For employers looking to hire employees from Pakistan, an Employer of Record (EOR) can ease many concerns around compliance, taxes and payroll. A Pakistan EOR will ensure strict adherence to local regulations, providing you with a hassle-free entry into its talent market without the complexities of establishing a legal entity.

Embark on your team's expansion journey in Pakistan, a country boasting significant economic centers in Islamabad, Karachi, Lahore, and Faisalabad. With a rising demand for skills in sectors such as IT, finance, education, legal services, healthcare, manufacturing, operations, and management, Pakistan offers diverse opportunities. Partner with Gloroots to facilitate your team's expansion, leveraging local expertise to ensure compliance and navigate the intricacies of employment regulations. Whether you are entering IT, sales, or any other industry, trust Gloroots to be your ally, supporting a successful and seamless growth trajectory in Pakistan.

The "Misclassification of Workers" challenge is a significant concern when employees are incorrectly categorized as independent contractors or exempt from specific regulations in Pakistan. To effectively mitigate these risks, engaging a PEO/EOR is essential. Gloroots, as your trusted partner, is dedicated to ensuring strict adherence to labor laws, accurate worker classification, seamless payroll management, and comprehensive employee benefits. Delegating these responsibilities to experienced professionals assures a compliant and efficient experience within Pakistan's labor landscape. This commitment fosters operational efficiency and instills confidence in your business endeavors in the Pakistani market.

Navigating the legal aspects of employment in Pakistan involves adherence to comprehensive labor laws. With the fifth-largest global population, Pakistan's young workforce, averaging 22.8 years, contributes significantly to its semi-industrial economy. Industries focus on chemicals, textiles, leather goods, carpets, and sports commodities. Trade and services dominate the economy, with agriculture as the second-largest sector. Employers must comply with labor regulations covering working hours, minimum wages, and workplace safety. Utilizing written employment contracts, understanding local laws, and managing working hours and overtime are critical for a legally sound employment framework in Pakistan's dynamic business landscape.

Employment contract

Pakistan's labor regulations dictate that employers must engage in one of six types of employment contracts:

• Permanent Contracts: The most common, typically drafted post-probationary period.
• Probationary Contracts: Allows trial periods for both employer and employee.
• Badlis (Alternate) Contracts: Applicable when a temporary replacement is appointed for a permanent or probationary employee.
• Temporary Contracts: Drafted for work durations less than nine months.
• Apprenticeship Contracts: Designed for employee training.
• Contract Worker Agreements: Common for remote or gig workers or situations where overtime compensation is not applicable.

Employment rules mandate that contracts include details on job roles, working hours, leave, benefits, termination, salary, payment schedules, and confidentiality agreements. Probationary periods may be extended for three months, allowing termination without notice, though a written order stating the reason is required. Disputes for blue-collar employees are settled in labor courts, while those for white-collar employees are handled in civil courts with appropriate jurisdiction.

Working time

The typical working week in Pakistan encompasses 45 hours, distributed across 9 hours daily.

Overtime

Any labor exceeding the standard weekly working hours qualifies as overtime, as employment contracts or collective agreements stipulate. When employees are required to work beyond the regular hours or on holidays, there are specific limits on the allowable number of hours. Overtime, defined as hours beyond 9 per day, warrants compensation at a rate of 200% of the regular salary. Employees are entitled to remuneration for overtime during public holidays amounting to 300% of their usual pay.

Public Holidays

Pakistan has 17 public holidays throughout the year (approximately).

Minimum Wage

The minimum wage across Pakistan stands at 25,000 PKR per month, with the province of Punjab recently increasing it from 25,000 PKR to 32,000 PKR. This revision also extends to semi-skilled and highly skilled workers, whose wages will now be elevated to 35,000 PKR.

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Annual Leave

In Pakistan, employees have the right to 14 calendar days of fully paid annual leave after completing 12 consecutive months of service. This leave cannot be fragmented and must be utilized as a whole. It is permissible to carry over leave of up to 14 days into the subsequent vacation year.

Paid Sick Leaves

Employees can take 10 days of casual sick leave for unexpected situations like sudden illness or urgent matters. Every employee is granted 10 days of fully paid casual leave, in addition to the annual leave, which applies to specific situations such as sudden illness. Additionally, employees are entitled to an additional 16 days of sick or medical leave, compensated at 50% of their pay. For sick leave, a medical certificate is a requisite.

Maternity leaves

Female employees are eligible for three months of fully paid maternity leave after working for a single employer for a minimum of four months preceding childbirth. A mandatory post-natal leave period of six weeks is required. Employees are safeguarded from termination during their maternity leave. To qualify for these benefits, the employee must have made at least 180 days of contributions in the year preceding the child's expected birth.

Paternity leaves

Fathers have the entitlement to one month of leave following the birth of each of their first three children.

‍Tax and Social Security contribution

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Employer Payroll Contribution 

Termination 

The termination process depends on the employment structure and collective agreements, varying with the type of contract and the grounds for termination. Employers and employees must furnish written termination notices, and the rationale for dismissal must be valid.

Severance Pay

Unless there is a misconduct case, employees are entitled to receive severance pay equivalent to 30 days' wages for each year of completed service upon their termination.

Notice Period

A one-month notice period is mandatory for employees and employers when terminating an employment contract. Temporary workers, however, are exempt from the requirement of advanced notice. Without advanced notice, the employer must provide compensation equivalent to one month's salary.

Probation period

In Pakistan, the probationary periods are specified within employees' employment contracts — usually three months.