Pakistan Employment Law & Compliance Guide for Employers

Pakistan compliance reference

Key employment laws in Pakistan: what employers need to know

Employment in Pakistan is mainly a provincial matter: since the 18th Constitutional Amendment (2010), Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan and the federal government for Islamabad each have their own labour laws, many based on the Factories Act 1934 and the Standing Orders Ordinance 1968. Foreign employers are most often surprised that minimum wages, maternity leave and social security differ by province, and that workers with permanent status are hard to dismiss. This page summarises the core employer rules as of October 2026, with official sources.

Pakistan employment rules at a glance

Pakistan employment rules for employers at a glance (reviewed October 2026)
Topic	What the rule is	Official source
Minimum wage	Set each year by each province, and by the federal government for Islamabad, for unskilled adult workers. From 1 July 2026: PKR 43,000 a month in Sindh and PKR 40,700 in Islamabad. Punjab and Khyber Pakhtunkhwa: PKR 40,000 from July 2025; check for a 2026-27 notification.	WageIndicator Foundation – Sindh minimum wage from 1 July 2026 (non-official)
Standard working hours	48 hours a week and 9 hours a day for adult workers (Factories Act 1934, ss.34 and 36; Shops and Establishments Ordinance 1969, s.8), with a rest interval and a weekly day off. Each province has its own version, such as the Sindh Factories Act 2015.	Pakistan Code – Factories Act 1934
Overtime pay	Twice the ordinary rate of wages for hours beyond 9 a day or 48 a week (Factories Act s.47; Shops Ordinance s.9). In shops and commercial establishments overtime is capped at 624 hours a year for adults. Provincial laws can differ.	Pakistan Code – Factories Act 1934
Paid annual leave	14 days of leave with full pay after 12 months of continuous service (Factories Act s.49-B; Shops Ordinance s.14). Unused days can be carried forward within statutory limits. Provincial versions of these laws apply in each province.	Pakistan Code – West Pakistan Shops and Establishments Ordinance 1969 (PDF)
Public holidays	Shops and commercial establishments must give 10 paid festival holidays a year (Shops Ordinance s.16); factories give the festival holidays declared by the province. The federal government also announces a yearly public holiday list, including Eid holidays fixed by the lunar calendar.	Pakistan Code – West Pakistan Shops and Establishments Ordinance 1969 (PDF)
Sick leave	Factories: 16 days a year on half pay (Factories Act s.49-H). Shops and commercial establishments: 8 days on full pay, accumulating up to 16 (Shops Ordinance s.15). Both also give 10 days' casual leave on full pay. Provincial versions vary.	Pakistan Code – Factories Act 1934
Maternity and parental leave	Varies by province. For employers under federal administrative control, mainly in Islamabad, the Maternity and Paternity Leave Act 2023 gives 180 days' paid maternity leave for a first birth (120 and 90 days for the second and third) and 30 days' paid paternity leave, up to three times. Provincial laws set their own periods.	Arab News Pakistan – Maternity and Paternity Leave Act 2023 signed (news report)
Probation period	Under the Standing Orders, a probationer is a worker provisionally filling a permanent post who has not completed 3 months of service (SO 1(c)). After that the worker becomes permanent. Managerial staff follow their contract.	Pakistan Code – Industrial and Commercial Employment (Standing Orders) Ordinance 1968
Notice period	1 month's notice or 1 month's wages in lieu to end a permanent worker's employment for reasons other than misconduct (Standing Order 12); the worker gives the same notice. Probationers and temporary workers are not entitled to this notice. Managers follow their contract.	Pakistan Code – Industrial and Commercial Employment (Standing Orders) Ordinance 1968
Severance pay	In establishments with 20 or more workers, a worker leaving for reasons other than misconduct, including resignation, gets gratuity of 30 days' wages per completed year (or part over 6 months), unless a qualifying provident fund applies (SO 12(6)). Industrial units with up to 49 workers can be exempt.	Pakistan Code – Industrial and Commercial Employment (Standing Orders) Ordinance 1968
Employer social contributions	EOBI 5% of the applicable minimum wage per insured employee, plus provincial social security (PESSI, SESSI and others) at 6% for covered workers; the base and coverage limits vary by province. Companies may also owe Workers' Welfare Fund (2% of taxable income) and Workers' Profit Participation Fund (5% of profits).	Vialto Partners – Pakistan minimum wages, EOBI and social security, October 2025 (professional source)
Employee social contributions	EOBI 1% of the applicable minimum wage (PKR 400 a month on a PKR 40,000 minimum wage). Workers do not pay into provincial social security. There is no other mandatory employee pension contribution.	Vialto Partners – Pakistan minimum wages, EOBI and social security, October 2025 (professional source)
Income tax on salaries	Employers withhold tax monthly under the Income Tax Ordinance 2001 and deposit it with the FBR. Salaried rates run from 0% (up to PKR 600,000 a year) to 35% (above PKR 7 million), in 8 bands: 0%, 1%, 11%, 20%, 25%, 29%, 32% and 35%.	PwC Worldwide Tax Summaries: Pakistan, taxes on personal income (professional source)
Mandatory bonuses and 13th-month pay	No 13th-month pay. Companies above the statutory thresholds must pay 5% of profits into the Workers' Profit Participation Fund for workers. Eid or annual bonuses are customary but contractual.	Pakistan Code – Companies Profits (Workers' Participation) Act 1968 (PDF)
Work permits for foreign nationals	Foreign employees need a work visa, applied for online through the Pakistan Online Visa System with the employment agreement, SECP registration and FBR tax number of the employer. It is valid for 1 year (multiple entry), extendable yearly; the stated processing time is 4 weeks.	Pakistan Online Visa System – Work Visa
Employment contract requirements	The Standing Orders require a written order of appointment stating the worker's terms and classification (permanent, probationer, temporary) (SO 2A). No language rule; Urdu or English is used. Register the establishment with the provincial labour department, EOBI, social security and FBR.	Pakistan Code – Industrial and Commercial Employment (Standing Orders) Ordinance 1968

