Pakistan

Pakistan, with a population exceeding 220 million, is South Asia's second-largest economy. The country is navigating economic reforms aimed at stabilizing its fiscal landscape and meeting international obligations, including an IMF-backed loan agreement. Understanding Pakistan's employment laws, taxation system, and payroll practices is crucial for compliance and successful business operations.
Contractor Management
Currency
Pakistani Rupee (PKR)
Payroll Frequency
Weekly, bi-monthly, or monthly
Employer Taxes
5%

Overview

Population
~220 million
Language
Urdu, English
Capital
Islamabad
Currency
Pakistani Rupee (PKR)
Country code
+92
Min wage
32,000–37,000 PKR / month
Working hours
8 hours per day
Weekdays
Monday to Saturday
Work hours per week
48 hours per week

Payroll

Salaried Employees
Time-Based Employees
13th Salary
  • Not mandatory; subject to employer discretion
Avg employer tax

5%

Tax Breakdown

Personal Income Tax (PIT):

Salaried Individuals
Progressive tax rates up to 35%
Non-Salaried Individuals
Progressive tax rates up to 45%

Corporate Income Tax (CIT):

Standard Rate
29%

Small and Medium Enterprises (SMEs)

Category 1
7.5% for turnover up to PKR 100 million
Category 2
15% for turnover between PKR 100 million and PKR 250 million

VAT

VAT

18%

Tax Calculation for Pakistan
*
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
PK
*
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Top Countries
Employer cost
Total monthly cost of employment
GBP 9,633
Gross monthly salary costs
GBP 8,334
Estimated taxes and contributions
GBP 8,334
Employee cost
Net monthly salary
GBP 5,137
Gross monthly salary
GBP 8,334
Estimated taxes & social security
GBP 8,334
Employer cost
Total yearly cost of employment
GBP 9,633
Gross yearly salary costs
GBP 8,334
Estimated taxes and contributions
GBP 8,334
Employee cost
Net yearly salary
GBP 5,137
Gross yearly salary
GBP 8,334
Estimated taxes & social security
GBP 8,334
Request a detailed quotation
How it works

Onboarding Process

Onboarding in Pakistan typically includes the following steps to ensure a smooth transition for new hires:

Employment Contract

  • Must be in writing
  • Include job title, duties, salary, working hours, leave entitlements, and termination conditions

Registration with Authorities

  • Register the employee with the Federal Board of Revenue (FBR) for tax purposes
  • Register with the Employees Old-Age Benefits Institution (EOBI) for social security purposes

Payroll Setup

Ensure accurate calculation and withholding of taxes and social security contributions

Employee Documentation

Collect personal identification, bank account details, and tax information

Workplace Policies

Provide access to company policies, health and safety guidelines, and any applicable collective agreements

Pre-boarding

Pre-boarding

Pre-boarding

Key Elements of an Employment Contract in Pakistan
When drafting an employment contract for employees in Pakistan, the following key elements should be included:

Personal Details

Name, contact information, and role of the employee.

Employee Leave Policies

Sick days
  • 16 days at half pay
  • Medical certificate required
  • Accumulation limit: 16 days
Maternity leave
  • First child: 180 days (fully paid)
  • Second child: 120 days (fully paid)
  • Third child: 90 days (fully paid)
  • Additional children: Unpaid leave
Paternity leave
  • First three children: 30 days (fully paid)
  • Additional children: Unpaid leave
Annual Leave
  • 14 days per year; unused leave may be carried forward
12 Public holidays in Pakistan
1st
New Year's Day
5th
Kashmir Day
23rd
Pakistan Day
31st
Eid-ul-Fitr
1st
Eid-ul-Fitr Holiday
2nd
Eid-ul-Fitr Holiday
21st
Easter Monday
1st
Labor Day
28th
Youm-e-Takbeer
7th
Eid-ul-Azha
14th
Independence Day
25th
Christmas Day
  • 5 Feb: Kashmir Day
  • 23 Mar: Pakistan Day
  • 1 May: Labor Day
  • 3 May: Eid ul-Fitr
  • 4 May: Eid ul-Fitr Holiday
  • 5 May: Eid ul-Fitr Holiday
  • 10 Jul: Eid ul-Azha
  • 11 Jul: Eid ul-Azha Holiday
  • 8 Aug: Ashura
  • 9 Aug: Ashura
  • 14 Aug: Independence Day
  • 9 Oct: Milad un-Nabi
  • 25 Dec: Quiad-e-Azam Day

NB – some of these dates are estimates and not yet confirmed.

Termination Process

Permissible Grounds

  • Mutual agreement
  • Redundancy
  • Misconduct
  • Performance issues

Notice Period

  • Employee-Initiated: 30 days
  • Employer-Initiated: 30 days
  • Probationers: No notice period required; however, employers may waive or reduce it

Severance Pay

Not mandatory; subject to employment agreements

Probation Period

  • Duration:Typically 3–6 months
  • Extension: Not permitted beyond 3 months; if no confirmation letter is issued by the end of this period, the employee is automatically considered permanent

Personal Details

Name, contact information, and role of the employee.

_'s Booming Remote Workforce

Challenges of Remote Hiring in _

Simplifying Remote Hiring in _ with RemotePass 

Grow Your Team in Pakistan
with RemotePass

From onboarding and payroll to offboarding and visa support, RemotePass simplifies it all so you can focus on growing your team.

Building and expanding a global workforce is seamless with RemotePass. Our platform simplifies the complexities of hiring, payroll, and compliance across over 150 countries, including Pakistan.

