Pakistan, officially known as the Islamic Republic of Pakistan, is a South Asian country bordered by Iran, Afghanistan, China, India, and the Arabian Sea. It has a workforce population of 81.9 million people (2023) and a GDP of 337 billion US dollars (2023).

Agriculture is the main source of income in Pakistan, with the developing economy moving towards stabilization and growth. Goods exports are rising, and the IT sector has grown by 28% year on year – workers in Pakistan are known to be hard-working and flexible, with employment laws improving in recent years to protect employees and improve equal opportunities.

This guide will provide an overview of employee benefits in Pakistan, providing an understanding of the Pakistani labor laws and the mandatory employee benefits dictated within it, to supplementary benefits companies are encouraged to offer. We’ll also show how Remote People can help make hiring in Pakistan easy via their Employer of Record broker services.

Pakistani Employment Laws

Pakistan’s labor laws have evolved significantly since its independence in 1946, with laws based on the Constitution of Pakistan supporting Islamic social principles.

Many of their labor laws were introduced in the 1970s, promoting employee benefits such as job security, pension opportunities, and social welfare. Today, equality is a main focus of Pakistani labor laws, prohibiting child labor and improving working conditions.

Some of the key acts within Pakistani labor law include:

  • Workmen’s Compensation Act 1923
  • The Factories Act 1934
  • Payment of Wages Act 1936
  • Minimum Wages Ordinance 1961
  • Apprenticeship Ordinance 1962
  • West Pakistan Maternity Benefit Ordinance 1962
  • Provincial Employees’ Social Security Ordinance 1965
  • Companies Profits (Workers’ Participation) Act 1968
  • The Industrial and Commercial Employment Ordinance of 1968
  • Punjab Shops and Establishments Ordinance 1969
  • Worker’s Welfare Fund Ordinance 1971
  • Workers Children (Education) Ordinance 1972
  • Employee’s Old Age Benefits Act 1976
  • Disabled Persons’ (Employment and Rehabilitation) Ordinance 1981
  • Punjab Industrial Relations Act 2010
  • Industrial Relations Act 2012

It’s strongly recommended that employers seek legal advice before employing in Pakistan to ensure that all mandatory benefits and Pakistani labor laws are adhered to.

Mandatory Employee Benefits in Pakistan

Pakistan offers its employees a range of mandatory benefits that companies must adhere to. Each section below will explain a different employee benefit and what employees in Pakistan are entitled to.

Social Security

Pakistan adopted a Social Security Scheme in 1965, known as the West Pakistan Social Security Ordinance. 

Its first law came into effect in 1972 and was set up to introduce medical services, cash allowances, pensions, and old-age benefits to Pakistani workers. Current social security rates in Pakistan are 1% for employees and 5% for employers. 

Benefits provided by social security contributions include:

  • Old-age pension
  • Disability pension
  • Survivor pension/benefits
  • Sick pay
  • Maternity Pay
  • Medical benefit
  • Family allowance

Annual Paid Leave

All workers (except temporary or contractor workers) are entitled to annual paid leave, provided that they have completed 12 months of continuous service. They can take 14 consecutive days of paid leave in the subsequent 12-month period as detailed under the Factories Act and Shops and Establishments Ordinance.

This differs if you work in the mining industry, whereby you earn 1 day of paid leave for every 17 days worked below ground, and one day of leave for every 20 days of work above ground.

Working Hours

The standard working hours in Pakistan is 8 – 9 hours per day, on the condition that weekly hours don’t exceed 48 hours.

Generally, 1 hour a day is allocated for lunch/prayer time, with the total number of hours in work inclusive of breaks totaling 9 – 10 hours.

Women are only allowed to work up to 9 hours per day, until 10 pm, on the condition that employers arrange transport for pickup/drop-off. If an employer cannot arrange transport, women are permitted to work until between 6 am – 7 pm only.

Mine workers may not work longer than 8 hours per day or 48 hours per week. Working hours are generally reduced during the month of Ramadan.

National Minimum Wage

A national minimum wage was introduced in Pakistan in 1961, with the implementation of The Minimum Wages Ordinance.

The provincial governments set minimum wages. For 2025–26, the minimum wage for unskilled workers is PKR 40,000 per month in most provinces. In Sindh, semi-skilled workers earn PKR 41,380, skilled workers PKR 49,628, and highly skilled workers PKR 51,745 per month. These wages apply to employees in industrial and commercial establishments to help improve workers’ earnings.

Overtime Pay

Some employers will require their workers to carry out overtime due to the nature of their businesses. Any hours that are over the set hours in a contract count as overtime, with employees being allowed to work a maximum of 2-3 hours per day. Workers are limited to 12 overtime hours per week, 634 hours per year.

