Guide to employment, payroll and benefits in

Pakistan

Rivermate offers complete payroll, benefits and compliance services for

Pakistan

01. Overview

Last updated: 

August 19, 2021

Currency
Pakistan Rupee
Capital
Islamabad
Ease of doing business
61
Language
Urdu
Population
220892340
GDP growth
5.70%

02. Grow your team in

Pakistan

with Rivermate

Payroll, benefits, taxes, and compliance can be difficult to manage in

Pakistan

, particularly if you don't have established local relationships. You can hire employees in

Pakistan

effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global employment solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

03. Summary

Pakistan is a country in South Asia that is officially known as the Islamic Republic of Pakistan. With a population of over 212.2 million people, it is the world's fifth most populous nation and home to the world's second-largest Muslim population. Pakistan has an area of 881,913 square kilometers, making it the 33rd largest country in the world. It has a 1,046-kilometer coastline that runs along the Arabian Sea and Gulf of Oman in the south, and is bordered on the east by India, on the west by Afghanistan, on the southwest by Iran, and on the northeast by China. It shares a maritime boundary with Oman and is isolated from Tajikistan by Afghanistan's Wakhan Corridor in the northwest. Pakistan is home to many ancient civilizations, including the 8,500-year-old Neolithic site of Mehrgarh, which is the oldest in South Asia, and the Bronze Age Indus Valley Civilisation, which is the largest of the Old World's civilisations. The Archaemenid Empire, briefly that of Alexander the Great; the Seleucid, Maurya, Kushan, the Gupta; the Umayyad Caliphate in its southern regions, the Ghaznavids, the Delhi Sultanate, the Mughals, the Durrani Empire, the Sikh Empire, East India Company rule, and, most recently, the British Indian Empire from 1858 to 1947, were among the empires and dynasties that ruled Following the Partition of the British Indian Empire, which granted separate statehood to its Muslim-majority regions and was followed by unprecedented displacement and loss of life, Pakistan gained independence in 1947 after the Pakistan Movement, which sought a homeland for the Muslims of British India, and election victories in 1946 by the Muslim League. Pakistan is a country with a diverse ethnic and linguistic population, as well as a diverse geography and wildlife. Pakistan, which was once a British Commonwealth dominion, adopted a constitution in 1956 and became an Islamic republic. After a civil war, East Pakistan seceded in 1971 to form the new country of Bangladesh. Pakistan was governed by a variety of governments over the next four decades, with definitions ranging from civilian to military, democratic to authoritarian, relatively secular to Islamicist. Pakistan introduced a parliamentary structure with periodic elections in 2010, after electing a civilian government in 2008. Pakistan has the world's sixth-largest standing armed forces; it is a nuclear power and a former nuclear-weapons state. It is one of the world's fastest-growing economies, with a strong and rapidly-growing middle class. Since independence, Pakistan's political history has been marked by periods of significant economic and military development, as well as periods of political and economic instability. Poverty, illiteracy, and corruption are among the country's problems. Pakistan is a significant non-NATO partner and a member of the United Nations, the Shanghai Cooperation Organisation, the OIC, the Commonwealth of Nations, the SAARC, and the Islamic Military Counter Terrorism Coalition.

04. Public holidays

05. Types of leave

Paid time off

In Pakistan, employees are entitled to 14 days of paid vacation. They receive this immediately after completing 12 months of service. Employees are paid their regular salaries while on leave. Before the start of the leave, factory workers are paid half of their wages. Annual leave cannot be broken up into smaller chunks and must be used in its whole. Unused vacation time is carried over to the next year. The maximum amount of transferable days is 14.

Public holidays

Pakistan recognizes seventeen public holidays.

Sick days

10 days of unpaid absence in the event of an emergency, such as a sudden sickness or other pressing need.Employees are paid for 16 days of sick leave at full pay and 8 days at half pay, but must submit a medical certificate signed by a doctor.Employers can provide employees ill benefits for a total of 121 days at 75 percent of their last wage after the initial 16 days of sick leave. Employees who have TB or cancer are granted a maximum of 365 days off and are paid in full.To be eligible for benefits, the employee must have contributed for at least 90 days in the six months before to sickness or injury.