With RemotePass, you can quickly onboard international employees, manage payroll, ensure legal compliance, and provide competitive benefits—all from one place. Focus on growing your business while we handle the HR and legal intricacies.

Free 7-day trial

No credit card required

Cancel anytime

Hiring in Pakistan | Payroll, Tax & Employment Guide

Pakistan offers access to a large tech-savvy workforce with competitive hiring costs. Its growing startup scene makes it attractive for building remote and local teams.

To hire successfully, you'll need to understand labor laws, payroll registration, and social security requirements. This guide explains how to hire and pay employees in Pakistan while staying compliant.

RemotePass makes hiring in Pakistan simple. We handle compliance, contracts, and payroll. You focus on building your business.

Key Takeaways For Hiring in Pakistan

  • Payroll Frequency: Monthly, with wages typically paid at month-end.
  • Minimum Wage: PKR 37,000/month (federal rate for FY 2025–26).
  • Contract Types: Fixed-term and open-ended; no requirement for bilingual contracts.
  • Notice Period: 1 month for both resignation and termination.
  • Working Hours: 48 hours/week (6 days, 8 hours/day).
  • Mandatory Benefits: Social security (EOBI), provincial medical coverage, gratuity/severance after 1 year.
  • Income Tax: Withheld at source under a progressive system.
  • Leave Entitlements:
  • 14 days annual leave
  • 16 days sick leave
  • 10 days casual leave
  • Maternity leave up to 180 days
  • Paternity leave up to 30 days

Termination: Employment can end  with cause or without, but the process and benefits differ.

Foreign Worker Coverage: Expats are generally exempt from EOBI and provincial social schemes.

Insurance: Private health insurance isn't mandatory, though some provinces provide employer-funded coverage.

Quick Facts For Hiring in Pakistan

Continent
Asia
Capital
Islamabad
Currency
Pakistani Rupee (PKR,Rs)
Language
Urdu
Payroll Cycle
Monthly
Pay Date
End of the month

Pakistan Employment Contract Overview

Contract Type
Fixed-term / Open-ended
Local Language Required?
No
Bilingual?
No
Probation Period
Up to 3 months
Minimum Paid Time Off
14 days
Public Holidays
Pakistan typically observes 11–14 official public holiday occasions, totaling around 13–17 days off per year, depending on the lunar calendar and government announcements.
Notice Period
1 month

What Do You Need To Include in a Pakistani Employment Contract?

Every employment contract in Pakistan must include the following key details to remain compliant with local labor laws:

Employee Information

  • Full name
  • ID number
  • Role / Job title
  • Start date
  • End date (if applicable)
  • Contract duration
  • Annual leave
  • Address
  • Probation and notice conditions
  • Termination provisions
  • Compensation details

Hiring contractors? Learn how to avoid misclassification risks in Pakistan.

How Does Payroll and Taxation Work in Pakistan?

Managing payroll in Pakistan means handling social contributions, income tax, and reporting on tight schedules. The rules are straightforward once you know how they fit together. Here's how it works:

Payroll Setup

Salary currency

Pakistani Rupee (PKR, Rs)

Minimum Wage

Federal minimum wage is PKR 37,000 per month (FY 2025–26), applicable nationally.

Hours per Week

48 hours per week / 8 hours per day

Payroll Frequency

Monthly

Weekdays

Monday through Saturday

Mandatory Bonuses

Not required

Gross Salary Structure

Basic Salary

~%60-70 (Mandatory component)

House Rent Allowance (HRA)

~30-40% (Required if company housing is not provided)

Medical Allowance

Fixed or with a percentage of basic salary (Taxable if exceeding PKR 150,000 annually)

Conveyance Allowance

Optional (Non-taxable up to PKR 2,400 per month)

Other Allowances

Varies (Bonuses, utilities, fuel, etc. Taxable unless exempt)

What Payroll Taxes Do Employers Pay in Pakistan?

Employer cost % (estimate):


Employer Cost

Contributions breakdown:


Employer Cost

Employees’ Old-Age Benefits Institution (EOBI) – National Pension Scheme:

Covers all employees in formal sector establishments with five or more workers. The EOBI calculates contributions using the minimum wage, not the actual salary, under the latest federal and provincial rules.

Benefits include: Old‑age pension (available at age 60 for men, 55 for women with ≥15 yrs), invalidity and survivors’ pension, or a one-time old-age grant. Expats aren’t covered.

Employer contribution (based on the 1 July 2024 minimum wage of PKR 37,000): 5% of the minimum wage (PKR 1,850 per month).

Provincial Social Security Schemes (e.g. PESSI, SESSI):

These apply in provinces like Punjab, Sindh, KP and Balochistan.

Employers contribute 6% of the gross wage, subject to caps set by each province (for example, Punjab applies the rate to wages up to PKR 37,000 per month).

What Payroll Taxes Do Employees Pay In Pakistan?

Individual income tax (PAYE)

The Federal Board of Revenue (FBR) administers income tax on salaries. Employers withhold tax at source each month under the PAYE system. Progressive tax rates apply and are updated annually through the Federal Budget.

Social Contributions

Employees’ Old-Age Benefits Institution (EOBI) – National Pension Scheme:

1% of minimum wage = PKR 370/month

Expat aren’t eligible for EOIB/PESSI.

