Employer of Record in Pakistan

An Employer of Record (EOR) in Pakistan is a company that legally hires employees on your behalf. This means you can build a team in Pakistan without setting up a local entity. The EOR handles all the HR tasks like payroll, taxes, benefits, and employment contracts, ensuring you comply with all local labor laws. Think of it as an outsourced HR department that understands the specific legal and cultural landscape of Pakistan. This lets you focus on your core business operations. For companies looking to hire in Pakistan, an EOR like Rivermate simplifies the entire process.

How an Employer of Record (EOR) Works in Pakistan

Using an EOR in Pakistan streamlines hiring and employment. Here is how it typically works:

• You Find the Talent: You recruit and select the candidate you want to hire in Pakistan.
• The EOR Hires Them: The EOR legally employs the worker under their local Pakistani business entity.
• Contracts are Handled: The EOR drafts a locally compliant employment contract.
• Onboarding is Managed: They handle all the necessary paperwork and onboarding processes.
• Payroll and Benefits are Administered: The EOR manages salary payments, tax withholdings, and statutory contributions.
• Compliance is Ensured: They make sure all employment practices follow Pakistani labor laws.
• You Manage Daily Work: Your company directs the employee's day-to-day tasks and responsibilities.

Why use an Employer of Record in Pakistan

Using an EOR in Pakistan offers a straightforward way to grow your team in a new country. It removes significant legal and administrative burdens, allowing you to access a new talent pool efficiently.

Here are some key benefits:

• Avoid Setting Up a Legal Entity: You can hire employees in Pakistan without the time and expense of establishing a local company.
• Ensure Legal Compliance: EORs have expertise in Pakistani labor laws, reducing the risk of fines or legal issues. You can find official information on labor laws from Pakistan's Ministry of Overseas Pakistanis and Human Resource Development (https://www.ophrd.gov.pk/).
• Simplify HR and Payroll: All administrative tasks, from payroll processing to managing benefits, are handled for you.
• Hire Faster: You can onboard new team members much more quickly than if you were to set up your own entity.
• Access Local Expertise: EORs understand the local market, culture, and employment standards, which helps in managing your team effectively.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Pakistan includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Pakistan.

Hiring in Pakistan can seem complex, but it doesn't have to be. The country offers a large pool of skilled and dedicated workers, especially in the tech and finance sectors. With a young and tech-savvy population, Pakistan is a growing market for businesses looking to expand their teams. Understanding the local employment laws is the first step to successfully building your team in the region.

Employment contracts & must-have clauses

You are required to provide a written employment contract at the beginning of the employment relationship. This document sets clear expectations for both you and your employee. It should be in the local language and clearly outline the terms of employment.

Your employment contracts in Pakistan should include:

• Job responsibilities: A clear description of the employee's role and duties.
• Compensation: The employee's salary or wages, and any other financial benefits.
• Working hours: The expected daily and weekly working hours.
• Termination conditions: The process and reasons for ending the employment relationship.
• Nature of employment: Whether the position is permanent, temporary, or probationary.

Probation periods

In Pakistan, you can include a probationary period in your employment contracts. This period is typically three months. During this time, you can assess a new employee's suitability for the role. It also gives the employee a chance to decide if the job is a good fit for them.

Working hours & overtime

The standard workweek in Pakistan is 48 hours, spread over six days. Any hours worked beyond this are considered overtime. You must pay employees for overtime hours. The law specifies mandatory rest periods and breaks for employees.

Public & regional holidays

Pakistan observes a number of public holidays each year. These holidays are a mix of religious and national celebrations. The number of public holidays is approximately 17 annually. Keep these dates in mind when planning your work schedules.

Hiring contractors in Pakistan

Many companies choose to hire independent contractors in Pakistan. This can be a flexible way to access specialized skills for specific projects. When you hire contractors, you need to be careful about worker classification.

An independent contractor is a self-employed individual who provides services to your business. They are not considered employees. This means you do not provide them with the same benefits and protections as your employees.

Misclassifying an employee as a contractor can lead to significant legal and financial risks. An Employer of Record (EOR) can help you avoid these risks. An EOR takes on the legal responsibility for your workers in Pakistan. They ensure that your contractors are classified correctly and that you comply with all local labor laws. This allows you to focus on managing your team and growing your business.

In Pakistan, handling compensation and payroll means navigating a system with both national and provincial rules. You are responsible for calculating pay, withholding taxes, and making social security contributions. It's a process that requires attention to detail to ensure you comply with all the legal requirements.

Payroll cycles & wage structure

You can process payroll weekly, bi-monthly, or monthly. Most businesses in Pakistan choose a monthly cycle. At the end of each pay period, you must provide your employees with a payslip.

A typical salary structure includes:

• Basic Salary: This is the fixed part of an employee's pay.
• Allowances: You might offer allowances for housing, transport, or medical expenses.
• Bonuses: Performance-based bonuses can also be part of the compensation package.

The total cost to the company (CTC) includes the employee's gross salary plus your contributions as the employer. The net salary is what the employee takes home after all deductions.

Overtime & minimums

The national minimum wage for full-time employees is PKR 17,500 per month.

For any hours worked beyond the standard workday, you must pay overtime. The overtime rate for normal working days is 200% of the employee's regular wage.

Employer taxes and contributions

As an employer, you are responsible for contributing to social security funds. These contributions are a percentage of your employee's wages.

