Hire in Pakistan
Pakistan PEO &
Employer of Record
Hire & manage teams remotely in Pakistan without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.
Hire Employees in Pakistan
The NNRoad Advantage ☺
Pay as you go
Global account manager
Employer of Record in Pakistan
Compliance & Payroll
Recruiting process outsourcing – including but not limited to resume screening, shortlisting candidates, coordination for interviews, and assistance for salary negotiation.
Hiring and termination of employees/local labor contracts (contract administration – engagement, extension termination and conversion to permanent hire).
On-boarding and off-boarding employees following labor law practice.
Complete payroll solution and benefit administration
Employee management – employee record retaining, time keeping, bonus and allowance management, expense and claims, and leave employee database management accordingly to the local law.
Mandatory insurance compliance (i.e. pension, labor and health insurance) according to the local labor laws.
Payment management (Invoicing customers/clients and vendor payments).
Work VISA application assistance, if needed.
Local individual income tax reporting.
Payroll & PEO in Pakistan
Compliance & Payroll
Registering the necessary company and personnel information for payroll calculation in the payroll software and system
Monthly Payroll Processing
Year-End Adjustment and Annual Declaration
Taxes & Payroll in Pakistan
Employee Income Taxes:
In Pakistan, employee income taxes are imposed by the Federal Board of Revenue (FBR) under the Income Tax Ordinance, 2001. The tax system is progressive, meaning that individuals with higher incomes are subject to higher tax rates. The tax brackets and rates may vary from year to year as per the government’s budget announcements.
Residents are subject to taxation on their income earned both domestically and internationally. Non-resident individuals, however, are only taxed on income derived from Pakistan, which includes income received or considered received within Pakistan or deemed to have originated or arisen in Pakistan. When it comes to salary, it is deemed as Pakistan-source income if it is connected to employment performed within Pakistan, regardless of where the payment is made.
Individuals are required to file their annual tax returns with the FBR, disclosing their income, deductions, and tax liabilities. The tax year in Pakistan runs from July 1 to June 30. The FBR periodically conducts tax assessments to ensure compliance and may conduct audits if deemed necessary. Employers are required to deduct income tax from their employees’ salaries at the time of payment. This deduction, known as Tax Deduction at Source (TDS), is based on the employee’s annual income and the applicable tax rates.
There are certain tax rebates and deductions available to individuals in Pakistan. These include deductions for medical expenses, charitable donations, education expenses, and contributions to pension funds, among others. The specific deductions and rebates may vary depending on the tax laws and regulations in effect.
0%: 0PKR – 600,000PKR
2.5%: 600,001PKR – 1,200,000PKR
12.5%: 1,200,001PKR – 2,400,000PKR
22.5%: 2,400,001PKR – 3,600,000PKR
27.5%: 3,600,001PKR – 6,000,000PKR
35%: Over 6,000,000PKR
0% tax on the income up to PKR 600,000: 0
2.5% tax on the income between PKR 600,001 and PKR 1,200,000: (1,200,000 – 600,000) * 0.025 = PKR 15,000
12.5% tax on the income between PKR 1,200,001 and PKR 2,400,000: (2,400,000 – 1,200,000) * 0.125 = PKR 150,000
22.5% tax on the income between PKR 2,400,001 and PKR 3,000,000: (3,000,000 – 2,400,000) * 0.225 = PKR 135,000
Total tax = 0 + 15,000 + 150,000 + 135,000 = PKR 300,000
Employer Costs in Pakistan
Social Security Contribution – 5%
Employees’ Old-Age Benefits Institution (EOBI) – 1%
Workers Welfare Fund (WWF) – 2%
Employees’ Social Security Institution (ESSI) – varies depending on the nature of the industry
Employees’ Provident Fund (EPF) – 10%
Social Security Contribution – 4%
Employees’ Old-Age Benefits Institution (EOBI) – 4.5%
Employees’ Social Security Institution (ESSI) – vary depending on the nature of the industry
Employees’ Provident Fund (EPF) – 10%
Benefits & Insurance in Pakistan
While there are statutory pension schemes like the Employees’ Old-Age Benefits Institution (EOBI), which is mandatory for certain categories of employees, not all employers are required to provide pension funds. Employees may have access to a pension fund or retirement savings scheme provided by their employer. The specific scheme and rules can vary depending on the employer and employment contract.
