How to Hire Employees in Pakistan?

Hiring employees in Pakistan requires a written employment contract, EOBI registration, and provincial compliance in place from the first day of employment.

Pakistan's 18th Constitutional Amendment devolved labour law to the four provinces, meaning the same hire in Karachi and Lahore can carry different leave entitlements, maternity provisions, and termination rules a distinction that shapes compliance obligations before any offer letter is signed.

Job Market and Hiring Trends in Pakistan

Pakistan's IT and BPO exports reached USD 2.6 billion in FY 2023-24, according to the Pakistan Software Export Board. Demand is concentrated in software engineering, data, and fintech roles.

General labour supply is large. Senior tech, finance, and compliance talent is in short supply, and that gap is widening as international employers increase hiring activity in the country.

• Pakistan has a population of 220 million with a median age of approximately 22 years (World Bank, 2024). That creates a substantial entry-level talent pool across sectors.

• Rozee.pk reported 40% year-on-year growth in tech job postings in 2023, reflecting accelerating employer demand for digital skills.

• Unionization covers approximately 2.2% of the workforce (ILO data), down from 25% historically. Collective bargaining risk is low for most employers.

• Primary hiring platforms include Rozee.pk (the largest local job board), Mustakbil.com, BrightSpyre, LinkedIn Pakistan, and Indeed Pakistan.

• The Special Investment Facilitation Council (SIFC), launched in 2023, created new pathways for foreign direct investment and introduced visa options for foreign investors and workers entering Pakistan.

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Your Options for Hiring in Pakistan: Entity vs. EOR vs. Contractor

Foreign companies hiring in Pakistan choose between three paths: a local entity registered through SECP eZfile, an Employer of Record, or an independent contractor. Each carries a distinct compliance burden and setup timeline.

Entity setup takes 5 to 10 working days via the SECP eZfile (LEAP) portal. Post-incorporation, employers must complete FBR NTN registration, EOBI enrollment, and provincial SSI registration before running payroll.

Contractor engagement suits genuinely independent, project-based work. Misclassification risk is high in Pakistan, and consequences apply retroactively across taxes and social contributions.

Foreign companies that direct Pakistani employees without a local entity or EOR may trigger permanent establishment. That exposure subjects Pakistan-sourced income to corporate tax, even without a formal registered presence.

An EOR is the fastest compliant path. The EOR becomes the legal employer, handles all statutory filings, and lets you retain day-to-day operational control. For companies evaluating this model, see how does EOR work and a comparison of the best employer of record providers.

Employees vs. Contractors in Pakistan

Misclassifying a worker in Pakistan triggers retroactive EOBI contributions, back taxes owed to the FBR, and potential reclassification of the entire working relationship.

Pakistan applies a substance-over-form test. In IFFCO Pakistan v. Ghulam Murtaza (April 2024), the Supreme Court granted 55 contract workers permanent employee status based on actual working conditions, not the labels written into their contracts. The court looked at how work was performed, not what the agreement said.

No statutory classification test exists in Pakistan. Courts decide case by case, examining control over hours, location, and methods; use of company tools; integration into core operations; financial risk; and exclusivity. Contract labels carry little weight when actual working conditions point to employment.

Cost to Hire an Employee in Pakistan

Total employment cost in Pakistan exceeds gross salary. Statutory contributions add approximately 23% or more on top of base pay, depending on province and salary level.

Employer obligations include EOBI at 5% of the applicable minimum wage (approximately PKR 1,850 to 2,000 per month as a fixed amount), provincial social security (SESSI, PESSI, KPESSI, or BESSI) at 6% of wages up to the provincial ceiling, gratuity fund accrual at 8.33% of salary, and mandatory group life insurance. Profit bonuses apply where statutory thresholds are met.

Total estimated employer cost runs approximately 23.26% above gross salary, plus fixed monthly amounts for EOBI. Budget accordingly before finalizing offer letters. For a full breakdown of what these obligations mean for your hiring budget, see employer of record cost.

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Compliance Risks While Hiring in Pakistan

Pakistan's compliance risk is amplified by provincial fragmentation. A single payroll error can trigger penalties across multiple regulatory bodies at the same time.

