Hiring Talent And Managing Payroll In Pakistan

Agreements

• 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

• 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

Minimum Wage

Payroll Cycle

Annual Bonus

Health Benefits

• 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

• 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.

Social Security

Taxes for Employees

• 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.

Termination

• 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

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