Pakistan Labor Laws: A Comprehensive Guide

Pakistan’s economy is growing, with industrial production expected to increase by 4.8% in 2025 and the manufacturing sector expanding by 1.3% in fiscal year 2024-25. With over 60 million workers across industries like manufacturing, textiles, and services, understanding and following Pakistan’s labor laws is essential for businesses to ensure fair treatment of employees and smooth operations. Pakistan’s labor laws set clear rules to protect workers’ rights and define employers’ responsibilities. These laws cover important areas such as wages, working hours, leave entitlements, workplace safety, and fair termination procedures. Despite a solid legal framework, many businesses struggle to fully understand and apply these rules, which often leads to costly disputes, fines, and unhappy employees.

These laws are governed by both federal and provincial regulations, reflecting the country’s diverse economy and workforce. By understanding and applying Pakistan’s labor laws correctly, businesses can reduce disputes, improve productivity, and build trust with their workforce. Employees, in turn, have a clear understanding of their rights and the legal options available if those rights are violated. This balanced approach creates a fair and compliant workplace that benefits everyone. This guide provides clear and practical information on Pakistan’s labor laws to help you apply them effectively in your workplace.

Scope of Labor Laws in Pakistan

Pakistan’s labor laws regulate the relationship between employers and employees to ensure fair wages, safe working conditions, and protection of workers’ rights. These laws cover essential areas including minimum wage, working hours, leave entitlements, workplace safety, termination procedures, and labor dispute resolution. They are based on Pakistan’s constitution and aligned with international labor standards to promote both economic growth and worker welfare.

The laws apply to a wide range of industries such as manufacturing, textiles, services, and commerce. They set minimum standards to protect workers while supporting businesses in maintaining fair and lawful operations. These laws also include provisions for social security benefits, health insurance, and retirement schemes, which are important for employee wellbeing.

Key Regulatory Bodies (Ministry of Labor, Courts)

Several institutions enforce and oversee Pakistan’s labor laws, working together to ensure compliance and protect workers’ rights across the country. These bodies conduct inspections, resolve disputes, and implement social security schemes to maintain fair labor practices.

• Ministry of Labor and Human Resource Development: This federal ministry formulates national labor policies, coordinates with provincial labor departments, and updates regulations to align with evolving labor standards. It also implements programs aimed at improving worker welfare, workplace safety, and capacity building for labor law enforcement.
• Provincial Labor Departments: Following the 18th Amendment, labor administration is primarily devolved to provincial governments. These departments conduct workplace inspections, enforce labor laws locally, and resolve labor disputes within their jurisdictions.
• Labor Courts and Industrial Tribunals: These judicial bodies handle disputes related to wrongful termination, wage claims, workplace safety violations, and other labor issues. They provide accessible legal remedies for both employers and employees, helping resolve conflicts efficiently.
• Employees’ Old Age Benefits Institution (EOBI) and Social Security Institutions: These statutory bodies manage social security schemes, including retirement pensions, medical benefits, and compensation for workplace injuries. Employers are legally required to register employees with these institutions and make contributions to ensure workers’ financial security.
• National Industrial Relations Commission (NIRC): NIRC resolves industrial disputes between employers and employees, helping prevent strikes and work stoppages. It ensures that both parties follow labor laws and provides a legal platform for addressing conflicts related to wages, working conditions, and union activities.

Employment Contract in Pakistan

A clear and well-structured employment contract is crucial for ensuring transparency, fairness, and legal compliance in Pakistan’s labor market. Under Pakistan’s labor laws, employers must provide written contracts that define the rights and obligations of both employers and employees. These contracts help prevent misunderstandings and disputes by clearly outlining job roles, salary details, benefits, working hours, leave policies, and termination conditions. A properly drafted contract creates a stable work environment and protects the interests of both parties.

Types of Employment Contracts in Pakistan

Understanding the specific types of employment contracts recognized under Pakistan labor law is essential for both employers and employees to ensure legal clarity and protect their rights. Each contract type serves a distinct purpose and comes with defined rights and obligations.

• Permanent Employment Contracts: Permanent contracts provide employees with long-term job security and full legal protections under Pakistan’s labor laws. After successfully completing a probation period, usually three to six months employees gain permanent status. Permanent employees are entitled to statutory benefits including paid annual leave, sick leave, maternity leave, social security contributions, and protection against unfair dismissal.
  
