Pakistan
Min. wage
(x12 payments)
PKR 40,700 /mo
About the minimum wage
Employer tax
Annual leave
14 days
Learn about annual leave
Notice period
1 month min
Termination and notice info
Updated
Sep 2026
The default and most common arrangement in Pakistan. A written appointment letter/contract is legally required, setting out pay, duties, and terms. Indefinite contracts continue until ended by either party with proper notice (and, outside misconduct cases, statutory severance/gratuity) — dismissal generally requires a documented, fair reason.
Fixed-term/temporary contracts are permitted for defined projects or a set period and are common in Pakistan, but carry fewer protections than permanent roles (e.g. reduced or no overtime/notice rights under some provincial Standing Orders definitions). Provincial rules on 'deemed permanency' vary — e.g. in Balochistan a temporary worker who completes 9 months, or whose contract with renewals exceeds 12 months, must be made permanent. There is no single nationwide cap on renewals, so the relevant provincial law should be checked.
The Factories Act 1934 and provincial Shops & Establishments laws cap normal hours at 9/day and 48/week, with a maximum spread-over (including breaks) of 12 hours. Overtime is generally paid at double the ordinary hourly rate (railways use 1.25x), and is typically capped around 2-3 hours/day and roughly 12 hours/week, with lower caps for workers under 18. Women may generally work up to 9 hours/day and not after 10pm unless the employer provides transport.
The Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 and its provincial equivalents set 3 months as the standard probation period, though many private employers extend it to about 6 months by agreement when performance is unclear. Either party may end the relationship during probation without notice or severance.
There is no legal requirement for a 13th or 14th month salary or bonus in Pakistan. Some employers pay a discretionary annual bonus, often around Eid, but this is a matter of company policy or collective agreement rather than law.
Pakistani labor law does not regulate or restrict job titles; employers may define titles freely in the employment contract. What matters legally is the substance of the role — classification as a 'workman'/'worker' versus managerial/supervisory staff under the Industrial Relations Act — which determines which statutory protections (Standing Orders coverage, union rights, overtime) apply, regardless of the title used.
Employer-paid statutory contributions are calculated on the minimum wage, not actual gross salary: EOBI (old-age pension) = 5% of the minimum wage (~PKR 40,700 in 2026) ≈ PKR 2,035/month; provincial Employees' Social Security Institution dues (PESSI in Punjab, SESSI in Sindh, and KP/Balochistan equivalents, covering health and injury benefits) ≈ 6% of the minimum wage ≈ PKR 2,442/month, generally applying to establishments above a minimum headcount (5-10 workers depending on province). Combined this is roughly 11% of the minimum-wage base — a much smaller effective percentage of an above-minimum-wage employee's actual gross pay. Employers with 50+ staff may additionally owe a 2% Workers' Welfare Fund levy on annual profits (not salary-linked, so excluded from this percentage).
Employees contribute 1% of the minimum wage (~PKR 407/month in 2026) to EOBI, withheld and remitted by the employer. There is no employee-side contribution to PESSI/SESSI. Progressive income tax withheld under FBR rules is separate and not counted as a social-security-style contribution.
In addition to statutory leave, employees are entitled to the following statutory benefits:
Pakistan's social security system runs on two parallel tracks: the federal EOBI pension scheme and provincial Employees' Social Security Institutions (health and injury benefits).
Work-related injury and occupational disease are covered through two overlapping frameworks depending on the employee's coverage status:
Employees terminated for reasons other than misconduct are entitled to statutory severance, commonly referred to as gratuity.
Pakistan has no statutory 13th or 14th month salary.
P.S. our team speaks multiple languages and we'd love to chat in your preferred language if requested.
Your employee's hours, time off, holidays, bonuses, and commissions are automatically calculated into payroll. RemoFirst will invoice you in either US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), Australian Dollars (AUD), or Singapore Dollars (SGD) around the 15th of each month to make sure your employees are paid on time. To make it even easier, you can summarize your entire global team's salaries to aggregate them into one payment (instead of many individual payments).
Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.
Whenever the employee or employer has a question about, or anything else related to international employment, they can speak with our customer support team to get answers from our team of experts.
