Pakistan

Pakistan PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Pakistan to companies willing to enter the Pakistani market or hire regional/expatriate employees in this area.

The general approach requires establishing a subsidiary in Pakistan.  Meanwhile, our solution allows you to start the operations in Pakistan within days hence save time and money.  WeHG would hire candidates on your behalf while you keep entire operational control of their work. So legally they would be our employees, on our local payroll, 100% manageable but will work on your behalf.

Pakistan fast facts

Population, million: 222
Land area:  881,913 km²
Capital: Islamabad
Local currency: Pakistani rupee (₨) (PKR)

GDP per capita:$ 5,160
GDP in currency:$ 1.076 trillion

Terrorism Index: 7.89

Pakistan, a populous and multiethnic country in South Asia. Having a predominately Indo-Iranian speaking population, Pakistan has historically and culturally been associated with its neighbors Iran, Afghanistan, and India. Since Pakistan and India achieved independence in 1947, Pakistan has been distinguished from its larger southeastern neighbor by its overwhelmingly Muslim population (as opposed to the predominance of Hindus in India). Pakistan has struggled throughout its existence to attain political stability and sustained social development. Its capital is Islamabad, in the foothills of the Himalayas in the northern part of the country, and its largest city is Karachi, in the south on the coast of the Arabian Sea.

Hiring, Negotiating and Doing Business in Pakistan

Necessity of written employment contract

The Standing Orders Ordinance1968 requires every employer to provide every worker an employment contract, showing terms and conditions of his/her service. Your employer is responsible to provide this contract at the time of your appointment, transfer or promotion. Similar provisions are found in the above referred provincial legislation of Khyber Pakhtunkhwa and Sindh. 

Different forms of engagement: employment, contracting, work with private entrepreneur

If you are working in an establishment, you will be classified in one of the following six categories:

  • You become permanent worker if you have been on work of permanent nature for the last 9 months and have satisfactorily completed the probationary period of three months.
  • You will be a probationer for the first three months of service, after provisionally employed for a permanent position.
  • You will be considered a “Badli” if you are appointed in the post of a permanent or probationer employee who is temporarily absent.
  • You should consider yourself a temporary employee if you are hired for a project ending within 9 months.
  • An apprentice is a person undergoing training through the system of apprenticeship.
  • Lastly, you will be a contract worker if you are employed to work on piece rate basis for a specific period of time. You will not be given overtime for hours worked above the normal working hours.

Pakistan Employment Contract

Types of employment agreements

There’re such employment contracts for an employee:

  • Permanent
  • Probationers
  • Badlis (Alternate)
  • Temporary
  • Apprentices
  • Contract worker

Pakistan working hours

The typical workweek in Pakistan is 48 hours for a full-time employee, 6 days a week for 8 hours per day. No employee can be required or permitted to work more than 9 hours per day or 48 hours per week without payment of overtime.

Overtime

Overtime = gross monthly salary x 2 x number of overtime hours/26 (working days in a month) x 8 (working hours in a day)

Vacation leave in Pakistan

Every employee who has completed a period of 12 months of continuous service shall be allowed 14 consecutive days of paid annual leave during the subsequent 12 months. If all 14 days are not taken, those days will be added to the annual leave allotted to the employee in the succeeding 12 month period.

Pakistan Maternity Leave

Pakistan has four different laws that cover maternity leave and the associated benefits. These laws are:

  • The Mines Maternity Benefits Act, 1941 – applicable to mine workers
  • The West Pakistan Maternity Benefit Ordinance, 1958 – applicable to all organizations, establishments (industrial or commercial) and factories
  • The Provincial Employees Social Security Ordinance, 1965 – applicable to all establishments and stipulates maternity benefits and medical care during pregnancy
  • The Civil Servants Act, 1973 – applicable to civil servants

Under the Maternity Benefits Ordinance, every employed woman is entitled to a maximum of 12 weeks of fully paid maternity leave.  This leave can be taken 6 weeks before the expected birth date and 6 weeks after the delivery and entitles the employee to 100% of pay.  The employee must be employed for at least 4 months preceding the date of delivery.

Additionally, female employees are eligible for pre-natal confinement and postnatal medical care through the Provincial Employees Social Security Ordinance provided that contributions were paid for at least 90 days in the previous 6 months.

Pakistan Severance Laws

Labour law requires termination notice before terminating services of an employee. A permanent employee may be terminated after serving one month’s notice or paying in lieu of notice. (S.O. 12 of Standing Orders Ordinance, 1968)

Similar provisions are found in the Khyber Pakhtunkhwa Industrial and Commercial Employment (Standing Order) Act 2013 (Standing Order 17) and the the Sindh Terms of Employment (Standing Orders) Act 2015 (Standing Order 16).

Pakistan Tax

Income from property derived by an individual is a separate block of income and taxable on a gross basis (without deduction of any expenses).

