Understanding Employment Norms in Pakistan: A Comprehensive Guide
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Hiring in Pakistan? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in Pakistan.

Employment norms in Pakistan

Pakistan has a large and young workforce, which is a significant asset to the country's economy. However, ensuring that these workers are treated fairly and have access to decent working conditions is a key challenge. The government of Pakistan has established laws and regulations to protect the rights of workers and to ensure that employers provide fair and equitable working conditions. In addition, labor unions and other organizations work to advocate for workers' rights and to improve working conditions across the country.

General Information:

  • The Pakistan currency is Pakistani Rupee (PKR).
  • Islamabad is the capital of Pakistan.
  • Urdu and English are the official languages of Pakistan. Documentation can be in English or Urdu to be considered legally valid.
  • As of 2021, the GDP of Pakistan was reported to be USD 348.26 billion.
Labor laws in Pakistan cover minimum wage, working hours, benefits, and workplace safety to protect employees' rights.
Pakistan map

Table of Contents

  • Agreements
  • Onboarding Process
  • Visa
  • Minimum Wage
  • Payroll Cycle
  • Annual Bonus
  • Health Benefits
  • Working Hours and Overtime
  • Leaves
  • Social Security
  • Taxes for Employers
  • Taxes for Employees
  • Probation
  • Termination
  • Severance Pay
  • Employees or Contractors
  • Final Words


In Pakistan, employment agreements are an important component of the employment relationship. These agreements set out the terms and conditions of employment, including the employee's job duties, compensation, benefits, and other relevant details. Some key considerations for employment agreements in Pakistan include:
  • Employment agreements must be drafted in either English or Urdu.
  • Agreements must specify the duration of employment, whether it is for a fixed term or ongoing.
  • Employers must ensure that the terms and conditions of the agreement comply with relevant labor laws and regulations.
  • Agreements must include provisions related to the termination of employment, including notice periods and reasons for termination.
  • Employers must provide employees with a copy of the employment agreement, and ensure that employees understand its contents before signing.
Onboarding Process

Onboarding Process

While there are no established onboarding process laws in Pakistan, best practices include:
  • Collection of relevant employee information, such as personal details and educational qualifications
  • Submission of mandatory documents, including national identification cards, educational certificates, and other relevant documentation
  • Orientation and training, to familiarize employees with their roles and responsibilities, company policies, and workplace safety measures
  • Issuance of employee contracts, outlining the terms and conditions of employment


Some of the most common types of work permits and visas in Pakistan include:
  • Work visas for foreign nationals, including those working for diplomatic missions, international organizations, or multinational corporations
  • Business visas for individuals seeking to engage in business-related activities in Pakistan
  • Employment visas for skilled workers or professionals, which may be issued for a period of up to two years
  • Student visas for foreign nationals studying in Pakistan

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Minimum Wage

Minimum Wage

The current minimum wage in Pakistan is PKR 25,000 per month for unskilled workers in most sectors, as of 2023
Payroll Cycle

Payroll Cycle

In Pakistan, the payroll cycle is typically monthly.
Annual Bonus

Annual Bonus

It is common for employers in Pakistan to grant an annual bonus to employees, typically equivalent to one month's salary. However, there is no legal requirement for employers to provide an annual bonus.
Health Benefits

Health Benefits

There is no specific legislation mandating health benefits for employees in Pakistan but common benefits are:
  • Medical insurance coverage
  • Access to healthcare facilities and services
  • Sick leave and paid time off for medical reasons
  • Workplace safety measures and training
Working Hours and Overtime

Working Hours and Overtime

  • Work hours: the standard work week is typically six days, with a maximum of eight hours per day or 48 hours per week.
  • Break: Employees are entitled to at least one rest day per week. Employers are also required to provide a one-hour break for every six hours of work.
  • Overtime: Employees who work overtime are entitled to additional compensation, typically at 200% of their regular wage on normal days and 300% on holidays.


Sick Leave

  • Employees are typically entitled to 8 days of sick leave per year
  • sick leaves which are unused get accumulated for up to 16 days and are transferable to the next year
  • sick leaves are paid by the employer.

Parental leaves

  • Female employees are entitled to 18 weeks of paid maternity leave.
  • Male employees are entitled to up to a month of paternity leave for 3 births.
  • These leaves are paid by the Social security

Annual leaves

  • Employees are typically entitled to 14 days of annual leave per year
  • Casual leaves of 10 days per year are also provided.

Public Holidays (for the Calendar year 2023)

  • Kashmir day: 5 Feb
  • Pakistan Day: 23 Mar
  • Eid-Al-Fitr: 21 to 23 Apr
  • Labor Day: 1 May
  • Eid-Al-Adha: 28 Jun to 30 Jun
  • Ashura: 27 Aug to 28 Aug
  • Independence Day: 14 Aug
  • Eid Milad-Un-Nabi: 28 Sep
  • Christmas Day/ Quaid-e-azam Day: 25 Dec
  • Day after Christmas: 26 Dec

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Social Security

Social Security

The Employees' Old-Age Benefits Institution (EOBI) provides social security benefits to workers, including pensions and other financial assistance in the event of disability, injury, or death. Employer's contribution is 5% and employee contribution is 1% of their salary plus 40 PKR.
Taxes for Employers

Taxes for Employers

Employers are responsible for paying a range of taxes and contributions in Pakistan, including:
  • Social Security: Employers must contribute 5% of their employee's wages to the Employees' Old-Age Benefits Institution (EOBI).
  • Value-added tax: this is at a flat rate of 16%.

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Taxes for Employees

Taxes for Employees

In Pakistan, employees are subject to several taxes that they are required to pay, including:
  • Income Tax: The income tax rate for employees varies based on their income bracket, with the maximum tax rate being 35%.
    • 0 to 600,000: 0%
    • 600,000 to 1,200,000: 2.5%
    • 1,200,000 to 2,400,000: 12.5%
    • 2,400,000 to 3,600,000: 22.5%
    • 3,600,000 to 6,000,000: 27.5%
    • Above 6,000,000: 35%
    • Director fee: 20%
  • Health Insurance: Employees are required to contribute to the Social Security Institution (SSI) at a rate of 1% of their gross salary and 40 PKR as health insurance per month.


Employers in Pakistan often have a probationary period for new employees, typically ranging from three to six months.

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In Pakistan, an employee can be terminated under certain conditions and scenarios, including:
  • Termination with notice
  • Termination without notice: An employer can terminate an employee without prior notice in cases of misconduct, poor performance, or breach of contract.
  • Resignation.
  • Mutual agreement
  • Redundancy
  • Medical reasons
Severance Pay

Severance Pay

In Pakistan, severance pay applies to employees who have completed at least one year of continuous service with the employer. The rate of severance pay is one month's salary for every year of service.
Employees or Contractors

Employees or Contractors

  • If an employee is misclassified as a contractor, the employer may be subject to penalties for failing to provide the employee with benefits such as social security, health insurance, and leave entitlements.
  • On the other hand, if a contractor is misclassified as an employee, the employer may be required to provide the contractor with benefits and protections that would ordinarily be provided to employees.
  • Employers should ensure that they are properly classifying their workers to avoid legal and financial consequences.
Final Words

Final Words

In conclusion, employment norms in Pakistan are regulated by various laws and regulations that ensure the fair treatment of employees. The country offers various employment opportunities in diverse sectors, and its workforce is known for its skill and dedication. While the country's employment landscape is competitive, employees in Pakistan enjoy certain benefits such as annual leave, sick leave, and parental leave, as well as mandatory severance pay.

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