Foreign employers frequently underestimate how quickly these risks compound. Each of the following failure points carries its own penalty structure and enforcement body.

• Incorrect EOBI rate: Using 9% of salary instead of 5% of minimum wage creates overpayment liability and audit exposure with EOBI inspectors.

• FBR tax penalties: Failing to withhold taxes on time attracts a penalty of PKR 40,000 or 10% of outstanding income taxes, whichever is higher. Late return filing carries 0.1% of tax per day or PKR 1,000 per day, with a minimum of PKR 10,000 and a maximum of 200% of outstanding taxes.

• Misclassification: The 2024 IFFCO Pakistan v. Ghulam Murtaza precedent confirms that courts reclassify contractors as employees based on the substance of the relationship, not the contract label.

• Termination without Standing Order 15 procedure: Dismissal for misconduct without a written charge sheet, domestic inquiry, and recorded reasons is legally invalid and triggers reinstatement claims.

• Permanent establishment (PE) risk: Foreign companies directing Pakistani employees without a local entity or EOR may trigger corporate tax on Pakistan-sourced income.

• Workplace harassment non-compliance: Failure to constitute an internal Inquiry Committee under the Protection Against Harassment of Women at the Workplace Act 2010 (amended 2022) exposes employers to FOSPAH complaints.

Each risk above is manageable with the right employment structure in place. Gloroots EOR services cover payroll accuracy, statutory filings, compliant contracts, and Standing Order procedures so your Pakistan headcount stays within legal boundaries.

Key Labor Laws in Pakistan

Pakistan's labour law framework operates at both federal and provincial levels. The 18th Constitutional Amendment (2010) devolved most labour regulation to Sindh, Punjab, Khyber Pakhtunkhwa, and Balochistan, each with distinct statutes and enforcement bodies.

Key federal statutes that still apply across provinces include the Factories Act 1934, the Industrial and Commercial Employment (Standing Orders) Ordinance 1968, and the Employees' Old-Age Benefits Act 1976. The Maternity and Paternity Leave Act 2023 and the Protection Against Harassment of Women at the Workplace Act 2010 (amended 2022) also carry federal force.

Provincial Standing Orders legislation adds another layer. Sindh enacted its own Standing Orders Act in 2015. KPK enacted its version in 2013. Balochistan followed in 2021. Punjab continues to apply the federal 1968 Ordinance under its 2012 Amendment Act.

Employers operating across multiple provinces must track each jurisdiction separately. A contract or policy compliant in Punjab may not satisfy Sindh's requirements. Compliance is not a single checklist; it is a province-by-province obligation that changes with each new hire location.

Employment Contracts

Written employment contracts are legally required for permanent roles under provincial labour laws and must specify salary, hours, leave, and termination terms.

Fixed-term contracts are permitted, but repeated renewals can be interpreted as permanent employment. Under Standing Orders, fixed-term contracts for tasks of a permanent nature are limited to nine months.

Standing Orders recognise six worker categories: Permanent, Probationer, Badli (Alternate), Temporary, Apprentice, and Contract. Each category carries different entitlements and termination rules, so correct classification at the point of hire matters.

Working Hours and Overtime

The statutory maximum workweek is 48 hours (9 hours/day) under the Factories Act 1934. Overtime is paid at 2x the ordinary wage and 3x on public holidays. Overtime is capped at 3 hours/day and 12 hours/week, with total weekly hours not exceeding 56. Employees are entitled to a 1-hour unpaid break after 6 hours of work, or 30 minutes after 5 hours. Weekly rest is 24 consecutive hours, typically Friday or Sunday.

Minimum Wage

Pakistan's federal minimum wage is PKR 37,000 per month for FY 2025-26, but Punjab raised its rate to PKR 40,000 effective July 1, 2025. Employers must pay whichever provincial rate is higher.

Provincial rates vary: Punjab PKR 40,000; Sindh PKR 40,000 (unskilled), PKR 38,200 (semi-skilled), PKR 45,910 (skilled); KPK PKR 40,000; Balochistan and ICT PKR 37,000. Failure to comply triggers back-pay liability and penalties from provincial labour departments.