 Social security contributions due by an employer and an employer

Employers must contribute to Social Security on behalf of the employee for up to 7% of wages and 5% for Employees Old Age Benefit. No contributions are due on wages in excess of PKR 400 per day or PKR 10,000 per month. Social Security provides for four types of benefits including:

  • Old-Age Pension
  • Survivor’s Pension
  • Invalidity Pension
  • Old-Age Grant (if an employee is not eligible for pension)

Health Insurance Benefits in Pakistan

Healthcare in Pakistan is considered one of the country’s most corrupt sectors, as currently only 0.8% of the country’s GDP is allotted to health care. Pakistan has no national health insurance system and 78% of the population pay health care expenses out of pocket.  Pakistan is currently the only country in the world without a National Health Ministry.

Healthcare in Pakistan is administered through expensive private-sector insurance companies.

In addition to the 14 days of paid annual leave, every employee is entitled to 10 days casual leave with full pay and a further 16 days of sick or medical leave with 50% of pay. Casual leave is granted upon certain situations such as sudden illness.  Sick leave requires a medical certificate.

Additional Benefits in Pakistan

n accordance with section 1(4) of the Standing Orders Ordinance, 1968, every industrial and commercial establishment in Pakistan, employing 20 or more employees, is required to pay profit bonus to their employees provided that s/he has been in employment in that year for a continuous period of at least 90 days and the company has declared profit in that year.

The bonus is paid to the employees in recognition of the good services rendered by them while serving the organization.

It must be paid within a period of 3 months from the closing of the financial year and cannot be delayed due to any reason including lack of available funds or incomplete financial accounts.

The bonus is calculated as follows:

  • If profit is less than the total of one-month wages of all employees, 15% of the profit is distributed among the eligible employees
  • If profit is equal to the total of one-month wages of all employees, 30% of the profit is distributed among the eligible employees
  • If profit is greater than the total of one-month wages of all employees, at most 30% of the profit is distributed among the eligible employees

General market practice benefits/additional allowances

Pakistan is the second largest economy in South Asia, after India. It is also the sixth most populous country in the world, behind Brazil and ahead of Bangladesh. It has a young and growing population of around 200 million, with a burgeoning middle class. Together, these factors are a promising sign for global business, since it creates a large, diversified consumer base with disposable income.

An additional benefit is the country’s ongoing growth; it has the fastest growing retail market globally, according to Euromonitor, with predicted growth of 8.2 percent annually between 2016 and 2021. This has led to a boom in the growth of shops, shopping malls and restaurants in its cities. It is also competitive in industries including steel and textiles, and its energy market is seeing a dramatic rise in demand.

Pakistan also has a very good business relationship with the US, with two-way trade totalling around $5.6 billion in 2016. The US is Pakistan’s largest trading partner; and US firms have a strong presence in the country, with many big brands doing business there, including Procter & Gamble, McDonald’s, KFC, Pizza Hut, Domino’s Pizza, Microsoft and Dell, to name just a few.

Pakistan is an attractive country for international business since it has few restrictions on the movement of capital for foreign companies, no shareholding restrictions, straightforward work permit regulations and a strong entrepreneurial culture. Its official language is English, which is widely used among the population, and which is also a major attraction for international businesses, since it reduces the risk of communications getting lost in translation.

Pakistan Holidays

Pakistan celebrates both national and religious holidays for which employees are given the day off, including:

  • Birthday of Prophet Muhammad (Eid Milad un-Nabi)
  • Kashmir Day
  • Pakistan Day
  • Labor Day
  • Eid ul Fitr
  • Independence Day
  • Eid ul Azha
  • Birthday of Muhammad Iqbal
  • Ashura
  • Eid Milad-un-Nabi
  • Christmas Day

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.

FAQ Pakistan

  • Working hours in Pakistan?

    The typical workweek in Pakistan is 48 hours for a full-time employee, 6 days a week for 8 hours per day. No employee can be required or permitted to work more than 9 hours per day or 48 hours per week without payment of overtime.

  • What are the main holidays in Pakistan?

    • Birthday of Prophet Muhammad (Eid Milad un-Nabi)
    • Kashmir Day
    • Pakistan Day
    • Labor Day
    • Eid ul Fitr
    • Independence Day
    • Eid ul Azha
    • Birthday of Muhammad Iqbal
    • Ashura
    • Eid Milad-un-Nabi
    • Christmas Day
  • What are payroll taxes in Pakistan?

    Employers must contribute to Social Security on behalf of the employee for up to 7% of wages and 5% for Employees Old Age Benefit. No contributions are due on wages in excess of PKR 400 per day or PKR 10,000 per month. Social Security provides for four types of benefits including:

    • Old-Age Pension
    • Survivor’s Pension
    • Invalidity Pension
    • Old-Age Grant (if an employee is not eligible for pension)
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