• Probationary Employment Contracts: These contracts allow employers to evaluate new hires before confirming permanent employment. The probation period typically lasts three months but can extend up to six months with mutual agreement. During probation, employers may terminate the contract without notice, but must provide a valid written explanation if requested. Probationary employees have limited benefits compared to permanent staff but are covered by basic labor protections such as minimum wage and working hours.
  
• Temporary Employment Contracts: Temporary contracts cover fixed-term employment, usually for less than nine months. These are common for seasonal work, project assignments, or short-term business needs. Temporary employees receive wages and benefits proportional to the contract length but generally do not qualify for long-term benefits like retirement contributions.
• Apprenticeship Contracts: Governed by the Apprenticeship Ordinance, 1962, apprenticeship contracts focus on skill development for young workers. Apprentices receive a stipend instead of a full salary while undergoing practical training under supervision. These contracts are time-bound and designed to provide industry-specific skills, with limited employment benefits.
• Contract-Based & Gig Work Agreements: The rise of freelancing and remote work in Pakistan has led to increased use of contract-based agreements for gig workers. These contracts define the scope of work, payment terms, deadlines, and confidentiality but usually exclude traditional employment benefits such as paid leave, social security, or job protection.

Key Elements of an Employment Contracts

• Job Responsibilities & Expectations: The contract must specify the employee’s job title, detailed duties, and performance standards. Clear role definitions prevent misunderstandings, help measure employee performance, and set expectations for promotions or disciplinary actions.
  
• Salary, Benefits & Allowances: The contract should state the agreed salary, ensuring it meets or exceeds the government-mandated minimum wage. It must include payment frequency (monthly or biweekly), overtime pay rates (usually 1.5 times the normal wage), bonuses, and other allowances such as medical, travel, or housing. Employers must also clarify contributions to social security schemes like the EOBI and provident funds where applicable.
• Working Hours & Overtime Policies: Pakistan labor law limits working hours to 48 hours per week (typically 8 hours per day, 6 days a week). The contract should detail regular working hours, rest breaks, and overtime policies, including conditions under which overtime pay applies.
• Termination & Resignation Policies: Clearly define notice periods required for resignation or termination, which typically range from one to three months depending on the employee’s length of service and contract type. Specify valid grounds for termination (e.g., misconduct, redundancy), severance pay entitlements, and employee rights to appeal or seek remedy through labor courts.
• Dispute Resolution: Contracts should specify procedures for resolving disputes, such as internal grievance processes, mediation, or referral to labor courts and industrial tribunals. Clear dispute resolution terms help address conflicts efficiently and legally, reducing costly litigation.
• Probation Period (If Applicable): If applicable, the contract should specify the probation period duration (usually 3 to 6 months), conditions for confirmation, and termination rights during this phase. Probationary employees have limited benefits but are protected under basic labor laws.
• Confidentiality: Employers include these clauses to protect sensitive company information and prevent employees from joining direct competitors.

Key Labor Laws and Acts in Pakistan

Pakistan labor law is designed to regulate employment contracts, wages, working conditions, employee benefits, and dispute resolution. Whether you are an employer or an employee, understanding these laws ensures compliance and protects rights in the workplace. Pakistan’s labor laws primarily govern blue-collar workers in industries and factories but also influence the employment terms of white-collar employees in corporate and commercial sectors. 

Employment Regulations & Worker Protection

• Industrial and Commercial Employment Ordinance, 1968: Requires written employment contracts for permanent and probationary workers. It mandates clear termination procedures, including valid reasons and notice periods, protecting employees from arbitrary dismissal. It also covers disciplinary processes and grievance handling.
• Factories Act, 1934: Includes provisions for appointing safety officers in factories with over 250 employees, mandatory first aid facilities, and health surveillance for workers exposed to hazardous substances. It enforces limits on overtime and mandates rest periods.
• Shops and Establishments Ordinance, 1969: Recently strengthened to include stricter enforcement on overtime payments, night shift regulations for women, and penalties for violations. They regulate weekly rest days and employment conditions in commercial establishments