2025-2026 Tax Slabs For Salaried Individuals

Annual Income (PKR) Tax Rate
Up to 600,000 0%
600,001 - 1,200,000 5% of amount exceeding 600,000
1,200,001 - 2,400,000 PKR 30,000 + 12.5% of amount exceeding 1,200,000
2,400,001 - 3,600,000 PKR 180,000 + 20% of amount exceeding 2,400,000
Above 3,600,000 PKR 420,000 + 25% of amount exceeding 3,600,000

Hiring cost calculator 

*
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
PK
*
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Top Countries
Employer cost
Total monthly cost of employment
GBP 9,633
Gross monthly salary costs
GBP 8,334
Estimated taxes and contributions
GBP 8,334
Employee cost
Net monthly salary
GBP 5,137
Gross monthly salary
GBP 8,334
Estimated taxes & social security
GBP 8,334
Employer cost
Total yearly cost of employment
GBP 9,633
Gross yearly salary costs
GBP 8,334
Estimated taxes and contributions
GBP 8,334
Employee cost
Net yearly salary
GBP 5,137
Gross yearly salary
GBP 8,334
Estimated taxes & social security
GBP 8,334
Request a detailed quotation

Mandatory Employee Benefits in Pakistan

Benefits Mandatory? Notes
Health Insurance No

No mandatory government-provided health insurance for private-sector employees.

Provincial Social Security Institutions (e.g., PESSI in Punjab, SESSI in Sindh) provide healthcare benefits to registered employees in covered industries, funded by employer contributions (6%). Coverage includes medical treatment, maternity care, disability benefits for insured employees earning up to provincial wage caps.

Pension / Social Security Yes

Employees’ Old-Age Benefits Institution (EOBI) is the statutory pension scheme providing old-age, invalidity, and survivors’ pensions. Eligibility requires a minimum contribution period (usually 15 years). Applies to all employees in establishments with ≥5 workers.

Provincial Social Security Schemes (PESSI, SESSI, etc.) are employer-funded (6% contribution) and cover medical, maternity, and disability benefits.

Other Statutory Benefits No

Workers’ Compensation & Death Benefits

Establishments with 20+ employees must pay annual profit bonus to eligible workmen who have worked at least 90 days.

Leave And Holiday Entitlement in Pakistan

Annual leave

Employees who complete 12 months of continuous service earn 14 consecutive days of paid annual leave. Unused leave must be carried forward (up to 14–30 days, depending on provincial rules) and paid out on termination.

Public holidays

Pakistan observes 13–17 public holidays annually, including national events such asPakistan Day (March 23) and Independence Day (August 14) along with major religious holidays like Eid and Ashura.

Sick Leave

Casual Leave: Employees receive up to 10 days of paid casual leave per year, usually for urgent personal reasons.. Prior notice is required, except in emergencies.

Sick leave provides up to 16 days per year at half pay, with a medical certificate required for absences longer than two days.

For employees covered under Provincial Employees’ Social Security Ordinances, sick leave benefits can extend up to 121 days for ordinary illness (typically at 75% of wages, or 50% in KP and Balochistan) and up to 365 days at full pay for serious illnesses such as tuberculosis or cancer.

Maternity Leave

Female employees are entitled to:

  • 180 days of paid leave for the first birth
  • 120 days for the second birth
  • 90 days for the third birth
  • Some provinces provide up to 112 days of paid maternity leave.

Paternity Leave

Male employees are entitled to take up to 30 days of fully paid paternity leave for the first three separate births. Additional leave for later births may be granted as unpaid, depending on company policy.

Other Types of Leave

  • Pilgrimage Leave (Hajj/Umrah, Ziarat): Not legally required but often granted for up to 60 days, paid or unpaid, depending on company policy or collective agreements.
  • Bereavement (Compassionate) Leave: The Factories Act grants one day of paid leave for the death of an immediate family member, subject to proof.
  • Marriage Leave: Not required by law, though many employers grant two days of paid leave for the employee’s own marriage as a matter of policy or custom.

Termination And Offboarding in Pakistan

In Pakistan, every employment ending, whether by resignation or dismissal, must follow the law’s structure for notice, settlement, and records. The outline below shows what this means in practice.

Type Possible?
Termination for Cause (poor performance, misconduct, etc.) Yes
Termination without Cause Yes
Mutual Termination Agreement (MTA) Yes
Redundancy Not possible under the EOR setup

Employee Resignations

Employee
Resignations

 Termination with Cause

Termination
with Cause

Termination without Cause

Termination
without Cause

Mutual Termination Agreement

Mutual Termination
Agreement

 Fixed Term Contract

Fixed Term
Contract

Pakistani Employee Resignation

Form

Written notice.

Notice period

Employees intending to resign are required to provide their employer with a 30-day notice period.

End-of-Service Benefits

Severance/Gratuity

  • Employees who complete at least one year of service qualify for end-of-service gratuity equal to 30 days of wages for each completed year. Any period over six months counts as a full year.
  • This benefit applies even when an employee resigns, unless the contract explicitly states otherwise.

Other Benefits

Upon resignation, employers must settle all dues, including:

  • Unpaid salary, pro-rated if necessary;
  • Leave encashments (e.g., earned annual leave);
  • Bonuses, overtime, arrears, etc., as applicable.

Final Payment Timing and Compliance

Final Payment Deadline: Employers must pay all final dues within a few days of the employee’s last working day.

Employer Termination With Cause in Pakistan

Acceptable grounds

The law allows employers to dismiss an employee for serious misconduct such as fraud, theft, or insubordination. A fair process must be followed, including a show-cause notice, an inquiry, and a written explanation of the decision.

Notice

Under the Industrial and Commercial Employment Ordinance, employers can terminate an employee’s contract without notice in proven cases of misconduct.

End-of-Service Benefits

Severance

Employers can forfeit gratuity if the termination for cause is lawful, and all disciplinary procedures under the Standing Orders have been followed.