Leave Entitlements

EOBI provides four mandatory benefits: an old-age pension (payable at 55 for women and 60 for men, minimum PKR 5,250 per month), invalidity and injury compensation, a survivor pension, and a death grant of at least PKR 1,500.

Employers must also provide mandatory group life insurance of up to PKR 500,000 per employee. Profitable businesses with 20 or more employees must pay a profit bonus equal to 15 to 30% of annual profit, distributed to eligible workers.

What to Include in an Employment Contract or Offer Letter in Pakistan

A compliant Pakistani employment contract is the first line of defence against labour disputes. Missing mandatory terms favor the employee in court.

• Full names and addresses of employer and employee

• Job title and duties

• Basic monthly salary (minimum PKR 37,000 federal or applicable provincial rate)

• Working hours (48 hours per week maximum under the Factories Act 1934)

• Leave entitlements: annual 14 days, casual 10 days, sick 16 days

• Probationary period terms (up to 3 months, extendable to 6 months for senior roles)

• Overtime policy (2x rate; 3x on public holidays)

• Termination conditions and notice requirements

• Confidentiality and IP ownership clauses

• Governing law and applicable provincial jurisdiction

Payroll and Taxes in Pakistan

Payroll in Pakistan runs monthly in Pakistani rupees (PKR). Salaries are due by the end of the month for work performed that month.

Foreign employers without a Pakistani entity cannot run payroll directly. They must use an EOR or registered local entity to process payroll, withhold PAYE, and remit EOBI and provincial social security contributions. The same compliance structure applies when companies hire employees in India, where payroll obligations are similarly layered across federal and state frameworks.

Income tax is withheld at source under the PAYE system and remitted to the Federal Board of Revenue (FBR). The employer is liable for correct withholding. The FBR penalty for late withholding is PKR 40,000 or 10% of outstanding taxes, whichever is higher.

Income tax slabs (FY 2025-26, Finance Act 2025)

Employer and employee contributions

Employers may pay daily, weekly, bi-weekly, or monthly, but employees must receive pay at least once per month. The pay cycle must be specified in the employment contract.

Employment Benefits in Pakistan

Pakistani law mandates a defined set of statutory benefits for all eligible employees. These include annual leave, casual leave, sick leave, maternity and paternity leave, EOBI pension contributions, and mandatory group life insurance.

Paid Time Off and Public Holidays

Employees in Pakistan are entitled to 14 consecutive days of annual leave after completing 12 months of service, plus 10 days of casual leave per year. Both are paid at full wages.

Pakistan observes 10 to 11 gazetted public holidays each year: Kashmir Day (5 Feb), Pakistan Day (23 Mar), Labour Day (1 May), Independence Day (14 Aug), Eid ul-Fitr (3 days), Eid ul-Azha (2 to 3 days), Ashura (2 days), Eid Milad-un-Nabi, Iqbal Day (9 Nov), and Quaid-e-Azam Day/Christmas (25 Dec).

Employees required to work on a public holiday receive triple their normal daily pay. Islamic holiday dates shift each year with the lunar calendar, so exact dates must be confirmed annually before finalizing payroll schedules.

Sick Leave

Sick leave in Pakistan is paid at 50% of regular wages, not full pay. This is a material difference from annual and casual leave, which are both paid at 100%.

Entitlements differ by applicable statute: 16 days per year under the Factories Act, and 8 days per year under the Shops and Establishments Ordinance. A medical certificate is required to support any sick leave claim.

Maternity and Paternity Leave

Maternity leave entitlements in Pakistan vary by province and were updated at the federal level by the Maternity and Paternity Leave Act 2023.

Under federal law and in the Islamabad Capital Territory, mothers receive 180 days for a first child, 120 days for a second child, and 90 days for a third child. Provincial entitlements differ: Sindh provides 16 weeks, Punjab and Khyber Pakhtunkhwa each provide 12 weeks, and Balochistan provides 14 weeks.