Social Security & Employee Benefits

• Employees’ Old-Age Benefits Act, 1976 (EOBI): Employers are required to register all eligible employees within 30 days of hiring and contribute monthly to the EOBI fund. Contributions provide workers with pensions, survivors’ benefits, and invalidity allowances upon retirement or disabil Recent expansions include coverage for informal sector workers in some provinces.
• Provincial Employees Social Security Ordinances (PESS): These ordinances provide medical care, maternity benefits (minimum 12 weeks paid leave), disability compensation, and rehabilitation services to registered workers. Social security institutions under PESS regularly audit employers to ensure compliance and operate complaint mechanisms where workers can report violations or denial of benefits.
• Workers’ Welfare Fund Ordinance, 1971: Funded by a mandatory 2% contribution on the total income of industrial establishments earning above Rs. 500,000 annually, this fund finances workers’ housing, healthcare, education, and skill development programs. The fund is managed by a governing body with representatives from government, employers, and workers.

Wages & Compensation Laws

• Minimum Wages Ordinance, 1961: This Ordinance sets the minimum wage rates for workers in various industries and skill levels across Pakistan. Minimum wages are regularly reviewed and updated based on inflation, cost of living, and economic conditions. The law applies to skilled, semi-skilled, unskilled, and apprentice workers in industrial establishments but excludes government employees, agricultural workers, and coal miners.
• Payment of Wages Act, 1936: This Act requires employers to pay wages on time and in full without unauthorized deductions. Wages should preferably be paid through bank transfers to ensure transparency and reduce disputes. Employers must provide wage slips detailing earnings and deductions.
• Companies Profits (Workers Participation) Act, 1968: Applies to companies with 100+ employees and requires them to share a portion of their profits with workers. The profit-sharing amount is calculated based on the company’s annual profits and distributed as bonuses or dividends to eligible employees.
• Workmen’s Compensation Act, 1923: Under this Act, employers must compensate workers who suffer injuries or death due to workplace accidents. Compensation amounts depend on the severity of the injury and the worker’s wages. Employers are required to report all workplace accidents to labor authorities within 24 hours.

Employee Welfare & Special Protection Laws

• Workers’ Children (Education) Ordinance, 1972: This Ordinance requires employers in establishments with ten or more workers to pay an education cess to the provincial governmentThe funds collected are used to provide free education, including textbooks, admission, tuition, examination fees, and school funds, for up to two children of every worker employed.
• West Pakistan Maternity Benefit Ordinance, 1962: This law guarantees female workers a minimum of 12 weeks of paid maternity leave, including medical care and protection from dismissal during this period. Recent amendments have extended maternity benefits to contract and part-time workers, ensuring broader coverage.
• Disabled Persons (Employment and Rehabilitation) Ordinance, 1981: Employers with 50 or more employees are required to reserve at least 2% of their jobs for persons with disabilities. The law prohibits discrimination against disabled workers and mandates reasonable workplace accommodations to enable their effective participation.
• Bonded Labor System (Abolition) Act, 1992: This Act makes bonded labor illegal. Bonded labor is a system where workers have to work to pay off debts under unfair and harsh conditions. The law makes debt bondage, forced labor, and similar abuses a crime and provides legal protection for workers who are at risk of being treated unfair.
• Employment of Children Act, 1991: This Act prohibits the employment of children in hazardous industries and dangerous work environments. The law mandates rehabilitation, education, and vocational training for rescued child workers to help reintegrate them into society.

Industrial Relations & Dispute Resolution

• Industrial Relations Act, 2012: This Act regulates the formation and functioning of trade unions, collective bargaining, strikes, and dispute resolution across Pakistan, especially for industries operating in multiple provinces or the Islamabad Capital Territory. It requires that before any strike or lockout, parties must attempt conciliation to resolve disputes peacefully.
• Industrial Relations Ordinance, 1969: This Ordinance provides a legal framework for resolving labor disputes and protects trade union leaders from unfair treatment or victimization by employers. It sets out clear procedures for addressing grievances and conflicts between workers and employers, helping prevent escalation into strikes or lockouts.
• Trade Union Act, 1926: Allows workers in Pakistan to form and register trade unions to protect their rights and interests. It sets clear rules for registering unions, managing their funds, and running their affairs with transparency. Recent reforms have modernized the process by allowing electronic registration of trade unions, making it easier and faster to comply with legal requirements.