Other Benefits

Employers are obligated to provide permanent employees with a written termination notice detailing the reasons for dismissal, regardless of the cause.

Employer Termination Without Cause in Pakistan

Acceptance Grounds

The law allows employers to terminate an employee without cause, as long as they issue a termination letter with a valid, documented reason such as poor performance or business restructuring.

Notice

  • Notice period: When terminating permanent employees for reasons other than misconduct, employers must provide one month’s notice.
  • Payment in lieu of notice or notice waiver: Alternatively, they can offer payment in lieu of notice equal to one month’s wages, based on the average earnings of the previous three months.

End-of-Service Benefits

Severance/Gratuity

  • Permanent employees who are dismissed after completing at least 12 months of service are entitled to severance pay equivalent to 30 days’ wages for each year worked. Any service period longer than six months is counted as a full year.
  • Employers contributing to a provident fund on behalf of their employees are exempt from paying severance.

Other Benefits

Employers must provide permanent employees with a written termination notice detailing the reasons for dismissal, regardless of the cause.

Mutual Termination Agreements (MTAs) in Pakistan

  • MTA is a voluntary agreement signed by both parties (employer and employee) to terminate an employment contract by mutual consent.
  • Pakistani labor law neither mandates or prohibits agreements like this, but they’re lawful as long as they’re fair, voluntary, and properly documented. They’re typically used to avoid disputes or litigation by clearly spelling out termination terms: final payments, notice waivers, confidentiality, non-compete clauses, and release of claims.

These agreements are valid under Pakistani contract law (Contract Act, 1872), provided they involve free consent and lawful terms.

Offboarding Process for the End of Fixed-term Contracts in Pakistan

If the Fixed-Term Contract Ends Normally

Under Pakistan’s Industrial Relations Ordinance (IRO) and related regulations, when a fixed‑term contract concludes on its agreed date, no additional compensation or severance is required-unless the employment contract itself says otherwise.

If the Fixed-Term Contract Ends Normally

When an employer ends a fixed‑term contract prior to its scheduled end, the following legal principles apply:

Notice or Pay in Lieu

  • MThe employer must provide 30 days’ notice, or payment in lieu of notice
  • This applies even to fixed-term contracts that are ended early, unless otherwise specified.

Severance Pay (Gratuity)

Employees who complete at least one year of service are entitled to severance/gratuity pay: typically one month’s salary per year of service, or as per contract terms.

Key Elements of an Employment Contract in Pakistan
When drafting an employment contract for employees in Pakistan, the following key elements should be included:

Personal Details

Name, contact information, and role of the employee.

_'s Booming Remote Workforce

Challenges of Remote Hiring in _

Simplifying Remote Hiring in _ with RemotePass 

Hire in Pakistan, Worry Free

From onboarding and payroll to offboarding and visa support, RemotePass simplifies it all so you can focus on growing your team.

Building and expanding a global workforce is seamless with RemotePass. Our platform simplifies the complexities of hiring, payroll, and compliance across over 150 countries, including Pakistan.

With RemotePass, you can quickly onboard international employees, manage payroll, ensure legal compliance, and provide competitive benefits—all from one place. Focus on growing your business while we handle the HR and legal intricacies.

FAQs About Hiring in Pakistan

Got Questions? Find Answers Here

Can I hire foreign workers in Pakistan without setting up a legal entity?

Yes, using an Employer of Record (EOR) like RemotePass allows you to legally hire and pay workers in Pakistan without establishing a local entity.

What’s the minimum wage in Pakistan for 2025?

The federal minimum wage is PKR 37,000/month as of FY 2025–26. Provincial rates may vary but must not fall below this threshold.

Do I have to provide health insurance to employees in Pakistan?

No, it's not mandatory. However, provincial social security schemes like PESSI and SESSI provide health coverage funded by the employer.

How are end-of-service benefits (gratuity) calculated in Pakistan?

Employees with at least one year of service are entitled to 30 days’ wages per year worked. Partial years over 6 months count as full years.

What taxes should I withhold from employee salaries?

You must withhold monthly income taxes per Pakistan’s progressive PAYE system. Social contributions like EOBI (1%) are also deducted from employees.

What’s the probation period and notice requirement?

Probation is up to 3 months. The standard notice period is 30 days, both for resignation and termination (unless for cause).

How is sick leave handled in Pakistan?

Employees get 10 days of casual leave and up to 16 days of sick leave per year. Sick leave can extend up to 121–365 days under social security.

Is there a bonus requirement in Pakistan?

There’s no statutory requirement for bonuses, but companies with over 20 employees must pay an annual profit bonus to eligible workers.

What is the VAT or sales tax rate in Pakistan?

General Sales Tax (GST) is 17%. Some provinces impose a Service Sales Tax (SST) between 13–16% on services.

How can RemotePass help me hire in Pakistan?

RemotePass handles compliant onboarding, payroll, taxation, benefits, and offboarding without the need to set up a local entity.