This overview provides general information, not legal advice. Rules can differ by collective agreement, region, sector and the employee’s circumstances — check the current official text before acting. Last reviewed: October 2026 by NNRoad Compliance Team.

Employer obligations in Pakistan, topic by topic

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Employment contracts

Does an employment contract in Pakistan have to be in writing, and which law applies?

Yes. The Standing Orders require a written appointment letter for workers, stating their classification and terms. Which law applies depends on the province where the employee works and on whether the employee is a worker or a manager.

Primary: EOR

Also: Payroll

Also: Expat

Working time

What are the working hours and overtime rules in Pakistan?

Adult workers may work up to 48 hours a week and 9 hours a day, with rest breaks and a weekly day off. Overtime is paid at twice the ordinary wage rate, and shops cap it at 624 hours a year.

Primary: EOR

Also: Payroll

Pay and minimum wage

What is the minimum wage in Pakistan and how must wages be paid?

Each province sets its own minimum wage for unskilled adult workers each budget year. From 1 July 2026 it is PKR 43,000 a month in Sindh and PKR 40,700 in Islamabad; Punjab’s last confirmed rate is PKR 40,000.

Primary: Payroll

Also: EOR

Leave and holidays

How much leave must employers give in Pakistan?

Workers get 14 days of paid annual leave after a year and 10 days of casual leave. Sick leave is 16 days on half pay in factories or 8 days on full pay in shops. Maternity leave depends on the province.

Primary: EOR

Also: Payroll

Social security and payroll tax

What payroll contributions and taxes does an employer pay in Pakistan?

Employers pay EOBI at 5% of the minimum wage per employee and provincial social security at 6% for covered workers. Employees pay EOBI at 1% of the minimum wage and income tax at 0% to 35%, withheld monthly.

Primary: Payroll

Also: EOR

Also: Expat

Termination

How can an employer end employment in Pakistan, and what does it cost?

A permanent worker can be dismissed for misconduct after an inquiry, or terminated for other reasons with 1 month’s notice or pay in lieu. Gratuity of 30 days’ wages per year of service is owed unless a qualifying provident fund replaces it.

Primary: EOR

Also: Payroll

Hiring foreign nationals

Can a company in Pakistan hire foreign nationals, and which visa do they need?

Yes. A foreign employee needs a work visa, applied for online through the Pakistan Online Visa System with the employer’s documents. It is valid for one year with multiple entries, can be extended yearly, and the stated processing time is 4 weeks.

Primary: Expat employment

Also: EOR

Contractors vs employees

Is it risky to use contractors instead of employees in Pakistan?

Yes. Labour courts look at the real working relationship, and a contractor who works like an employee can claim permanent status, gratuity, leave and social security. Tax withholding rules also differ for contractor payments.

Primary: Talent / contractors

Also: EOR

Key employment laws in Pakistan and official sources

Industrial and Commercial Employment (Standing Orders) Ordinance 1968 (and provincial versions, e.g. Sindh Terms of Employment (Standing Orders) Act 2015) — Sets worker classifications, appointment orders, probation, notice, misconduct procedure and gratuity.
Factories Act 1934 (and provincial versions, e.g. Sindh Factories Act 2015) — Sets working hours, double-rate overtime, annual, casual and sick leave, and health and safety duties in factories.
West Pakistan Shops and Establishments Ordinance 1969 (and provincial versions) — Sets hours, overtime, annual, casual, sick and festival leave in shops and commercial establishments.
Employees’ Old-Age Benefits Act 1976 — Requires covered employers to register employees with EOBI and pay 5% (employer) and 1% (employee) of the minimum wage.
Provincial Employees’ Social Security Ordinance 1965 (and provincial successors, e.g. Sindh Employees’ Social Security Act 2016) — Requires employer contributions to provincial social security for medical, sickness, maternity and injury benefits.
Income Tax Ordinance 2001 — Requires employers to withhold income tax from salaries and file withholding statements with the FBR.
Companies Profits (Workers’ Participation) Act 1968 — Requires companies above set thresholds to pay 5% of profits into the Workers’ Profit Participation Fund.
Maternity and Paternity Leave Act 2023 (federal / Islamabad Capital Territory) — Gives up to 180 days’ paid maternity leave and 30 days’ paid paternity leave for employers under federal control.

