Payroll and Benefits Guide Pakistan
Last updated: Mar 03, 2026
Contribution
| Employer Payroll Contributions | |
|
5%
|
Employees Old Age Benefit (EOAB) applied on salary up to 444,000 PKR annually
|
| 5% |
Total Employment Cost |
| Employee Payroll Contributions | |
|
1%
|
Employees Old Age Benefit (EOAB) applied on salary up to 444,000 PKR annually. |
|
40-rupee flat rate each month
|
Healthcare
|
| 1% plus 40-rupee per month | Total Employee Cost |
| Employee Income Tax | |
|
0.00%
|
0-600,000 PKR annually.
|
|
5.00%
|
600,001-1,200,000 PKR annually.
|
|
15.00%
|
1,200,001-2,200,000 PKR annually.
|
|
25.00%
|
2,200,001-3,200,000 PKR annually.
|
|
30.00%
|
3,200,001-4,100,000 PKR annually.
|
|
35.00%
|
4,100,001 PKR annually.
|
Employer taxes
Employee taxes
Minimum Wage
General
In Pakistan, the minimum wage varies by province. The highest rate of minimum wage is in Punjab at PKR 37,000 per month.
MINIMUM WAGE (PER MONTH)
Payroll
Payroll Cycle
In Pakistan, the payroll frequency can be daily, weekly, bi-monthly, or monthly. The employee must pay salaries at least once a month.
13th Salary
13th-month payments are not legally required.
Working Hours
General
The standard work week in Pakistan consists of 45 hours a week, 9 hours a day.
Overtime
| Aspect | Regulation Details | Notes |
| Maximum Ordinary Hours | 48 hours per week (typically 8 hours per day, or 9 hours on some days). | Overtime is triggered when an employee works beyond 9 hours in any day or 48 hours in any week. |
| Absolute Daily Cap | The period of work, including rest intervals and overtime (spread-over), cannot exceed 12 hours in a day. | This effectively limits daily overtime to 2 to 3 hours after standard working hours and mandatory rest. |
| Weekly Overtime Cap | Total working hours, including overtime, must not exceed 60 hours per week. | This implies a maximum of 12 hours of overtime per week. |
| Annual Overtime Cap | The Factories Act limits overtime to 150 hours per quarter (for urgent repairs, maintenance, etc.), translating to 600 hours per year. Some sources cite a general maximum of 624 hours per year. | |
| Exemptions | Employees in clerical, executive, or managerial capacity are generally exempt from statutory overtime pay. | |
| Ramadan Reduction | Working hours for all employees are typically reduced by 2 hours daily during the month of Ramadan. |
Overtime compensation is mandatory and is calculated as a minimum premium percentage of the employee’s ordinary rate of pay (which generally means gross monthly salary, including fixed allowances).
| Day/Condition | Minimum Compensation Rate (Statutory) | Total Pay Rate | Notes |
| Standard Overtime (Working Days) | 2 times the employee’s ordinary rate of pay (Double Pay). | 200% | This is the non-negotiable legal minimum for all eligible overtime hours. |
| Weekly Rest Day/Holiday Work | 2 times the ordinary rate of pay (Double Pay). | 200% | Work on the designated rest day or an official public holiday is compensated at double the rate. |
| Festival Holidays | 3 times the ordinary rate of pay. | 300% | For work performed on officially declared festival holidays, the compensation is triple the ordinary rate. |
Compensatory Holiday: When an employee works on a public holiday, they are entitled to a compensatory holiday with full pay in addition to the payment at the premium rate (or triple rate for festival holidays).
Leave
Annual leave (vacation)
In Pakistan, employees are entitled to 14 calendar days of fully paid annual leave following 12 months of consecutive service. This leave cannot be taken in part and must be taken in its entirety. Leave of up to 14 days can be carried over into the following vacation year.
PTO carryover
In Pakistan, statutory annual (earned) leave can be carried over, but only up to legal caps set by applicable law (e.g., Factories Act / provincial laws, often up to ~30 days). Employers cannot forfeit accrued statutory leave by a blanket “use-it-or-lose-it” policy, and unused leave within the cap must be paid out on termination.
Public Holidays
The local government decides each year if holidays falling on the weekend are lost or moved to a working day in lieu.
Religious holidays are determined by the lunar cycle and will show as tentative until they are confirmed nearer the date of the holiday.
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 5 February 2026 | Thursday | Kashmir Solidarity Day | Standard holiday |
| 21 March 2026 | Saturday | Eid ul-Fitr (End of Ramadan) | |
| 22 March 2026 | Sunday | Eid ul-Fitr Holiday | |
| 23 March 2026 | Monday | Eid ul-Fitr Holiday / Pakistan Day | Standard holiday |
| 1 May 2026 | Friday | Labour Day | Standard holiday |
| 27 May 2026 | Wednesday | Eid ul-Adha (Feast of Sacrifice) | |
| 28 May 2026 | Thursday | Eid ul-Adha Holiday / Youm-e-Takbeer | Standard holiday |
| 25 June 2026 | Thursday | Ashura (9th of Muharram) | |
| 26 June 2026 | Friday | Ashura Holiday (10th of Muharram) | |
| 14 August 2026 | Friday | Independence Day | Standard holiday |
| 25 August 2026 | Tuesday | Eid Milad un-Nabi (Prophet’s Birthday) | |
| 9 November 2026 | Monday | Allama Muhammad Iqbal Day | Standard holiday |
| 25 December 2026 | Friday | Quaid-e-Azam Day / Christmas | Standard holiday |
Sick Days
Employees are entitled to 10 days of Casual Leave upon contingent situations such as sudden illness or other urgent purposes.
