Hiring employees in Pakistan requires a strong grasp of the country’s employment laws, benefits, payroll, and taxes. Below are the basics you can draw on to successfully hire and onboard talents in Pakistan.
Employee Contract
Public and Provincial Holidays
Leave Information
Basic
Hiring employees in Pakistan requires a strong grasp of the country’s employment laws, benefits, payroll, and taxes. Below are the basics you can draw on to successfully hire and onboard talents in Pakistan.
Probation Period
The probationary period for employees at minimum is 3 months to a maximum of 6 months.
13th Month Pay
The 13th-month pay is customary in Pakistan.
Employee Benefits
Employers in Pakistan may provide the following benefits to their employees:
- Social security schemes.
- Worker’s compensation.
- Maternity leaves and benefits.
Wages can be paid on a daily, weekly, bimonthly, or monthly basis. Wage period cannot exceed one month.
The minimum wage in Pakistan has been raised from 20,000 PKR to 25,000 PKR for unskilled workers.
Employees are paid 200% of their regular pay on normal days. Employees are paid 300% of their regular pay during holidays.
Employer Payroll Cost:
| Type |
Contribution |
| Social security contribution |
6%(7% of monthly payroll up to 5000 rupees in Balochistan province) |
| Pension (Employees Age Old Benefit) |
5% (of minimum wage) |
Employee Payroll Cost:
| Type |
Contribution |
| Health insurance |
40 PKR flat-rate each month |
| Pension |
1% (of minimum wage) |
Employee Income Tax
| Annual Taxable Income (PKR) |
Tax Rate |
| 0 to 600,000 |
0 |
| 600,000 to 1,200,000 |
2.5% |
| 1,200,000 to 2,400,000 |
12.5% |
| 2,400,000 to 3,600,000 |
20% |
| 3,600,000 to 6,000,000 |
17.5% |
| 6,000,000 to 12,000,000 |
25% |
| 12,000,000 |
32.5% |
| 8,000,000 to 12,000,000 |
25% |
| 12,000,000 and up |
35% |
VAT
The standard VAT rate in Pakistan is 17%.
A written letter should be provided when terminating a contract and reasoning for the termination must be sufficient.
The notice period for employees during probationary period is up to 2 weeks and for permanent employees, it is up to 1 month.
Severance pay
In Pakistan, employees who leave the company through no fault of no fault such as company closure or layoffs after one year of service can receive severance pay equivalent to 4, 8 or 12 days of monthly salary, or 30 days' wages for each full year, according to the length of service, and the specific calculation method and payment requirements are subject to local labor laws.
There are two types of visas in Pakistan you can get: Work Visa or Business Visa.