Paternity leave under federal and ICT law is 30 days paid for each of the first three children. Provincial frameworks generally do not mandate paid paternity leave for private-sector employers, so the applicable rule depends on where the employee works.

Public Health Insurance

Pakistan does not mandate employer-provided private health insurance. The primary statutory benefit is EOBI, which covers old-age, invalidity, and survivor benefits through mandatory employer and employee contributions.

Employers are also required to provide mandatory group life insurance of up to PKR 500,000 per employee through a reputable insurer. Supplemental private health insurance is not legally required but is common in competitive hiring packages, particularly in technology and professional services roles.

Work Permits and Visas in Pakistan

Foreign nationals working in Pakistan need an employment visa and, for most roles, a Board of Investment (BOI) work permit. Processing takes approximately four weeks.

Employers sponsoring foreign nationals must submit a BOI recommendation letter with a full document package. Required documents include: a company profile, SECP incorporation certificate, FBR NTN certificate, employment contract or offer letter, candidate CV with attested educational and professional certificates, and a passport copy with photographs.

• Employer cover letter on letterhead justifying the hire

• Undertaking on letterhead confirming compliance obligations

• Salary and assignment duration details for the candidate

Applications are submitted via the NADRA e-visa portal. The table below summarises the main visa categories available to foreign workers and investors.

Onboarding New Hires in Pakistan

Onboarding in Pakistan is a compliance sequence. Statutory registrations must be completed before or on day one, not after the employee starts work.

The steps below follow a phase structure so nothing is missed at each stage of the employment lifecycle.

Before day one

• Register the employee with EOBI and the applicable provincial social security institution (SESSI, PESSI, KPESSI, or BESSI depending on province)

• Obtain a signed employment contract

• Collect CNIC copy, NTN where applicable, proof of address, bank account details, and work visa or permit for foreign nationals

• Set up payroll and statutory contribution processing

Day one

• Provide the written employment contract, company policies, and role-specific training materials

• Brief the employee on leave policies, overtime rules, and performance review timelines

• Conduct workplace safety orientation

First week

• Assign a direct manager and clarify performance expectations

• Confirm payroll setup and communicate the first pay date

Beyond the first week

• Schedule a probation review at three months

• Confirm EOBI contribution remittance is active

• File any required provincial labour department notifications

All organisations must also constitute an internal Inquiry Committee under the Protection Against Harassment of Women at the Workplace Act 2010, as amended in 2022. This applies regardless of company size and must be in place from the date of first hire.

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NDAs, Confidentiality and IP Protection in Pakistan

NDAs and confidentiality clauses are enforceable under Pakistani contract law. Courts uphold them when scope, duration, and geography are reasonable.

IP created during employment belongs to the employer by default. Employment contracts should explicitly assign ownership of all work product, inventions, and proprietary processes to the employer. This is especially important for software and technology roles where ownership disputes are most common.

Pakistan's Personal Data Protection Bill 2023 was approved by the Federal Cabinet but remains pending Parliament enactment. The current framework relies on Article 14 of the Constitution (right to privacy) and PECA 2016 for digital data. Standard practice is to obtain written employee consent before processing CNIC numbers and salary data.

Pakistani courts will not enforce non-compete clauses that are unreasonable in scope, duration, or geography. Draft restrictions narrowly and with clear justification to preserve enforceability.

Termination and Offboarding in Pakistan

Termination in Pakistan requires documented grounds, adherence to the Standing Order 15 misconduct procedure where applicable, and correct notice periods. Employees carry strong statutory protections after the probationary period, and arbitrary terminations trigger reinstatement claims.

The Standing Order 15 misconduct dismissal procedure requires: a written charge sheet issued within one month of the misconduct; an opportunity for the employee to explain; an independent domestic inquiry; written reasons for dismissal; and employer approval. Misconduct categories include theft, fraud, willful insubordination, habitual absence, habitual late attendance, riotous behaviour, and striking without permission.

Gratuity is payable at 30 days' wages per completed year of service. It applies to employees terminated for any reason other than misconduct after at least six months of service, per Standing Order 12(6).

