Employer of Record (EOR) in Pakistan

An EOR in Pakistan allows businesses to enter the market quickly and help maintain compliance with complex provincial laws, all while reducing the overhead costs of establishing a local entity. Atlas HXM offers a seamless EOR service that handles all aspects of employment from payroll processing to compliant administration across Pakistan's diverse provincial landscape.

Partner with Atlas HXM for a cost-effective, compliant solution to hire and manage your workforce in Pakistan.

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Quick Overview of EOR in Pakistan

Expanding into Pakistan doesn't have to mean drowning in paperwork or hefty setup costs across multiple provinces. With an Employer of Record (EOR), you can bypass the complexities of Pakistan's multi-jurisdictional employment landscape and quickly hire employees, all while maintaining compliance with varying provincial labor laws. From payroll processing and tax compliance to benefits management, an EOR takes care of the legal nitty-gritty like EOBI contributions and provincial social security schemes, so you can focus on growing your business without the need to set up a costly local entity.

The EOR model offers a low-risk, cost-effective alternative to setting up a subsidiary in Pakistan's complex regulatory environment. Establishing a local entity can be time-consuming and costly, requiring navigation of federal and provincial regulations. By partnering with an EOR, you can avoid these setup costs and enter the market faster, avoiding the overhead of a physical office. This is especially beneficial for startups, SMEs, and businesses testing new markets, who need to act quickly and comply with complex local regulations that vary significantly between Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, and Islamabad Capital Territory.

Disclaimer: The contents of this article is not legal advice and should be used for reference only. If in doubt, please seek independent legal advice from a lawyer in the relevant jurisdiction.

What You'll Learn Ahead:

  • Looking to hire in Pakistan without the hassle and administrative burden of setting up a local entity? An EOR helps you onboard employees while maintaining compliance with payroll and complex provincial labor laws.

  • With a Direct EOR, you gain control, faster onboarding, and stronger compliance. It is ideal for businesses aiming to scale quickly across Pakistan's diverse provinces.

  • On the other hand, an Indirect EOR may be more cost-effective but comes with slower processes and added complexity.

  • EOR service fees typically range from USD 300 to USD 800 per employee per month.

  • Atlas HXM offers a robust Direct EOR solution, providing smooth market entry, compliance, and seamless employee management across all Pakistani provinces: all in one platform.

How an EOR Works

At Atlas HXM, we provide EOR services that ensure your business remains compliant with Pakistan's complex provincial labor laws while you focus on growing your operations, free from administrative and legal burdens.

Candidate Selection

Atlas HXM does not recruit candidates, but will check the employment setup for compliance around new hires like validating right-to-work, reviewing contract terms against Pakistan's provincial rules, and configuring payroll and statutory obligations correctly. EOR providers in Pakistan, including Atlas HXM, can assist with work visa applications for foreign employees. Anyone hired via EOR must either already hold valid work authorization or work with the EOR to obtain proper work visas through Pakistan's immigration system.

Employment Contracts

Atlas HXM drafts and administers employment contracts in compliance with Pakistan's provincial labor laws. In the contract, we clearly outline mandatory written employment terms to reduce risk of future disputes, such as:

  • Probationary period

  • Salary, benefits, and working hours (48 hours per week standard)

  • Leave entitlements and notice periods (varying by province)

Payroll & Benefits Management

Payroll is processed in Pakistani Rupees (PKR), including:

  • Accurate tax withholdings and EOBI contributions

  • Provincial social security contributions

  • Statutory benefits such as medical coverage

The EOR also helps maintain compliance with mandatory benefits, so employees are protected under Pakistan's federal and provincial laws.

Work Visa Compliance

In Pakistan, EOR providers can assist with work visa applications for foreign employees. Atlas HXM manages compliant employment, payroll, EOBI, and statutory obligations while helping coordinate work visa processes with Pakistani immigration authorities.

Ongoing HR Support

Provides HR support, including: Leave management across different provincial requirements, employee relations, and regulatory updates throughout the employee's tenure. This allows businesses to focus on core operations, while Atlas HXM handles ongoing compliance across Pakistan's diverse provincial landscape.