Working Hours and Overtime Regulations in Pakistan

Pakistan’s labor laws regulate working hours and overtime to protect employee rights and ensure fair compensation. These rules are primarily governed by the Industrial and Commercial Employment Ordinance, 1968, the Factories Act, 1934, and relevant provincial labor laws.

Standard Working Hours

• Employees can work up to 9 hours per day and 48 hours per week, usually spread over six days.
• The daily working hours include short breaks but exclude a one-hour lunch or prayer break.
• Employees are entitled to at least one rest day per week.
• Female employees are permitted to work only between 9 AM and 7 PM. If required to work beyond these hours, employers must provide safe transportation; otherwise, female workers can only work between 6 AM and 7 PM.
• During Ramadan, working hours are reduced to approximately 6 hours per day to accommodate fasting employees.
• For workplaces operating a five-day week, the weekly limit remains 48 hours, with daily hours adjusted accordingly.

Overtime Regulations

• Overtime applies when an employee works beyond 9 hours per day or 48 hours per week.
• Employees may work up to 2 to 3 hours of overtime daily, but total working hours including overtime must not exceed 60 hours per week.
• The Factories Act, 1934 limits overtime to 150 hours per quarter per worker.
• Overtime pay must be at double the regular hourly wage (e.g., if normal wage is PKR 200/hour, overtime pay is PKR 400/hour).
• Employees cannot be forced to work overtime beyond legal limits, especially if it affects their health or safety.
• If employees work on weekly rest days, they are entitled to compensatory holidays but no extra premium pay.
• Work done on public holidays must be paid at triple the normal wage rate, plus a paid substitute holiday and one day’s compensatory leave.
• Employers are legally required to maintain accurate records of overtime hours and payments.

Breaks and Rest Periods

• Employees working more than 5 continuous hours must be given a 30-minute break.
• If the workday exceeds 8.5 hours, employees are entitled to two 30-minute breaks.
• For every 6 hours of work, a total of 1 hour of rest must be provided, which can include lunch and prayer breaks.
• Employees must receive at least one full rest day per week, usually Sunday or as per company policy.

Leave Policies and Employee Entitlements

Pakistan’s labor laws provide a structured framework of leave entitlements designed to protect employee welfare, promote work-life balance, and ensure compliance by employers. These leave policies apply to all categories of workers, including permanent, probationary, and contractual employees, under laws such as the Industrial and Commercial Employment Ordinance, 1968, the Factories Act, 1934, and provincial labor regulations.

Annual Leaves

• Employees who complete 12 months of continuous service are entitled to 14 consecutive days of paid annual leave.
• Annual leave includes any weekly holidays or public holidays that fall during the leave period, which are counted as part of the leave.
• Annual leave pay must be calculated based on the employee’s normal wages, including basic salary and regular allowances.
• If an employee resigns or is terminated before taking annual leave, they are entitled to payment in lieu of unused leave days.

Casual Leaves

• Employees are entitled to up to 10 days of paid casual leave annually.
• Casual leave is intended for urgent personal matters, emergencies, or unforeseen events such as family bereavement or accidents.
• Granting casual leave is usually subject to employer approval and may require prior notice depending on company policy.
• Casual leave typically cannot be carried forward to the next year or encashed if unused.
• Employers may set specific rules on how casual leave can be taken, such as limiting consecutive days or requiring documentation for certain cases.

 Sick Leaves

• Employees are entitled to 8 to 16 days of paid sick leave annually, with 16 days commonly recognized under the Factories Act.
• Sick leave beyond a few days typically requires a medical certificate from a registered physician.
• Sick leave may be carried forward in some organizations but is usually capped (e.g., maximum accumulation of 16 days).
• Sick leave is not encashable if unused.
• Sick leave entitlements apply to both permanent and probationary employees under labor laws.

Maternity Leave

• Female employees are entitled to 12 to 16 weeks of paid maternity leave, depending on provincial laws and employer policies.
• Maternity leave is usually granted after completing a minimum of 4 months of continuous service with the employer.
• Full wages must be paid during the entire maternity leave period.
• Employees have the right to return to the same job or an equivalent position after maternity leave ends.
• Maternity leave benefits also apply to contract and part-time workers under recent legal amendments.