Maternity leave

Employees who are female are entitled to three months of paid maternity leave. The six-week maternity leave is required. To be eligible for maternity leave, an employee must have worked for the same company for at least four months before to giving birth. While a woman is on maternity leave, her employer is not allowed to fire her.To be eligible for benefits, the employee must have contributed for at least 180 days in the year prior to the projected birth of the child.

Paternity leave

For each of their first three children, qualified fathers will earn one month of paid leave.

Parental leave

There are no statutory laws regarding parental leave in Pakistan.

Other leave

If a female employee's spouse dies, the company is required to offer paid Iddat leave. This is a period during which the employee gets paid at his or her regular rate.

06. Employment termination

Termination process

Either party may end the contract by giving the other party one month's notice. The same restriction does not apply to temporary employees, "badlis" (alternative employees who fill in for an absent permanent employee or probationer), or probationers. They do not have the right to a one-month notice. A terminated employee for any reason other than misconduct shall receive a severance payment of one month for each completed year of service or portion thereof in excess of six months. One month's salary, computed on the average of the last three months of service prior to termination, must be paid immediately or the next day.


No notice is necessary when firing full-time employees for misconduct. Termination may be based on significant illness, inability to do the job adequately, or the organization's financial and economic demands. Employers have the right to terminate an employee's employment contract if the employee is accused of misconduct such as breaking the law, being absent without leave, willful disobedience, causing damage to the employer's property, theft, fraud, illegal strike or work slowdown, or committing a crime, civil or criminal.


All terminations must be in writing and include a statement of the reasons for the dismissal. Labor courts have the authority to investigate and intervene in labor disputes.

Notice period

In Pakistan, the notice period is one month.

Severance pay

When employees are terminated for reasons other than misconduct, they are entitled to severance pay. Severance pay is equal to 30 days' wages for each year of service completed or any portion exceeding six months. For instance, 5 years and 8 months of service is considered 6 years.

Probation period

In the private sector, an employee's probationary period is typically between three and six months. Probationary periods are generally between one and two years in the public sector.

07. Working hours

General

In Pakistan, the standard workweek is nine hours per day and 48 hours per week spread over six days. Each employee receives a one-hour break daily and is not permitted to work for more than six hours without taking a break. Employees who work more than 8.5 hours per day are entitled to a minimum of two breaks. Employees who are female are not permitted to work past 7:00 p.m. Seasonal employees may work up to 50-56 hours per week if necessary for technical reasons.


It is illegal for an employer to require an employee to work ten consecutive days without a holiday. No employee is permitted to work on Sunday unless they have been granted a substitute holiday within the next or previous three days.

Overtime

Employees entitled to overtime pay if they work more than the stipulated 9 hours per day and 48 hours per week. In Pakistan, overtime pay is 200 percent of the employee's regular pay. Employees receive a pay rate of 300 percent during the holidays.

08. Minimum wage

General

In Pakistan, the minimum wage varies by area.


Pakistan increased its monthly minimum pay for unskilled employees to PKR 17,500, or approximately $115, in 2019. The minimum monthly salary in the Punjab province has been raised to PKR 20,000 for 2021. There is no minimum wage for skilled workers in the nation. This is instead discussed between the employer and the employee.

09. Employee benefits

General

Healthcare in Pakistan is regarded as one of the most corrupt industries, with just 0.8 percent of the country's GDP presently allocated to health care. Pakistan has no national health insurance system, and 78% of the population pays for health care out of pocket. Pakistan is the only nation in the world that does not have a National Health Ministry.

In Pakistan, healthcare is provided through costly private-sector insurance firms. Employees who go on pilgrimage, such as Hajj, Umra, or Ziarat, are given exceptional leave of up to 60 days under certain Collective Bargaining Agreements.

Some businesses provide medical insurance, life insurance, and tuition reimbursement.

10. Why Rivermate as your Employer of Record / PEO?

Establishing an entity in

Pakistan

to hire a team takes time, money, and effort. The labor law in

Pakistan

has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into

Pakistan

simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in

Pakistan

give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in

Pakistan

via our Employer of Record / PEO solution.

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