after termination. In cases of terminating full-time employees for misconduct, no notice is required. Grounds for termination are serious illness, insufficiently performing the job, or financial and economic needs of the organization. An employer may cancel the employment contract if the employee is accused of any misconduct such as breach of the law, unexcused absence, willful disobedience, damage to employer’s property, theft, fraud, illegal strike or work slowdown, or a crime whether civil or criminal. All terminations must be documented in writing, stating the reasons for such dismissal. Labor courts have the power to examine and intervene in disputes between concerned parties.

Local Laws & Regulations

We understand that local laws and regulations change and sourcing an accurate reference guide is not easy. Our data is researched and verified by our team of local international Employment Attorneys, HR and Benefit Professionals and Tax Accountants through our Atlas team and consultants, to ensure information up-to-date and accurate.

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