 Paternity Leave

• In some provinces, such as Punjab, male employees are entitled to 7 to 30 days of paid paternity leave.
• Paternity leave can typically be taken up to 3 times during the course of employment.
• Eligibility for paternity leave usually requires a minimum period of continuous service, often around 3 to 6 months.
• Paternity leave is paid at the employee’s regular wage rate.
• Employers are prohibited from penalizing or dismissing employees for taking paternity leave.

 Public Holidays

• Employees are entitled to 13 to 15 paid public holidays annually, including national and religious holidays such as:
  • Eid-ul-Fitr
  • Eid-ul-Adha
  • Ashura (9-10 Muharram)
  • Pakistan Day (March 23)
  • Independence Day (August 14)
  • Quaid-e-Azam Day (December 25)
• Public holidays are fully paid and cannot be deducted from other leave entitlements.
• Minority religious holidays such as Christmas (December 25), Easter, Holi, Baisakhi, Diwali, and Guru Nanak’s Birthday are also observed as paid holidays for respective communities.

 Festival Leave

• Some organizations grant up to 10 days of festival leave annually, separate from public holidays.
• Festival leave is usually given for major religious and cultural festivals such as Eid-ul-Fitr, Eid-ul-Adha, and other local celebrations.
• Festival holidays are often declared by provincial or federal governments, and employers must comply with these official announcements.
• Festival leave is fully paid and does not affect other leave entitlements like annual or casual leave.

Pilgrimage Leave

• Muslim employees have the right to pilgrimage leave (e.g., for Hajj or Ziarat), which can last up to 30 days depending on employer policy and labor agreements. 
• This leave can last up to 30 days unpaid as mandated by labor laws, but some employers may offer paid leave or extend the duration up to 60 days under collective agreements or company policy.

• Employers have the discretion to decide how many employees can take pilgrimage leave each year based on work requirements and staffing needs.

Minimum Wage in Pakistan (2025 Update)

As of the fiscal year 2025-26, the federal minimum wage in Pakistan remains fixed at Rs37,000 per month. This follows the previous increase from Rs32,000 to Rs37,000 in the 2024-25 budget. Despite inflation and public calls for a higher minimum wage, the government has chosen to keep the current rate steady to balance economic priorities and support overall economic stability.

Key Facts About Minimum Wage 2025

• Federal Minimum Wage: Rs37,000 per month, unchanged for FY 2025-26.
• Punjab: Rs40,000 per month for unskilled workers, effective July 1, 2025.
• Sindh: Proposed minimum wages vary by skill level, with Rs40,000 for unskilled, Rs41,280 for semi-skilled, Rs48,910 for skilled, and Rs50,868 for highly skilled workers (pending final approval).
• Other provinces set wages based on local boards and economic conditions; employers must comply with the applicable provincial minimum wage.
• Women workers are entitled to the same minimum wage as men for work of equal value, as stipulated in Punjab’s Minimum Wages Notification 2024-25.
• The minimum wage applies to all workers in formal sectors, including unskilled, semi-skilled, and skilled laborers, as well as contractual and daily wage workers under labor laws.
• Provincial labor departments enforce minimum wage laws, conduct inspections, and penalize non-compliant employers.

Payroll Taxes and Employer Obligations

Employers must fulfill several payroll tax and contribution requirements under Pakistani law:

• Deduct income tax (PAYE) from employees’ salaries according to FBR tax slabs and remit monthly.
• Contribute to provincial social security institutions, providing medical, maternity, and disability benefits.
• Register employees with the Employees’ Old-Age Benefits Institution (EOBI) and make monthly pension contributions.
• Pay into the Workers’ Welfare Fund, a statutory fund for worker welfare projects.
• Manage provident fund contributions where applicable, ensuring retirement savings.
• Maintain accurate payroll records and file tax returns timely to avoid penalties.

Payslip Requirements in Pakistan

Payslips must be provided to all employees to ensure transparency in salary payments.