Practical offboarding steps:

• Issue written termination notice per contract and applicable provincial law

• Process final pay including accrued leave and gratuity

• Deregister the employee from EOBI and provincial social security

• Collect company property and revoke system access

• Provide a service certificate if the employee requests one

Business Culture in Pakistan

Pakistan's workplace culture is shaped by hierarchy, relationship-building, and context-sensitive communication. Understanding these norms reduces friction when managing local teams.

• Hierarchy is respected. Decisions flow top-down. Address senior stakeholders formally and by title until invited to use first names.

• Relationship-building precedes business. Invest time in personal rapport before discussing commercial terms. Skipping this step slows deal progress.

• Conflict is rarely expressed directly. Disagreement surfaces through indirect signals. Read context carefully rather than taking verbal agreement at face value.

• The standard workweek runs Sunday through Thursday. Friday is the weekly rest day in most organisations. Schedule meetings accordingly.

• Ramadan reduces working hours. Many organisations cut official hours by two to three hours during the holy month. Plan project timelines around this.

• Punctuality expectations vary locally. Allow scheduling flexibility, but arrive on time yourself as a sign of respect.

• Decision-making can be slow in hierarchical organisations. Identify the actual decision-maker early and engage them directly to avoid delays.

Top Sectors to Hire From in Pakistan

Pakistan's talent pool is concentrated in five sectors, each with distinct in-demand roles and measurable market scale. Knowing where supply is strongest helps you target hiring more precisely.

• Information Technology and BPO. IT and BPO exports reached USD 2.6 billion in FY 2023-24, according to the Pakistan Software Export Board (PSEB). In-demand roles: software engineers, full-stack developers, data scientists, and QA engineers.

• Fintech and Financial Services. The State Bank of Pakistan reported 64 million active mobile banking accounts in 2023. In-demand roles: compliance officers, risk analysts, and mobile payment developers.

• Textile and Manufacturing. Pakistan is the world's fourth-largest cotton producer. In-demand roles: supply chain managers, quality control engineers, and production supervisors.

• Business Process Outsourcing and Customer Support. A growing English-language BPO sector serves US and UK clients. In-demand roles: customer service agents, data entry specialists, and virtual assistants.

• Healthcare and Pharmaceuticals. Pakistan's pharmaceutical market was valued at USD 4.5 billion in 2023. In-demand roles: regulatory affairs specialists, clinical research associates, and medical sales representatives.

Companies expanding across South Asia often source from multiple markets in parallel. If you are also evaluating regional options, see our guide to hire employees in Bangladesh for a comparable talent profile.

Top Cities to Hire From in Pakistan

Pakistan's talent is concentrated in five cities, each with a distinct specialization that shapes what you can hire and how quickly.

• Karachi: Pakistan's financial and commercial capital. Largest talent pool for finance, banking, FMCG, and BPO roles. Home to the Pakistan Stock Exchange and major multinational offices.

• Lahore: The country's technology and startup hub. Largest concentration of IT graduates and home to Arfa Software Technology Park. Strong talent in software development, digital marketing, and e-commerce.

• Islamabad/Rawalpindi: Government, policy, and NGO sector hub with a growing tech talent pool. Preferred by foreign companies that need proximity to federal regulatory bodies.

• Faisalabad: Manufacturing and textile industry center. Strong talent in industrial engineering, supply chain, and quality management.

• Peshawar: Emerging BPO and services sector with a growing English-language talent pool. Gateway to Khyber Pakhtunkhwa province talent.

Matching your role type to the right city reduces time-to-hire and improves candidate quality from the first search.

Hire Compliantly in Pakistan with Gloroots

A streamlined way to hire employees in Pakistan without establishing your own local employing entity is through an Employer of Record (EOR). Gloroots acts as the legal employer and can manage applicable employment administration, including EOBI, provincial social-security requirements, income-tax withholding, payroll, and statutory filings, while you continue to direct the employee’s day-to-day work.