The typical rate of overtime is double the standard rate of pay. Employees working under the Railways Act are paid an overtime rate of 25% on top of their standard pay.

Overtime is not voluntary and must be completed if an employer requires it unless sufficient causes/reasons are provided.

Paid Public Holidays

Public holidays in Pakistan are generally paid for by employers. The public holidays in Pakistan are as follows:

  • January 1: Bank Holiday
  • February 5: Kashmir Day
  • March 11: Bank Holiday
  • March 23: Pakistan Day
  • March 20 – March 22: Eid ul Fitr (date varies)
  • May 1: Labour Day
  • May 27 – May 29: Eid ul Azha (date varies)
  • May 28: Youm-e-Takbeer
  • July 1: Bank Holiday
  • July 24 – July 25: Ashura / Muharram (date varies)
  • August 14: Independence Day
  • August 25 or August 26: Eid Milad un Nabi (date varies)
  • November 9: Allama Iqbal Day
  • December 25: Quaid-e-Azam Day / Christmas Day

Paid Sick Leave

Employees in Pakistan are entitled to paid sick pay for 121 days in a calendar year if they suffer from ordinary ailments, or 365 days in a calendar year in the case of illnesses such as cancer or tuberculosis.

For ordinary ailments, employees will be paid 75% of wages by their employers. 100% of wages will be paid by employers in the case of employees taking sick pay due to cancer or tuberculosis. 

Employment-related injuries entitle employees to draw 100% of their wages for a maximum period of 180 days. Employees in Pakistan cannot be dismissed, discharged, punished, or have their hours reduced during a period of sickness, maternity, or injury.

Maternity Leave

Maternity leave in Pakistan varies depending on which province the employee is based. 12 weeks of paid maternity leave is granted for employees in Punjab, Khyber Pakhtunkhwa, Balochistan, and Islamabad Capital Territory.

Employees must have worked for at least 4 months before the expected delivery date to qualify for maternity leave. However, the province of Singh gives employees 16 weeks of paid maternity leave, and employees must have worked continuously for 1 year before their expected delivery date.

Rules for civil servants are slightly different. The Maternity and Paternity Leave Bill of 2018 provides paid maternity leave to employees working under the Federal Government, with 180 days provided for the first birth, 120 days for the second birth, and 90 days for the third birth.

Employees working in the mines will receive maternity benefits of 12 weeks paid leave, provided that they have worked in the mine for at least 6 months.

Paternity Leave

Male employees are entitled to paternity leave if their wife is expecting to give birth. Employees can take a maximum of 30 days of paid leave, which can only be taken 3 times throughout their period of service.

Pensions

Pensions in Pakistan are divided into Public Pensions and Private Pensions.

Public Pensions are compulsory for employees who work for companies employing more than 10 workers. The pension can be drawn at 60 for male employees and 55 for female employees, with at least 15 years of contributions. It’s voluntary for employee’s family members or self-employees, and several social assistance programs exist for special groups e.g. Muslim citizens.

Private Pensions were introduced in Pakistan in 2007, and target the self-employed and workers without occupational pensions. To be eligible for a private pension, employees must:

  • Be a Pakistani citizen
  • Be aged 18+
  • Have a valid national tax number

Employees can contribute up to 20% of net taxable income, and employers may also contribute to an employee’s pension plan.

Severance Pay

Employees in Pakistan are entitled to severance pay if their employment has been terminated without any significant reason. This is typically equivalent to 30 days’ wages for each full year of service. Employers may choose to substitute a pension fund for gratuity.

Supplementary Employee Benefits in Pakistan

Employers are encouraged to offer employees in Pakistan supplementary employee benefits. This is to attract potential talent and improve staff retention. Some examples of supplementary employee benefits include:

  • Performance bonuses
  • Expenses such as transport, housing, or food
  • Healthcare
  • Enhanced pension schemes
  • Additional maternity/paternity leave
  • Improved sick pay

Optimize Employee Benefits with Remote People

Remote People can make adhering to employee benefits in Pakistan a stress-free process with their Employer of Record in Pakistan. This is an efficient way of connecting with an EOR provider that understands Pakistani labor laws and can help hire employees without the need for a local legal entity.

Employee benefits, tax processes, and payroll obligations will be taken care of simply by using the Remote People’s service.

If you need help hiring in Pakistan, Remote People can help here, too, with our Pakistan recruitment services. We can connect you remotely with top talent in Pakistan, navigating the Pakistani recruitment sector with ease.