• Payslips must show employee name, designation, pay period, gross salary, itemized deductions (tax, social security, provident fund), overtime, bonuses, and net salary.
• Employers must issue payslips monthly along with salary payments.
• Payslips can be in paper or electronic form but must be clear and accessible.
• Employers must keep payslip records for 3 to 5 years for audit and inspection purposes.
• Failure to provide payslips can result in labor penalties and disputes.

Termination of Employment and Severance Pay in Pakistan

Termination of employment in Pakistan is governed by the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 (ICEO), the Industrial Relations Act, 2012, and provincial labor laws.

• Employers and employees must provide a minimum of 30 days’ written notice before termination. For probationary employees, notice periods range from 7 to 15 days.
• Employers may terminate employment for valid reasons such as misconduct, redundancy, incapacity, or contract expiry. Termination without valid cause is unlawful.
• Employers must pay severance to employees terminated for reasons other than misconduct. Severance equals 30 days’ wages for each completed year of service, including any fraction exceeding six months.
• Employers must pay gratuity as a lump sum benefit to employees who complete at least five years of continuous service. Gratuity amounts vary based on company policy or collective agreements but typically equal one month’s salary for every year of service.
• Termination during legally protected leaves (e.g., maternity, sick leave) is prohibited.
• Employers must document termination notices and reasons to avoid disputes.

Labor Disputes and Legal Procedures

Labor disputes in Pakistan arise under the Industrial Relations Act, 2012, provincial industrial relations laws, and the Factories Act, 1934.

• Common disputes include wage delays, unfair dismissal, discrimination, collective bargaining conflicts, and workplace safety issues.
• The first step in dispute resolution is conciliation, conducted by labor department officials or conciliation officers.
• If conciliation fails, disputes proceed to labor courts or industrial tribunals for binding decisions.
• Employers and employees must follow legal procedures for strikes and lockouts; illegal actions can lead to fines or other penalties.
• Complaints must be filed within statutory timeframes, usually 30 to 90 days from the incident.
• Registered trade unions represent workers in collective bargaining and dispute resolution.

Compliance Strategies for Employers in Pakistan (2025)

To ensure full legal compliance and avoid penalties, employers in Pakistan should implement the following essential strategies with added critical details:

Use Clear Employment Contracts

• Provide written contracts specifying job roles, wages, working hours, leave entitlements, termination conditions, confidentiality, and probation terms.
• Ensure contracts comply with provincial labor laws (e.g., Punjab Shops and Establishments Ordinance) and include clauses on grievance procedures and disciplinary actions.
• Update contracts to reflect changes in minimum wage, labor regulations, and company policies.

Follow Wage and Payroll Rules

• Pay at least the federal minimum wage of Rs37,000 per month, or higher provincial rates (e.g., Rs40,000 in Punjab).
• Calculate and pay overtime at double the hourly rate for hours worked beyond 9 per day or 48 per week, ensuring total weekly hours do not exceed 60.
• Deduct and remit income tax (PAYE) accurately to the Federal Board of Revenue (FBR) and make timely contributions to EOBI and provincial social security funds.
• Issue monthly payslips showing gross salary, all deductions (tax, social security, provident fund), bonuses, and net pay.
• Maintain payroll records for a minimum of 3 to 5 years for audit and compliance.

Implement Statutory Leave Policies

• Grant statutory leaves including 14 days annual leave, 10 days casual leave, 8-16 days sick leave, 12-16 weeks maternity leave, and 13-15 paid public holidays annually.
• Ensure leave policies align with provincial labor laws and communicate them clearly to employees.
• Keep accurate records of leave taken and balances to avoid disputes and facilitate inspections.

Apply Proper Termination Procedures

• Provide written notice of termination (minimum 30 days for permanent employees; shorter for probationers).
• Pay severance equal to 30 days’ wages per completed year of service for lawful terminations, and gratuity to employees with at least five years’ continuous service, typically calculated as one month’s salary per year of service.
• Avoid unlawful dismissal, especially during protected periods such as maternity leave or sick leave.
• Document all termination notices, reasons, and payments to protect against legal challenges.

Maintain Records and Documentation

• Keep comprehensive records of employment contracts, attendance, payroll, leave, disciplinary actions, and termination notices.
• Ensure records are securely stored and accessible for labor inspections and audits.
• Regularly review and update records to ensure accuracy and completeness.