Let’s Chat

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Pakistan

Pakistan, with a population exceeding 220 million, is South Asia's second-largest economy. The country is navigating economic reforms aimed at stabilizing its fiscal landscape and meeting international obligations, including an IMF-backed loan agreement. Understanding Pakistan's employment laws, taxation system, and payroll practices is crucial for compliance and successful business operations.
Contractor Management
العملة
Pakistani Rupee (PKR)
تردد الرواتب
Weekly, bi-monthly, or monthly
ضرائب أصحاب العمل
5%

نظرة عامة

التركيبة السكانية
~220 million
اللغة
Urdu, English
العاصمة
Islamabad
العملة
Pakistani Rupee (PKR)
رمز الاتصال الدولي
+92
الحد الأدنى للأجور
32,000–37,000 PKR / month
ساعات العمل
8 hours per day
أيام الأسبوع
Monday to Saturday
ساعات العمل اسبوعيا
48 hours per week

الرواتب

الموظفون برواتب ثابتة
الموظفون بنظام الأجر الزمني
13th Salary
  • Not mandatory; subject to employer discretion
متوسط ​​ضريبة صاحب العمل

5%

تحصيل الضرائب

Personal Income Tax (PIT):

Salaried Individuals
Progressive tax rates up to 35%
Non-Salaried Individuals
Progressive tax rates up to 45%

Corporate Income Tax (CIT):

Standard Rate
29%

Small and Medium Enterprises (SMEs)

Category 1
7.5% for turnover up to PKR 100 million
Category 2
15% for turnover between PKR 100 million and PKR 250 million

ضريبة القيمة المضافة

ضريبة القيمة المضافة

18%

حساب الضريبة في Pakistan
*
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
PK
*
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Top Countries
تكلفة صاحب العمل
إجمالي تكلفة التوظيف الشهرية
GBP 9,633
إجمالي تكاليف الراتب الشهري
GBP 8,334
الضرائب والمساهمات المقدرة
GBP 8,334
تكلفة الموظف
صافي الراتب الشهري

GBP 5,137
الراتب الشهري الإجمالي
GBP 8,334
الضرائب المقدرة والضمان الاجتماعي
GBP 8,334
تكلفة صاحب العمل
إجمالي تكلفة التوظيف السنوية
GBP 9,633
إجمالي تكاليف الرواتب السنوية
GBP 8,334
الضرائب والمساهمات المقدرة
GBP 8,334
تكلفة الموظف
صافي الراتب السنوي

GBP 5,137
الراتب السنوي الإجمالي
GBP 8,334
الضرائب المقدرة والضمان الاجتماعي
GBP 8,334
اطلب عرض أسعار تفصيلي
كيف تعمل الخدمة

عملية الانضمام

تشمل عملية التوظيف في Pakistan عادة الخطوات التالية لضمان انتقال سلس للموظفين الجدد:

Employment Contract

  • Must be in writing
  • Include job title, duties, salary, working hours, leave entitlements, and termination conditions

Registration with Authorities

  • Register the employee with the Federal Board of Revenue (FBR) for tax purposes
  • Register with the Employees Old-Age Benefits Institution (EOBI) for social security purposes

Payroll Setup

Ensure accurate calculation and withholding of taxes and social security contributions

Employee Documentation

Collect personal identification, bank account details, and tax information

Workplace Policies

Provide access to company policies, health and safety guidelines, and any applicable collective agreements

Pre-boarding

Pre-boarding

Pre-boarding

العناصر الأساسية في عقد العمل في Pakistan
عند إعداد عقد عمل للموظفين في Pakistan يجب تضمين العناصر الأساسية التالية:

Personal Details

Name, contact information, and role of the employee.

سياسات إجازات الموظفين

الإجازات المرضية
  • 16 days at half pay
  • Medical certificate required
  • Accumulation limit: 16 days
إجازة الأمومة
  • First child: 180 days (fully paid)
  • Second child: 120 days (fully paid)
  • Third child: 90 days (fully paid)
  • Additional children: Unpaid leave
إجازة الأبوة
  • First three children: 30 days (fully paid)
  • Additional children: Unpaid leave
الإجازة السنوية
  • 14 days per year; unused leave may be carried forward
12 عطلات رسمية في Pakistan
1st
New Year's Day
5th
Kashmir Day
23rd
Pakistan Day
31st
Eid-ul-Fitr
1st
Eid-ul-Fitr Holiday
2nd
Eid-ul-Fitr Holiday
21st
Easter Monday
1st
Labor Day
28th
Youm-e-Takbeer
7th
Eid-ul-Azha
14th
Independence Day
25th
Christmas Day
  • 5 Feb: Kashmir Day
  • 23 Mar: Pakistan Day
  • 1 May: Labor Day
  • 3 May: Eid ul-Fitr
  • 4 May: Eid ul-Fitr Holiday
  • 5 May: Eid ul-Fitr Holiday
  • 10 Jul: Eid ul-Azha
  • 11 Jul: Eid ul-Azha Holiday
  • 8 Aug: Ashura
  • 9 Aug: Ashura
  • 14 Aug: Independence Day
  • 9 Oct: Milad un-Nabi
  • 25 Dec: Quiad-e-Azam Day

NB – some of these dates are estimates and not yet confirmed.

عملية إنهاء العقود

Permissible Grounds

  • Mutual agreement
  • Redundancy
  • Misconduct
  • Performance issues

Notice Period

  • Employee-Initiated: 30 days
  • Employer-Initiated: 30 days
  • Probationers: No notice period required; however, employers may waive or reduce it

Severance Pay

Not mandatory; subject to employment agreements

Probation Period

  • Duration:Typically 3–6 months
  • Extension: Not permitted beyond 3 months; if no confirmation letter is issued by the end of this period, the employee is automatically considered permanent

Personal Details

Name, contact information, and role of the employee.

نمو سوق العمل عن بُعد _  

تحديات التوظيف عن بُعد في  _

تبسيط التوظيف عن بُعد في _ مع ريموت باس

نمِّ فريقك في Pakistan
مع ريموت باس

From onboarding and payroll to offboarding and visa support, RemotePass simplifies it all so you can focus on growing your team.

يصبح بناء فريق عالمي وتوسيعه مهمة سهلة مع ريموت باس. منصتنا تبسّط تعقيدات التوظيف والرواتب والامتثال القانوني في أكثر من 150 دولة، بما في ذلك Pakistan.

