Pakistan has a labor force of 71.8 million workers, with a national minimum wage of PKR 37,000/month (effective 2024). Employment is governed by provincial labour laws following the 18th Constitutional Amendment (2010), which devolved labour regulation to provinces. Key federal legislation includes the Industrial Relations Act 2012, the Employees Old-Age Benefits Act 1976 (EOBI), and the Workers Welfare Fund Ordinance 1971. Each province (Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan) has its own factories act, shops and establishments act, and minimum wage ordinance.
What Are the Hiring Options for Foreign Companies in Pakistan?
An employer of record in Pakistan handles EOBI registration, provincial social security enrollment, and income tax withholding across multiple provinces. This is particularly valuable because Punjab, Sindh, and KP have different contribution rates and filing requirements.
What Are the Mandatory Employer Costs in Pakistan?
EOBI contributions are calculated on the minimum wage (not actual salary), keeping the actual cost low. Provincial social security applies to establishments with 5+ employees in Punjab (PESSI) and Sindh (SESSI). Income tax follows progressive rates from 0% (up to PKR 600,000/year) to 35% (above PKR 5.6 million).
What Types of Employment Contracts Are Used in Pakistan?
Contracts should be in English or Urdu. Key clauses: designation, salary (PKR), working hours (48/week standard), leave entitlements, notice period, and confidentiality. The Standing Orders Ordinance 1968 governs industrial establishments and defines worker categories.
What Are the Termination Rules in Pakistan?
Gratuity of 30 days wages per completed year of service is payable after continuous employment (varies by province: Punjab requires 1 year, Sindh requires 6 months). Retrenchment follows the "last come, first go" principle under the Industrial Relations Act.
What Are the Leave Entitlements in Pakistan?
Punjab amended its maternity leave to 16 weeks in 2023. Paternity leave has no federal mandate but some progressive employers provide 3-7 days. The Hajj leave provision is similar to Indonesia's pilgrimage leave, reflecting the shared Muslim-majority workforce consideration.
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What Are the Salary Benchmarks in Pakistan?
What Work Permits Do Foreign Employees Need in Pakistan?
Foreign workers need a work visa issued by the Ministry of Interior and a work permit from the Board of Investment (BOI) or the relevant provincial authority. Processing takes 2-4 weeks. Employers must demonstrate that no Pakistani national is available for the role. The security clearance process can add 2-4 additional weeks for nationals of certain countries.
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Aniday's EOR in PakistanFrequently Asked Questions
Can foreign companies hire directly in Pakistan?
Foreign companies need a local registered entity or must use an employer of record. Direct employment without a local presence is not legally recognized.
What is the minimum wage in Pakistan?
The federal minimum wage is PKR 37,000/month (effective 2024). Provinces can set higher minimums. Punjab and Sindh typically follow the federal rate.
Are there restrictions on foreign ownership?
Pakistan allows 100% foreign ownership in most sectors through a Pvt Ltd registered with SECP. Some sectors (media, banking, defense) have restrictions. No minimum capital requirement for most sectors.