Train HR and Management

• Conduct regular training sessions for HR and management on current labor laws, minimum wage updates, payroll compliance, and employee rights.
• Educate management on handling disciplinary procedures, termination processes, and dispute prevention.
• Promote awareness of anti-discrimination laws and workplace safety standards.

How HRBS Supports Compliance with Pakistan Labor Laws

Pakistan’s labor laws are essential for ensuring fair treatment and clear responsibilities for both employers and employees. These laws cover key areas like minimum wages, working hours, benefits, and workplace safety, creating a structured environment that minimizes disputes. For employers, following these regulations is not just about avoiding fines and legal issues; it’s about building a reputable and stable workforce. For employees, understanding these laws ensures they receive their rightful pay, benefits, and a safe working environment. When challenges arise, established channels like labor courts, trade unions, and legal authorities provide pathways for resolution.  Staying informed and compliant helps businesses operate ethically and smoothly, while empowering employees to advocate for their rights.

For businesses looking to navigate Pakistan’s labor landscape efficiently, HRBS offers specialized Employer of Record (EOR) and payroll management services. HRBS can manage employment contracts, ensure compliance with local labor laws, handle accurate salary payments, tax deductions, and social security contributions, and manage statutory reporting. Contact HRBS  to ensure full legal compliance and streamline your operations in Pakistan.

FAQ’s

How do Pakistan’s labor laws protect employees?

Pakistan’s labor laws set mandatory standards for minimum wages, working hours, overtime pay, paid leave, workplace safety, and social security benefits like EOBI contributions. These laws protect workers from exploitation and unsafe conditions by guaranteeing basic financial and health protections. Employers are legally required to provide these benefits and maintain records to ensure transparency. While enforcement challenges exist, government inspections and penalties aim to improve compliance and safeguard worker rights.

How many working hours are allowed per week in Pakistan?
Employees may work up to 48 hours per week, typically over six days, with a maximum of nine hours daily. Breaks, including lunch and prayer, are excluded from working hours. Female employees generally work between 9 AM and 7 PM, with safe transport required if working beyond these hours. Certain industries, like mining and factories, may have additional restrictions, such as shorter maximum daily hours or government-approved extended hours during peak periods.

What is the minimum wage in Pakistan in 2025?
The federal minimum wage for 2025 is Rs37,000 per month, with provinces like Punjab and Sindh setting higher rates to reflect local living costs. This wage floor prevents exploitation and guarantees workers a basic income. HRBS assists businesses in payroll management and ensures adherence to minimum wage laws, helping maintain compliance.

What benefits are mandatory for employees in Pakistan?
Mandatory benefits include paid annual leave, sick leave, maternity leave, social security contributions, gratuity or provident fund, and compensation for workplace injuries. These benefits provide financial security and health protections, aligning with Pakistan’s labor welfare laws. Employers are legally required to provide these benefits to maintain compliance and employee welfare.

Can an employer terminate an employee without notice in Pakistan?

Termination without proper notice or compensation is prohibited except in cases of serious misconduct, as per the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968. Employees can challenge unlawful dismissals in labor courts, ensuring protection against unfair termination and reinforcing job security.

Are contract employees entitled to benefits under Pakistan labor law?

Contract employees in Pakistan are entitled to minimum wage, overtime pay, and workplace safety protections. However, benefits like gratuity, EOBI, and social security depend on their contract terms and employer policies, and they may not receive the same benefits as permanent employees. Employers must still comply with registration and contribution requirements for social security and EOBI where applicable.

How does the government enforce labor laws in Pakistan?

Labor laws are enforced through inspections, penalties, and labor courts managed by bodies such as the National Industrial Relations Commission (NIRC) and provincial labor departments. While enforcement gaps exist, ongoing inspections and legal recourse mechanisms help uphold workers’ rights and ensure employer compliance.

What is the role of trade unions in Pakistan?

Trade unions in Pakistan play a crucial role in protecting workers’ rights, negotiating fair wages, and improving working conditions. They help employees resolve disputes, address unfair labor practices, and ensure compliance with Pakistani labor laws. Workers can join unions to strengthen their collective bargaining power and secure better employment conditions.