مع ريموت باس، يمكنك ضم الموظفين الدوليين بسرعة، وإدارة الرواتب، وضمان الامتثال القانوني، وتقديم مزايا تنافسية — كل ذلك من مكان واحد. ركّز على تنمية أعمالك، ودع المهام الإدارية والقانونية علينا.

تجربة مجانية لمدة 7 أيام

لا حاجة لبطاقة ائتمان

يمكنك الإلغاء في أي وقت

Hiring in Pakistan | Payroll, Tax & Employment Guide

Pakistan offers access to a large tech-savvy workforce with competitive hiring costs. Its growing startup scene makes it attractive for building remote and local teams.

To hire successfully, you'll need to understand labor laws, payroll registration, and social security requirements. This guide explains how to hire and pay employees in Pakistan while staying compliant.

RemotePass makes hiring in Pakistan simple. We handle compliance, contracts, and payroll. You focus on building your business.

Key Takeaways For Hiring in Pakistan

  • Payroll Frequency: Monthly, with wages typically paid at month-end.
  • Minimum Wage: PKR 37,000/month (federal rate for FY 2025–26).
  • Contract Types: Fixed-term and open-ended; no requirement for bilingual contracts.
  • Notice Period: 1 month for both resignation and termination.
  • Working Hours: 48 hours/week (6 days, 8 hours/day).
  • Mandatory Benefits: Social security (EOBI), provincial medical coverage, gratuity/severance after 1 year.
  • Income Tax: Withheld at source under a progressive system.
  • Leave Entitlements:
  • 14 days annual leave
  • 16 days sick leave
  • 10 days casual leave
  • Maternity leave up to 180 days
  • Paternity leave up to 30 days

Termination: Employment can end  with cause or without, but the process and benefits differ.

Foreign Worker Coverage: Expats are generally exempt from EOBI and provincial social schemes.

Insurance: Private health insurance isn't mandatory, though some provinces provide employer-funded coverage.

Quick Facts For Hiring in Pakistan

Continent
Asia
Capital
Islamabad
Currency
Pakistani Rupee (PKR,Rs)
Language
Urdu
Payroll Cycle
Monthly
Pay Date
End of the month

Pakistan Employment Contract Overview

Contract Type
Fixed-term / Open-ended
Local Language Required?
No
Bilingual?
No
Probation Period
Up to 3 months
Minimum Paid Time Off
14 days
Public Holidays
Pakistan typically observes 11–14 official public holiday occasions, totaling around 13–17 days off per year, depending on the lunar calendar and government announcements.
Notice Period
1 month

What Do You Need To Include in a Pakistani Employment Contract?

Every employment contract in Pakistan must include the following key details to remain compliant with local labor laws:

Employee Information

  • Full name
  • ID number
  • Role / Job title
  • Start date
  • End date (if applicable)
  • Contract duration
  • Annual leave
  • Address
  • Probation and notice conditions
  • Termination provisions
  • Compensation details

Hiring contractors? Learn how to avoid misclassification risks in Pakistan.

How Does Payroll and Taxation Work in Pakistan?

Managing payroll in Pakistan means handling social contributions, income tax, and reporting on tight schedules. The rules are straightforward once you know how they fit together. Here's how it works:

Payroll Setup

Salary currency

Pakistani Rupee (PKR, Rs)

Minimum Wage

Federal minimum wage is PKR 37,000 per month (FY 2025–26), applicable nationally.

Hours per Week

48 hours per week / 8 hours per day

Payroll Frequency

Monthly

Weekdays

Monday through Saturday

Mandatory Bonuses

Not required

Gross Salary Structure

Basic Salary

~%60-70 (Mandatory component)

House Rent Allowance (HRA)

~30-40% (Required if company housing is not provided)

Medical Allowance

Fixed or with a percentage of basic salary (Taxable if exceeding PKR 150,000 annually)

Conveyance Allowance

Optional (Non-taxable up to PKR 2,400 per month)

Other Allowances

Varies (Bonuses, utilities, fuel, etc. Taxable unless exempt)

What Payroll Taxes Do Employers Pay in Pakistan?

Employer cost % (estimate):


Employer Cost

Contributions breakdown:


Employer Cost

Employees’ Old-Age Benefits Institution (EOBI) – National Pension Scheme:

Covers all employees in formal sector establishments with five or more workers. The EOBI calculates contributions using the minimum wage, not the actual salary, under the latest federal and provincial rules.

Benefits include: Old‑age pension (available at age 60 for men, 55 for women with ≥15 yrs), invalidity and survivors’ pension, or a one-time old-age grant. Expats aren’t covered.

Employer contribution (based on the 1 July 2024 minimum wage of PKR 37,000): 5% of the minimum wage (PKR 1,850 per month).

Provincial Social Security Schemes (e.g. PESSI, SESSI):

These apply in provinces like Punjab, Sindh, KP and Balochistan.

Employers contribute 6% of the gross wage, subject to caps set by each province (for example, Punjab applies the rate to wages up to PKR 37,000 per month).

What Payroll Taxes Do Employees Pay In Pakistan?

Individual income tax (PAYE)

The Federal Board of Revenue (FBR) administers income tax on salaries. Employers withhold tax at source each month under the PAYE system. Progressive tax rates apply and are updated annually through the Federal Budget.

Social Contributions

Employees’ Old-Age Benefits Institution (EOBI) – National Pension Scheme:

1% of minimum wage = PKR 370/month

Expat aren’t eligible for EOIB/PESSI.