– Employers may contribute a portion of the employee’s salary to the pension fund on their behalf.
– The pension fund is designed to provide financial support to employees during their retirement years.
– The contribution rate and other details, such as vesting periods and withdrawal rules, are typically outlined in the pension fund policy or the employment contract.
Healthcare insurance is also not mandatory for all employers in Pakistan. The provision of healthcare insurance as an employee benefit is at the discretion of the employer. Some employers choose to offer healthcare insurance coverage to attract and retain employees, while others may not provide such benefits. Some employers in Pakistan offer healthcare insurance coverage to their employees, which provides financial assistance for medical expenses. The coverage and extent of healthcare benefits can vary depending on the employer and the terms of the insurance policy.
– Healthcare insurance may cover expenses related to hospitalization, surgeries, medical consultations, and prescribed medications, among other medical services.
– The coverage can be extended to the employee’s dependents, such as their spouse and children, depending on the policy.
– The specific details of the healthcare insurance, including premium contributions, coverage limits, and network hospitals, are typically provided in the insurance policy documents or employment contracts.
Working Hours in Pakistan
Working Hours Per Week
The standard workweek in Pakistan consists of 48 hours, typically spread over six days. The maximum working hours per day are 8 hours.
If employees are required to work beyond the standard working hours, it is considered overtime. Overtime hours are subject to additional compensation, usually at a higher rate than regular working hours. The specific overtime rates may vary depending on the nature of the employment and applicable labor laws.
Termination Laws in Pakistan
In Pakistan, the termination of employment may involve severance pay and a notice period, which are governed by labor laws and employment contracts.
Severance pay, also known as redundancy compensation, is typically provided to employees in case of certain terminations, such as redundancy, retrenchment, or closure of a business. The specific rules for severance pay can vary depending on factors such as the length of service and the nature of the termination.
– The law generally stipulates that an employee who has been employed for at least one year is entitled to receive severance pay.
– The amount of severance pay is usually calculated based on the employee’s length of service and last drawn wages.
– The standard rate for severance pay is one month’s wages for each completed year of service.
The notice period refers to the duration of advance notice that an employer or employee must provide before terminating the employment relationship. The notice period allows both parties to prepare for the termination and make necessary arrangements.
– The notice period may vary depending on the length of service and the terms specified in the employment contract.
– Typically, the notice period ranges from 15 to 30 days. However, longer notice periods may be required for higher-ranking or specialized positions.
– Alternatively, instead of serving the notice period, the employer or employee may choose to pay compensation in lieu of notice.
Employment Contract in Pakistan
While employment contracts can vary in their specific terms, they typically cover the following aspects:
The probation period allows employers to assess an employee’s performance and suitability for the job before making a long-term commitment. It also provides employees with an opportunity to understand the job requirements and determine if it aligns with their expectations and career goals. The duration of the probation period can vary depending on the employer’s policies, industry practices, and the nature of the job.
Types of Leaves in Pakistan
Employees are entitled to annual leave or paid vacations, which typically accumulate based on the length of service. The minimum annual leave entitlement in Pakistan is typically 14 working days per year, but this can vary depending on the employment contract, industry, or collective agreements.
Employees are entitled to sick leave when they are unable to work due to illness or injury. The specific sick leave entitlements can vary depending on the nature of employment and applicable labor laws.
Female employees are entitled to maternity leave to cater to their needs during pregnancy and childbirth. As per the current law in Pakistan, female employees are entitled to a total of 12 weeks (84 days) of maternity leave. Maternity leave can start before or after childbirth, as per the employee’s choice, but it cannot begin earlier than 6 weeks before the expected date of delivery. During maternity leave, the employee is entitled to receive her full salary or an agreed-upon reduced salary as per the employment contract.
While there is no specific law mandating paternity leave in Pakistan, some employers may provide paternity leave as an additional employee benefit. The duration and terms of paternity leave can vary depending on the employer’s policies or employment contracts.
Public Holidays in Pakistan
Pakistan celebrates a variety of holidays throughout the year. Here are some of the major holidays observed in Pakistan:
Apart from these holidays, Pakistan also observes various religious and cultural events, including Muharram, the birth and death anniversaries of prominent Islamic figures, and regional festivals celebrated by different ethnic and cultural groups across the country.