Either party can terminate an employment contract in Pakistan by giving one month’s notice to the other party. However, the notice rule does 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. 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.
An employee who has been terminated for any reason other than misconduct receives a severance payment of one month's wages for every completed year of service or any part thereof in excess of six months. The employer must pay one month’s wages calculated on the average of the last three months of service before the termination by the day after the termination.