An EOR can be useful for companies testing the Pakistani market, scaling their workforce, or expanding across South Asia without immediately establishing their own SECP-registered entity. It can also simplify regional hiring alongside other markets, such as when you hire employees in the Philippines as part of a broader Asia-Pacific team.

• No local entity required: Hire employees without establishing and maintaining your own Pakistani employing entity and associated registrations.

• Streamlined onboarding: Get employees set up through a centralized employment and payroll process, subject to applicable requirements.

• Local payroll and compliance: Support applicable EOBI, provincial social-security, income-tax withholding, payroll, and employment-law requirements.

• Predictable pricing: Transparent cost breakdown with visibility into applicable statutory employment costs.

• Dedicated support: Pakistan-focused support for federal and provincial employment administration.

If you are hiring a small team in Pakistan to test a market or build a remote workforce, an EOR can be an alternative to establishing your own local entity. Compare the total cost of EOR employment against incorporation, accounting, payroll, registrations, and ongoing compliance before choosing the right structure.

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Frequently Asked Questions About Hiring in Pakistan

What are the income tax rates for employees in Pakistan?

Pakistan uses a progressive income tax structure for FY 2025-26. Earnings up to PKR 600,000 are taxed at 0%. The rate rises to 1% on PKR 600,001 to 1,200,000; 11% on PKR 1,200,001 to 2,200,000; 23% on PKR 2,200,001 to 3,200,000; 30% on PKR 3,200,001 to 4,100,000; and 35% above PKR 4,100,000. Employers withhold tax at source and remit it monthly to the Federal Board of Revenue (FBR).

How does termination work in Pakistan?

After probation, the standard notice period is one month. For misconduct, employers must follow the Standing Order 15 procedure: issue a charge sheet, allow the employee to respond, and hold an inquiry before any dismissal. Employees with one or more years of service are entitled to gratuity at 30 days' wages per year of service under Standing Order 12(6). Arbitrary termination carries reinstatement risk, as labour courts routinely order employees restored to their roles.

What work visas are available for foreign employees in Pakistan?

Foreign workers can enter on a General Work Visa, which permits entry for up to three months and can be extended for up to two years. The Special Investment Facilitation Council (SIFC) Business Visa is valid for six months or five years. The SIFC Investor Visa is valid for up to five years. Most applications require a Board of Investment (BOI) recommendation letter and are submitted through the NADRA e-visa portal. Processing typically takes around four weeks.

How does provincial labour law affect hiring in Pakistan?

The 18th Constitutional Amendment devolved labour regulation to the provinces. Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan each operate their own Standing Orders frameworks. The practical result: the same hire in Karachi and Lahore can carry different leave entitlements, maternity provisions, and termination rules. Employers operating across multiple provinces must track each provincial framework separately and apply whichever standard is more protective for the employee.

Is a written employment contract required in Pakistan?

Yes. Provincial labour laws require written contracts for all permanent roles. Contracts must specify salary, working hours, leave entitlements, probationary terms, and termination conditions. Verbal agreements for permanent positions create significant legal exposure. Pakistani labour courts interpret contract ambiguities in favor of the employee, so precision in drafting matters.

What are the mandatory employer contributions in Pakistan?

Employers contribute 9% of the employee's salary to the Employees' Old-Age Benefits Institution (EOBI) and 1% to provincial social security. These contributions sit on top of gross salary. Budget at least 10% above gross salary as a baseline for statutory employer obligations. Late remittance attracts penalties and interest from the respective institutions.

What is the minimum wage in Pakistan for FY 2025-26?

The federal minimum wage is PKR 37,000 per month for FY 2025-26, unchanged from the prior year. Some provinces set higher thresholds. Employers must apply whichever rate is higher in their operating province. Failure to meet the applicable minimum triggers back-pay liability and regulatory penalties.

Can a foreign company hire in Pakistan without setting up a local entity?

Yes. A foreign company can employ workers in Pakistan through a Global Employer of Record (EOR). The EOR acts as the legal employer, managing contracts, payroll, EOBI contributions, tax filings, and provincial compliance. The foreign company retains full operational control over the employee's work. This model suits companies testing the market or scaling quickly without committing to entity formation.