Costs & Pricing

EOR services in Pakistan are typically billed as a platform/service fee in the range of USD 300–800 per employee per month. This fee covers administration such as compliant contracts, payroll processing across provincial requirements, statutory filings, and HR administration for workers. This service fee is separate from the employee's salary, benefits, taxes, and visa-related costs, which vary by role and jurisdiction. By using an EOR, companies avoid the cost and overhead of setting up a Pakistani entity, which can require significant upfront investment and ongoing compliance costs across multiple provincial jurisdictions.

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What to Choose: EOR vs PEO

EOR

Employer of Record

An EOR becomes the legal employer for your hires in Pakistan where you do not have an entity. The EOR carries employer liability and handles compliant contracts, payroll, statutory benefits, tax filings, and labor-law adherence across all provinces. You still direct the employee's work. This model suits companies expanding into Pakistan without wanting to form a local entity or take on compliance risk across multiple jurisdictions.

PEO

Professional Employer Organization

A PEO provides outsourced HR services like payroll, benefits, HR admin, but only when you already have a local entity. You remain the legal employer, and the PEO shares administrative tasks without taking on employer liability. Suitable when you are already established in Pakistan and are only looking to offload HR administration.

What’s Best for You?

  • Choose an EOR when you want to hire in Pakistan without setting up an entity and want a partner who absorbs employer risk across provincial jurisdictions.

  • Choose a PEO when you already operate locally and just want HR support.

Work Life in Pakistan

Pakistan's employment framework is designed to balance operational needs with employee protections across its diverse provincial jurisdictions. Here's what you need to know:

Employment Types:

  • Permanent: Ongoing employment with full statutory benefits, normally after completing 3-month probation

  • Fixed-Term: Hired for a specific project or defined duration, the maximum duration for a fixed-term contract, including renewals, is generally nine months

Probation Periods: Employment contracts can include a typical probationary period of 3 months. During probation, either party can terminate without notice. These periods allow employers to assess employee suitability before offering permanent employment.

Working Hours & Overtime: In Pakistan, the standard workweek is 48 hours (9 hours per day for adults, 7 hours for adolescents in commercial establishments). Overtime regulations vary significantly by province: Punjab and Balochistan allow up to 624 hours annually, Sindh restricts to 150 hours per year, while Khyber Pakhtunkhwa limits to 12 hours per week. All overtime is paid at double the standard wage rate.

Leave Entitlements

Leave Type

Eligibility / Duration

Payment / Notes

Annual Leave

14 days after 12 months service

Paid by employer; can carry forward his unused annual leave balance to the next year for up to 14 days

Maternity Leave

180 days (six months) on the first birth; 120 days (four months) on the second birth; 90 days (three months) on the third birth

Full pay

Paternity Leave

30 days

Paid leave for working fathers

Sick Leave

Employees in Pakistan are entitled to 16 days of sick leave per year with half pay, plus 10 days of casual leave with full pay that can be used for illness. Some laws specify 8 days of sick leave with full pay for certain industries like shops and commercial establishments, while factory workers are entitled to 16 days of half-paid sick leave.

Varies by province and sector

Public Holidays

All statutory holidays

Paid; extra compensatory day off for holiday work

Payroll & Benefits: Wages are calculated based on provincial minimum wage requirements (PKR 37,000 monthly in most provinces, PKR 45,910 for skilled workers in Sindh). Atlas HXM manages payroll in PKR, EOBI contributions (employer 5%, employee 1%), provincial social security contributions, statutory benefits, and supplemental benefits like health insurance and professional development options.

Atlas HXM can help you manage these aspects and ensure that employees are supported and compliant with Pakistan's complex provincial labor laws while businesses can focus on operations without administrative burdens.

More Reading

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What to Choose: Indirect vs Direct EOR

Direct EOR

The EOR owns the legal entities in the target country, coordinating all employment-related tasks directly. It offers faster onboarding, better compliance, and more control.

Best for: Businesses looking to scale quickly, expand long-term, or enter Pakistan with compliance across multiple provinces.

Indirect EOR

The EOR provider acts as an intermediary between the business and a third-party local entity. While it can be cheaper, it may result in delays and compliance complexity.

Best for: Small teams or short-term hires with less urgent compliance needs.