Employee taxes and deductions

You must withhold income tax from your employees' salaries each month. Pakistan has a progressive tax system, meaning the tax rate increases with income. Employees also contribute to the national pension fund.

Income up to PKR 600,000 per year is not subject to income tax.

.In Pakistan, benefits and leave are a mix of legal requirements and extra perks. The government sets the minimum standards that all employers must follow. This includes things like paid time off, social security, and pensions. Many companies choose to offer more than the basics to attract and keep good employees. These extra benefits can include health insurance, bonuses, and help with transportation or housing.

Statutory leave

Pakistani law requires employers to provide several types of paid leave.

• Annual Leave: After one year of continuous work, you get 14 straight days of paid leave. If you don't use all of your vacation days, they carry over to the next year.
• Casual Leave: You are entitled to 10 days of casual leave with full pay for unexpected situations, like a sudden illness.
• Sick Leave: You can take up to 16 days of sick leave at 50% of your regular pay. For more serious illnesses like cancer, you can get up to 365 days of sick pay at 100% of your wages.
• Maternity Leave: For the first child, mothers get 180 days of paid leave. This changes to 120 days for the second child and 90 days for the third.
• Paternity Leave: Fathers can take up to 30 days of paid leave. This is available for the first three children.

Public holidays & regional holidays

You get paid time off for national and religious holidays in Pakistan.

Typical supplemental benefits

Many companies offer extra benefits on top of what the law requires.

How an EOR can help with setting up benefits

Setting up employee benefits in a new country can be tricky. An Employer of Record (EOR) handles all the legal and administrative work for you. This means you don't have to set up a local entity to hire employees.

An EOR can:

• Ensure you follow all local labor laws.
• Manage payroll and tax deductions correctly.
• Handle social security contributions.
• Help you create a competitive benefits package that meets local standards.

Using an EOR saves you time and reduces the risk of making mistakes. It lets you focus on growing your business while knowing your team is taken care of.

When an employee leaves your company in Pakistan, you need to follow a clear process. This involves handling their final pay, benefits, and company property. A smooth offboarding process ensures you comply with local labor laws and maintain a positive relationship with the departing employee. It's a series of administrative and communication tasks that begin when an employee resigns and ends on their last day.

Notice periods

In Pakistan, the notice period for ending employment depends on the employee's contract and labor laws. For permanent employees, you generally need to provide a minimum of 30 days' notice. If you don't provide notice, you must pay the employee's salary for that period. For employees on probation, the notice period is often shorter, typically ranging from one week to one month, as outlined in their employment contract.

Severance pay

Employees in Pakistan who have worked for more than one year are entitled to severance pay, also known as gratuity. This applies to employees who are terminated for reasons other than misconduct. The severance benefit is typically calculated as one month's wages for each year of service with your company.

How Rivermate handles compliant exits

Navigating employee exits in a different country can be complex. We simplify the process for you. Rivermate ensures that every termination and offboarding process in Pakistan is fully compliant with local labor laws.

Here's how we help:

• Legal Compliance: We ensure that all legal requirements for termination are met. This includes providing the correct notice period and calculating the proper severance pay.
• Documentation: We handle all necessary paperwork, from the termination letter to the final settlement of dues.
• Final Payroll: We manage the final payment to the employee, ensuring it includes all outstanding salary, unused leave, and any other benefits.
• Guidance: We provide you with clear steps to follow, so you can manage the process with confidence and professionalism.

Navigating visas and work permits in Pakistan requires a clear understanding of the process. Any foreign national who wants to work in the country needs a work visa. This is a mandatory requirement, and employers are responsible for ensuring their international hires have the correct authorization before they start working. The process involves both the employer and the employee providing specific documentation to the Pakistani authorities.

Employment visas & sponsorship realities

When it comes to hiring foreign talent, you will likely need a general work visa. This visa is for international employees who have a job offer from a company in Pakistan. The initial entry work visa is typically granted for up to three months, with the possibility of an extension for up to two years, which allows for multiple entries.

An Employer of Record (EOR) can be a practical route for hiring in Pakistan. An EOR must be a legally registered entity in the country to sponsor a work visa for a foreign employee. This means the EOR acts as the legal employer, handling the necessary paperwork and ensuring compliance with local laws.

Here is what you need to know about the sponsorship process:

• Valid Job Offer: The employee must have a formal job offer from a company registered in Pakistan.
• Company Registration: The sponsoring company, whether it's your own entity or an EOR, must be registered with the Securities and Exchange Commission of Pakistan (SECP).
• Justification: The employer needs to provide a reason for hiring a foreign national over a local candidate.

An EOR can sponsor a full-time employee with a valid employment offer. However, independent contractors and freelancers cannot apply for a work visa through an employer sponsorship. They must apply for a different type of visa that does not require an employer to sponsor them.

Business travel compliance

For short-term visits, a business visa is the appropriate choice. This visa is for individuals visiting Pakistan for business purposes, such as meetings, negotiations, or conferences. The business visa can be issued for up to five years with multiple entries.

To apply for a business visa, you will generally need the following:

• Valid Passport: Your passport should be valid for at least six months beyond your intended stay.
• Invitation Letter: A letter from a business organization in Pakistan, often recommended by a relevant trade organization.
• Company Registration: A copy of the registration certificate of the inviting company.

You can apply for a business visa online. The process is designed to be straightforward, and for many countries, the processing time can be as short as 24 hours.