Pakistan

Pakistan is a country in south Asia bordered by India, Afghanistan, Iran, and China. It is the world’s 5th most-populous country with the 2nd-largest Muslim population on the globe. Pakistan is the site of many ancient cultures, and has a diverse climate and geography. While it is considered to be a developing country, it has a high potential to become one of the world's largest economies in the 21st century.

Types of Contracts

In Pakistan, the following contract types are available:

• Permanent: does not have a specified end date and continues until terminated by either the employer or the employee according to the terms specified in the contract or as allowed by law.
• Fixed Term: Has a defined start and end date and is often used for temporary or project-based work. The contract automatically terminates at the end of the agreed-upon term unless renewed.
• Part-Time contract: has reduced working hours compared to full-time employment. Part-time employees are entitled to proportional benefits based on hours worked.

Working Hours

A standard working week in Pakistan is 45 hours long (Monday to Saturday).

Overtime

Hours worked over and above 45 hours are counted as overtime. There is no mandated limit to overtime for non  factory workers. Overtime pay is twice the regular rate.

Minimum Wage

The minimum wage is announced annually. For 2024 it is:

• Unskilled worker: PKR 32,000
• Skilled worker: PKR 44,000

Probation Period

The maximum probation period in Pakistan is 90 days. The period can be extended for a further 90 days.

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Taxes & Local Employment Costs

Employee Taxes & Contributions

Taxable income for employees includes salaries, wages, bonuses, allowances, and other employment-related income. Pakistan uses a progressive income tax rate system, where tax rates increase with income levels ranging from 0% to 35%.

Social Security contribution: Employees contribute 1% towards Employee Old Age Benefits Institution (EOBI) for pension.

Employer Taxes & Contributions

Employers pay 6% of their employees' salaries up to PKR 37000 for social security contributions.

Annual Leave

An employee is entitled to a minimum of 14 calendar days of annual leave.

At the end of the year, accrued leave is carried over to the next year for up to 12 months.

At the termination of the contract, unused leave is compensated.

Vacation Premium

Although the vacation premium is a different benefit from vacation days, these two benefits are directly related. The vacation premium is equivalent to 25% of an employee’s base salary corresponding to the vacation period - on top of the daily salary per vacation paid day.

Carrying Over and selling Annual Leave

Typically, an employee is not able to carry over unused vacation into the following reference year. Thus, if the employee does not go on holiday, he will lost it. In addition, vacations must never be compensated with any remuneration, i.e. the employer must grant to the employee the total amount of days off they have accumulated.

Sick Leave

Employees who are unable to work due to a non-work-related injury or illness and have made contributions to the social security system for the 4 weeks preceding the onset of the condition are entitled to paid sick leave through the Social Security Institute.

Employees are only eligible for their total rate of pay for the initial 3 days of illness or injury. After this, they are to be compensated at 60% of their typical pay rate.  This benefit, amounting to 60% of the employee's regular wage, commences from the 4th day of illness and lasts for up to 52 weeks, with the possibility of extension for an additional 52 weeks on an unpaid basis.

There are different types of disability benefits available:

• Total temporary disability (TTD)
• Partial permanent disability (PPD)
• Permanent total disability (PTD): In this case, the worker is entitled to a maximum of 52 weeks of paid leave based on medical evaluation.

Under federal law, employers with employees filing valid workers' compensation claims in Mexico must ensure access to medical care, physical therapy, rehabilitation, and hospitalization if necessary. They are also obligated to provide orthopedic devices and prosthetics for employees who have lost limbs or other body parts in workplace accidents. It's crucial to note that employers must pay injured or ill employees 100% of their total temporary disability benefits for a period of up to 3 months from the date they were approved to receive workers' compensation in Mexico.

Maternity Leave

An employee can take 6 weeks of maternity leave before giving birth and an additional 6 weeks of leave after their child is born, for a total of 12 weeks of paid maternity leave. If the employee chooses, they can adjust their maternity leave benefits so that their leave time begins 4 weeks before giving birth and extends 8 weeks after their child is born.

During leave, the employee receives 100% of their salary paid by the social security institute (IMSS).

Additional Maternity Leave

If the mother has a difficult labor or delivery, the child is unwell and must stay in the hospital, or the child is born with a disability, employees are eligible for an additional 2 weeks of maternity leave or more, depending on the situation. When extended maternity leave is granted, the employee is only entitled to 50% of their total salary for the extended period, and this period cannot last for more than 60 days.

Many employers are not required to pay maternity leave because employees can use IMSS benefits. However, for employees to be eligible to use these benefits, they will need to have been contributing to the social security fund for a minimum of 30 weeks within the year leading up to the beginning of their leave time.

Paternity Leave

Employers in Mexico should grant working fathers 5 working days of paternity leave with pay for the birth of their children.

Public Holidays

The following public holidays are observed in Mexico:

• New Year’s Holiday - January 1
• Constitution Day - February 5
• Benito Juarez Day - March 18
• Labor Day - May 1
• Independence Day - September 16
• Revolution Day - November 8
• Christmas Day - November 25

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Benefits

While not mandatory, many employers choose to provide additional benefits to their employees. These may include:

• Life Insurance: Coverage that provides financial protection to the employee's beneficiaries in case of death.
• Major Medical Insurance: Comprehensive health coverage that may extend to the employee's family, including spouse and children.
• Minor Medical Insurance: Coverage for minor medical expenses, excluding major injuries or treatments.
• Work from Home Allowance: An allowance provided to employees who work remotely, typically ranging around 1,000 MXN gross per month. There's no fixed minimum or maximum amount for this allowance.
• Grocery Coupons: Vouchers or coupons provided to employees for purchasing groceries, usually capped at 7% of the employee's salary.‍
• Profit share: is a mandatory benefit paid to employees in May every year and that have more then 3 months with the employer. The amount varies based on the employer’s profit.

These additional benefits complement the minimum benefits required by law and contribute to a more attractive employment package.

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Notice Period

During probation, the minimum notice period is 7 days. After probation, the minimum notice period is 30 days. An employee can be paid cash in lieu of the notice period.

Severance Pay

The following statutory payments apply following the termination of the employment contract:

• Cash in lieu of unused leave;
• 30 days notice pay where applicable;
• 30-day severance pay for a worker terminated for any reason other than misconduct.

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