FAQs: hiring employees in Pakistan

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

Not directly in most cases. Registration with EOBI, provincial social security and the FBR for salary withholding, and sponsorship of work visas, generally require a company registered in Pakistan. Without one, a foreign company can use an Employer of Record, which employs staff locally and runs payroll and contributions. Engaging people as contractors is possible for defined projects but carries reclassification and tax-presence risk. Larger teams usually justify a subsidiary or branch office.

How much does an employee cost in Pakistan on top of gross salary?

Statutory payroll costs are modest. The employer pays EOBI at 5% of the minimum wage per insured employee (PKR 2,000 a month at a PKR 40,000 minimum wage) and provincial social security at 6% for covered workers. Companies above set thresholds also pay 2% of taxable income to the Workers’ Welfare Fund and 5% of profits to the Workers’ Profit Participation Fund. Many employers add provident fund, group insurance and medical cover, which raise the real cost.

What is the minimum wage in Pakistan in 2026?

There is no single national figure; each province, and the federal government for Islamabad, sets its own minimum wage for unskilled adult workers. From 1 July 2026 it is PKR 43,000 a month in Sindh and PKR 40,700 in Islamabad. Punjab and Khyber Pakhtunkhwa set PKR 40,000 from July 2025, so check whether they have notified a 2026-27 rate. The minimum wage also sets the base for EOBI contributions.

How much notice and severance does an employer owe when dismissing an employee in Pakistan?

To end a permanent worker’s employment for reasons other than misconduct, the employer gives 1 month’s notice or 1 month’s wages in lieu under the Standing Orders. In establishments with 20 or more workers, gratuity of 30 days’ wages per completed year of service is due, including on resignation, unless a qualifying provident fund replaces it. Misconduct dismissals need a charge sheet and inquiry. Managers’ notice and severance follow their contracts.

Can a company hire a foreign national in Pakistan, and what permit is needed?

Yes. The foreign employee needs a work visa, applied for online through the Pakistan Online Visa System with the employer’s SECP registration, FBR tax certificate and the employment agreement. The visa is valid for one year with multiple entries and can be extended yearly; extensions need a Board of Investment or Ministry of Interior recommendation. The portal states a processing time of 4 weeks. Visit and business visas do not allow employment.

Is it risky to engage contractors instead of employees in Pakistan?

Yes. A person doing permanent, full-time work under the employer’s control can be treated as a permanent worker by labour courts, whatever the contract says. That brings claims for notice, gratuity, leave, overtime and EOBI and social security coverage. The FBR may also treat contractor payments as salary. Use contractors for defined projects, and employ long-term staff directly or through an Employer of Record.

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Regulation Updates in Pakistan

Provincial Employees Social Security (Amendment) Bill 2026

What it is: The Provincial Employees Social Security (Amendment) Bill 2026 is a new law enacted by the Punjab Assembly to adjust the provincial social security framework.

What it changes: It introduces amendments to social security contributions and aligns contribution rules with the revised minimum wage, while expanding institutional oversight and employer responsibilities for worker health and compensation.

Who is affected:

Employers
Workers

What employers should do:

Review and adjust social security contribution practices to align with the amended framework.
Prepare for expanded institutional oversight and updated employer responsibilities for worker health and compensation.

Notes: Effective month: 2026-04.

Dec 2025: Pakistan Immigration Reform: POE Stamp Digitization & Streamlined Procedures

Pakistan is taking significant steps to modernize its immigration system with the formation of a dedicated federal committee. This initiative aims to overhaul passenger offloading procedures and introduce a comprehensive digital process for the Protectorate of Emigrants (POE) stamp, known as POE Stamp Digitization. Scheduled to be effective from December 2025, this reform is expected to enhance the efficiency of immigration procedures at Pakistani ports of entry, reduce delays, and…

Update first published on NNRoad in Dec 2025. The current rules are summarised in the sections above.

Jul 2025: Pakistan Unifies Labour Regulations Under New Provincial Codes

Punjab and Sindh are consolidating numerous fragmented labour laws into unified, modern Labour Codes—simplifying compliance and strengthening worker protections.

Update first published on NNRoad in Jul 2025. The current rules are summarised in the sections above.

Discover the latest employment and compliance updates in Pakistan — helping you stay ahead in a changing regulatory landscape.