What’s Best for You?

  • For Small Teams or Contractors: Indirect EOR could work, especially for temporary hires or testing a market.

  • For Scaling and Compliance: Direct EOR is the best choice. With Atlas HXM, you’ll have control, faster entry, and streamlined compliance across Pakistan's complex provincial landscape.

Taxes & Compliance

Pakistan operates on a fiscal year tax system, running from July 1 to June 30. Employers must submit monthly EOBI contributions by the 15th of the following month, monthly payroll tax withholdings by the 15th, and quarterly advance tax payments. Annual income tax returns are due by September 30 for individuals and December 31 for companies.

Category

Details

Employer Payroll Tax

EOBI contributions: 5% of applicable wage base (PKR 13,000 in ICT, PKR 8,000 in other provinces)

  • Provincial social security: 2-6% of salary (varies by province)

  • No separate employer payroll tax beyond statutory contributions

Employee Payroll Tax

Residents: progressive income tax up to 35% for employment income

  • Non-residents: taxed only on Pakistan-source income

  • Employee EOBI contributions: 1% of applicable wage base

Pension System (EOBI)

Mandatory savings scheme for retirement

  • Eligibility: age 60 (55 for women) with 15 years contributions

  • Pension: 2% of average monthly wages per year of service

  • Early retirement available 5 years before normal age (except Sindh)

Sales Tax & EOR Costs: Pakistan applies a 17% sales tax on most goods and services. EOR services may be subject to sales tax depending on the specific nature of services and provider status, either included in quoted fees or added separately.

Atlas HXM handles tax compliance, including progressive income tax calculations, EOBI contributions, provincial social security schemes, year-end filings, and expatriate tax management, ensuring businesses remain compliant with federal and provincial laws while minimizing administrative burden.

Termination

Employees must give written notice for termination, with statutory minimum notice periods of 1 month in most provinces (3 months in Balochistan). Probationary employees, temporary workers, and contract workers can be terminated without notice. Severance pay is mandatory at 30 days' wages per year of service (2 months' wages per year in Balochistan) for permanent employees terminated without cause. The EOR helps ensure proper handling of terminations, including varying provincial notice periods, final wages, and required documentation.

5 Things to Look for in an EOR Provider

  1. Local expertise and knowledge of provincial labor laws, EOBI contributions, and varying provincial requirements across Punjab, Sindh, KPK, Balochistan, and ICT.

  2. Advanced technology for payroll, reporting, and HR system integration that can handle Pakistan's complex multi-jurisdictional requirements.

  3. Experience in your industry and handling work visa management for foreign employees.

  4. Strong compliance track record and relationships with federal and provincial government agencies and legal advisors.

  5. Global presence to support multi-country expansion, with verified security and compliance standards (ISO 27001/27017/27018, GDPR).

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Atlas HXM provides direct EOR services, managing payroll, compliance and benefits efficiently across all Pakistani provinces. Our unified platform automates HR, payroll, and compliance tasks, while offering premium employee support, global benefits, and access to 9,000+ learning courses. Recognized by Everest Group PEAK Matrix 2025 and NelsonHall NEAT Assessment 2025, Atlas HXM combines compliance, technology, and global expertise.

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FAQs

What is the minimum wage in Pakistan?

Minimum wages vary by province. Currently, most provinces have set the minimum wage at PKR 37,000 per month for unskilled workers, with PKR 45,910 for skilled workers in Sindh.

What is the typical probation period?

The standard probationary period is 3 months and must be in the employment contract. Either party can terminate without notice during probation.

How much notice is required for termination?

Notice depends on province: 1 month in most provinces, 3 months in Balochistan.

What are the EOBI contribution rates for employers?

Employers pay 5% of applicable wage base: PKR 650 in ICT (based on PKR 13,000), PKR 400 in other provinces (based on PKR 8,000).

Do foreign employees need work permits?

Foreign employees need work visas but not separate work permits. Work visas are issued for 2 years and can be extended.

Can employees work overtime without limits in Pakistan?

Overtime is regulated with varying provincial limits: 624 hours annually in Punjab/Balochistan, 150 hours in Sindh, 12 hours weekly in KPK. All overtime paid at double standard rate.

         

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