2025-2026 Tax Slabs For Salaried Individuals

Annual Income (PKR) Tax Rate
Up to 600,000 0%
600,001 - 1,200,000 5% of amount exceeding 600,000
1,200,001 - 2,400,000 PKR 30,000 + 12.5% of amount exceeding 1,200,000
2,400,001 - 3,600,000 PKR 180,000 + 20% of amount exceeding 2,400,000
Above 3,600,000 PKR 420,000 + 25% of amount exceeding 3,600,000

حاسبة تكلفة التوظيف

*
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
PK
*
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Top Countries
تكلفة صاحب العمل
إجمالي تكلفة التوظيف الشهرية
GBP 9,633
إجمالي تكاليف الراتب الشهري
GBP 8,334
الضرائب والمساهمات المقدرة
GBP 8,334
تكلفة الموظف
صافي الراتب الشهري

GBP 5,137
الراتب الشهري الإجمالي
GBP 8,334
الضرائب المقدرة والضمان الاجتماعي
GBP 8,334
تكلفة صاحب العمل
إجمالي تكلفة التوظيف السنوية
GBP 9,633
إجمالي تكاليف الرواتب السنوية
GBP 8,334
الضرائب والمساهمات المقدرة
GBP 8,334
تكلفة الموظف
صافي الراتب السنوي

GBP 5,137
الراتب السنوي الإجمالي
GBP 8,334
الضرائب المقدرة والضمان الاجتماعي
GBP 8,334
اطلب عرض أسعار تفصيلي

Mandatory Employee Benefits in Pakistan

Benefits Mandatory? Notes
Health Insurance No

No mandatory government-provided health insurance for private-sector employees.

Provincial Social Security Institutions (e.g., PESSI in Punjab, SESSI in Sindh) provide healthcare benefits to registered employees in covered industries, funded by employer contributions (6%). Coverage includes medical treatment, maternity care, disability benefits for insured employees earning up to provincial wage caps.

Pension / Social Security Yes

Employees’ Old-Age Benefits Institution (EOBI) is the statutory pension scheme providing old-age, invalidity, and survivors’ pensions. Eligibility requires a minimum contribution period (usually 15 years). Applies to all employees in establishments with ≥5 workers.

Provincial Social Security Schemes (PESSI, SESSI, etc.) are employer-funded (6% contribution) and cover medical, maternity, and disability benefits.

Other Statutory Benefits No

Workers’ Compensation & Death Benefits

Establishments with 20+ employees must pay annual profit bonus to eligible workmen who have worked at least 90 days.

Leave And Holiday Entitlement in Pakistan

Annual leave

Employees who complete 12 months of continuous service earn 14 consecutive days of paid annual leave. Unused leave must be carried forward (up to 14–30 days, depending on provincial rules) and paid out on termination.

Public holidays

Pakistan observes 13–17 public holidays annually, including national events such asPakistan Day (March 23) and Independence Day (August 14) along with major religious holidays like Eid and Ashura.

Sick Leave

Casual Leave: Employees receive up to 10 days of paid casual leave per year, usually for urgent personal reasons.. Prior notice is required, except in emergencies.

Sick leave provides up to 16 days per year at half pay, with a medical certificate required for absences longer than two days.

For employees covered under Provincial Employees’ Social Security Ordinances, sick leave benefits can extend up to 121 days for ordinary illness (typically at 75% of wages, or 50% in KP and Balochistan) and up to 365 days at full pay for serious illnesses such as tuberculosis or cancer.

Maternity Leave

Female employees are entitled to:

  • 180 days of paid leave for the first birth
  • 120 days for the second birth
  • 90 days for the third birth
  • Some provinces provide up to 112 days of paid maternity leave.

Paternity Leave

Male employees are entitled to take up to 30 days of fully paid paternity leave for the first three separate births. Additional leave for later births may be granted as unpaid, depending on company policy.

Other Types of Leave

  • Pilgrimage Leave (Hajj/Umrah, Ziarat): Not legally required but often granted for up to 60 days, paid or unpaid, depending on company policy or collective agreements.
  • Bereavement (Compassionate) Leave: The Factories Act grants one day of paid leave for the death of an immediate family member, subject to proof.
  • Marriage Leave: Not required by law, though many employers grant two days of paid leave for the employee’s own marriage as a matter of policy or custom.

Termination And Offboarding in Pakistan

In Pakistan, every employment ending, whether by resignation or dismissal, must follow the law’s structure for notice, settlement, and records. The outline below shows what this means in practice.

Type Possible?
Termination for Cause (poor performance, misconduct, etc.) Yes
Termination without Cause Yes
Mutual Termination Agreement (MTA) Yes
Redundancy Not possible under the EOR setup

Employee Resignations

Employee
Resignations

 Termination with Cause

Termination
with Cause

Termination without Cause

Termination
without Cause

Mutual Termination Agreement

Mutual Termination
Agreement

 Fixed Term Contract

Fixed Term
Contract

Pakistani Employee Resignation

Form

Written notice.

Notice period

Employees intending to resign are required to provide their employer with a 30-day notice period.

End-of-Service Benefits

Severance/Gratuity

  • Employees who complete at least one year of service qualify for end-of-service gratuity equal to 30 days of wages for each completed year. Any period over six months counts as a full year.
  • This benefit applies even when an employee resigns, unless the contract explicitly states otherwise.

Other Benefits

Upon resignation, employers must settle all dues, including:

  • Unpaid salary, pro-rated if necessary;
  • Leave encashments (e.g., earned annual leave);
  • Bonuses, overtime, arrears, etc., as applicable.