Every employee is entitled to 10 days of Casual Leave (in addition to the annual leave) with full pay. This leave is granted upon certain situations such as sudden illness.
A further 16 days of leave is entitled for Sick or Medical leave and paid at a rate of 50% of pay. Sick Leave requires a medical certificate to be issued.
Maternity Leave
Female employees are entitled to three months of paid maternity leave following four months of working for a single employer before giving birth. The employee must take a six-week post-natal leave period.
Employees are protected during their maternity leave and cannot be terminated during this time.
To receive benefits, the employee must have at least 180 days of contributions in the year before the child’s expected birth.
Paternity Leave
Fathers are eligible for one month of leave following the birth of their first three children.
Parental Leave
There are no provisions in the law regarding parental leave.
Other Leave
Employees in Pakistan are entitled to Iddat leave. Iddat leave is applicable if a secured person dies while in receipt of a sickness or injury benefit. In this case, their survivors are entitled to a death grant equal to the daily rate of sickness benefit multiplied by 30, but it should not be less than 1500 PKR.
Iddat leave is also applicable if a female employee loses her husband.
PAID MATERNITY LEAVE (DAYS)
Termination
Termination Process
The termination process varies according to how the employment agreement and collective agreement are in place and is based on the type of contract and reason for termination. Both employees and employers should provide terminations in writing, and the reasoning for dismissal must be sufficient.
| Salary payment interval / date | Final payment on termination | Bank account/payment-method requirement |
|---|---|---|
| Under the Payment of Wages Act, 1936: The wage-period cannot exceed one month. Wages must be paid before the expiry of the tenth day after the end of the wage-period in many cases. | For termination: Earned wages must be paid upon termination (the Act states that “wages earned by him shall be paid before the expiry of the second working day on which his employment is terminated”). | The Act requires wages to be paid in current coin or currency notes; payment by bank-account is not expressly mandated for all employees in the accessible sources. |
Notice Period
Both employees and employers require a notice period of one month to terminate an employment contract. Advanced notice is not necessary for temporary workers.
If advanced notice is not provided, then an employer must pay a monthly salary in its lieu.
Severance Pay
Except in the circumstance of misconduct, employees receive severance pay amounting to 30 days’ wages for each year of completed service following their discharge from work.
Probation Period
In Pakistan, probation periods are outlined in the employees’ employment contracts. The probation period is typically three months long.
Immigration
Work visas are usually granted for one year once approved by the board of investment; these must be renewed and re-approved annually. Pakistan has several specific visa applications for particular countries – each with differing requirements and levels of responsibility.
Foreign workers looking to work in Pakistan must obtain their working visa at the Pakistani Consulate in their country of residence. An essential requirement for the visa is an official invitation/letter from the Chamber of Commerce and Industry on behalf of sponsoring company in Pakistan. The letter must indicate the length of stay, place of stay, etc.
Once a work visa is granted for three months, an applicant can seek an extension of up to 2 years with multiple entries.
Following the completion of 2 years, an employee can apply for permanent status.
VAT
General
The standard rate of VAT in Pakistan is 17%.
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Payroll and Benefits Guide
in Pakistan
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 5 February 2026 | Thursday | Kashmir Solidarity Day | Standard holiday |
| 21 March 2026 | Saturday | Eid ul-Fitr (End of Ramadan) | |
| 22 March 2026 | Sunday | Eid ul-Fitr Holiday | |
| 23 March 2026 | Monday | Eid ul-Fitr Holiday / Pakistan Day | Standard holiday |
| 1 May 2026 | Friday | Labour Day | Standard holiday |
| 27 May 2026 | Wednesday | Eid ul-Adha (Feast of Sacrifice) | |
| 28 May 2026 | Thursday | Eid ul-Adha Holiday / Youm-e-Takbeer | Standard holiday |
| 25 June 2026 | Thursday | Ashura (9th of Muharram) | |
| 26 June 2026 | Friday | Ashura Holiday (10th of Muharram) | |
| 14 August 2026 | Friday | Independence Day | Standard holiday |
| 25 August 2026 | Tuesday | Eid Milad un-Nabi (Prophet’s Birthday) | |
| 9 November 2026 | Monday | Allama Muhammad Iqbal Day | Standard holiday |
| 25 December 2026 | Friday | Quaid-e-Azam Day / Christmas | Standard holiday |
Questions & Answers