Final Payment Timing and Compliance

Final Payment Deadline: Employers must pay all final dues within a few days of the employee’s last working day.

Employer Termination With Cause in Pakistan

Acceptable grounds

The law allows employers to dismiss an employee for serious misconduct such as fraud, theft, or insubordination. A fair process must be followed, including a show-cause notice, an inquiry, and a written explanation of the decision.

Notice

Under the Industrial and Commercial Employment Ordinance, employers can terminate an employee’s contract without notice in proven cases of misconduct.

End-of-Service Benefits

Severance

Employers can forfeit gratuity if the termination for cause is lawful, and all disciplinary procedures under the Standing Orders have been followed.

Other Benefits

Employers are obligated to provide permanent employees with a written termination notice detailing the reasons for dismissal, regardless of the cause.

Employer Termination Without Cause in Pakistan

Acceptance Grounds

The law allows employers to terminate an employee without cause, as long as they issue a termination letter with a valid, documented reason such as poor performance or business restructuring.

Notice

  • Notice period: When terminating permanent employees for reasons other than misconduct, employers must provide one month’s notice.
  • Payment in lieu of notice or notice waiver: Alternatively, they can offer payment in lieu of notice equal to one month’s wages, based on the average earnings of the previous three months.

End-of-Service Benefits

Severance/Gratuity

  • Permanent employees who are dismissed after completing at least 12 months of service are entitled to severance pay equivalent to 30 days’ wages for each year worked. Any service period longer than six months is counted as a full year.
  • Employers contributing to a provident fund on behalf of their employees are exempt from paying severance.

Other Benefits

Employers must provide permanent employees with a written termination notice detailing the reasons for dismissal, regardless of the cause.

Mutual Termination Agreements (MTAs) in Pakistan

  • MTA is a voluntary agreement signed by both parties (employer and employee) to terminate an employment contract by mutual consent.
  • Pakistani labor law neither mandates or prohibits agreements like this, but they’re lawful as long as they’re fair, voluntary, and properly documented. They’re typically used to avoid disputes or litigation by clearly spelling out termination terms: final payments, notice waivers, confidentiality, non-compete clauses, and release of claims.

These agreements are valid under Pakistani contract law (Contract Act, 1872), provided they involve free consent and lawful terms.

Offboarding Process for the End of Fixed-term Contracts in Pakistan

If the Fixed-Term Contract Ends Normally

Under Pakistan’s Industrial Relations Ordinance (IRO) and related regulations, when a fixed‑term contract concludes on its agreed date, no additional compensation or severance is required-unless the employment contract itself says otherwise.

If the Fixed-Term Contract Ends Normally

When an employer ends a fixed‑term contract prior to its scheduled end, the following legal principles apply:

Notice or Pay in Lieu

  • MThe employer must provide 30 days’ notice, or payment in lieu of notice
  • This applies even to fixed-term contracts that are ended early, unless otherwise specified.

Severance Pay (Gratuity)

Employees who complete at least one year of service are entitled to severance/gratuity pay: typically one month’s salary per year of service, or as per contract terms.

Key Elements of an Employment Contract in Pakistan
When drafting an employment contract for employees in Pakistan, the following key elements should be included:

Personal Details

Name, contact information, and role of the employee.

_'s Booming Remote Workforce

Challenges of Remote Hiring in _

Simplifying Remote Hiring in _ with RemotePass 

Hire in Pakistan, Worry Free

From onboarding and payroll to offboarding and visa support, RemotePass simplifies it all so you can focus on growing your team.

Building and expanding a global workforce is seamless with RemotePass. Our platform simplifies the complexities of hiring, payroll, and compliance across over 150 countries, including Pakistan.

With RemotePass, you can quickly onboard international employees, manage payroll, ensure legal compliance, and provide competitive benefits—all from one place. Focus on growing your business while we handle the HR and legal intricacies.

FAQs About Hiring in Pakistan

Got Questions? Find Answers Here

Can I hire foreign workers in Pakistan without setting up a legal entity?

Yes, using an Employer of Record (EOR) like RemotePass allows you to legally hire and pay workers in Pakistan without establishing a local entity.

What’s the minimum wage in Pakistan for 2025?

The federal minimum wage is PKR 37,000/month as of FY 2025–26. Provincial rates may vary but must not fall below this threshold.

Do I have to provide health insurance to employees in Pakistan?

No, it's not mandatory. However, provincial social security schemes like PESSI and SESSI provide health coverage funded by the employer.

How are end-of-service benefits (gratuity) calculated in Pakistan?

Employees with at least one year of service are entitled to 30 days’ wages per year worked. Partial years over 6 months count as full years.

What taxes should I withhold from employee salaries?

You must withhold monthly income taxes per Pakistan’s progressive PAYE system. Social contributions like EOBI (1%) are also deducted from employees.

What’s the probation period and notice requirement?

Probation is up to 3 months. The standard notice period is 30 days, both for resignation and termination (unless for cause).

How is sick leave handled in Pakistan?

Employees get 10 days of casual leave and up to 16 days of sick leave per year. Sick leave can extend up to 121–365 days under social security.

Is there a bonus requirement in Pakistan?

There’s no statutory requirement for bonuses, but companies with over 20 employees must pay an annual profit bonus to eligible workers.

What is the VAT or sales tax rate in Pakistan?

General Sales Tax (GST) is 17%. Some provinces impose a Service Sales Tax (SST) between 13–16% on services.

How can RemotePass help me hire in Pakistan?

RemotePass handles compliant onboarding, payroll, taxation, benefits, and offboarding without the need to set up a local entity.

دعنا نَدْرُدْش

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.