How to Hire Employees in Pakistan: A Guide for Global Employers

Pakistan has quietly emerged as one of the world’s most attractive destinations for global talent acquisition. The country offers a unique combination of skilled professionals, competitive costs, and a rapidly expanding economy that forward-thinking companies are increasingly tapping into.

As one of the world’s most dynamic talent markets, 64% of the Pakistani population is under 30. The country’s IT sector alone has surged, with exports growing 26.53% to $2.177 billion in the most recent fiscal year. Companies from Silicon Valley to Singapore are discovering what savvy employers already know: Pakistan offers access to skilled professionals at competitive rates in a rapidly growing economy.

But here’s where many global employers falter. The excitement of finding great talent can quickly turn into a compliance nightmare if you don’t understand local employment regulations. Pakistani labor laws cover everything from mandatory benefits to termination procedures, and getting it wrong can lead to fines, legal disputes, and damaged relationships with the talent you worked so hard to find.

Successfully hiring employees in Pakistan compliantly and confidently requires more than just understanding the legal framework. Cultural nuances, local business practices, and relationship-building approaches can make the difference between a smooth hiring process and costly missteps. Getting both the compliance and cultural elements right sets the foundation for long-term success in this promising market.

Pakistan’s labor market at a glance

Pakistan’s labor market presents a compelling opportunity for international employers seeking skilled, cost-effective talent. The country’s workforce has reached about 83 million people as of 2024, with projections showing it could exceed 100 million by 2025.

Pakistan also offers one of the world’s largest youth demographics actively entering the global workforce. This demographic advantage translates into a dynamic, tech-savvy generation that adapts quickly to new technologies and global business practices.

Freelancers alone contributed $400 million in foreign exchange earnings, highlighting the strength of Pakistan’s digital talent pool. Beyond technology, international companies are actively hiring in financial services, manufacturing, and emerging sectors like fintech and renewable energy, where startups have raised significant venture funding and created over 185,000 jobs through national incubation programs.

Pakistan’s educational system produces a steady stream of English-proficient professionals. In higher education across the country, classes are taught in English, ensuring most graduates have strong communication skills.

Universities like the National University of Sciences and Technology (NUST) and Lahore University of Management Sciences (LUMS) are recognized for producing competent graduates ready to tackle global challenges. Pakistani professionals often rank among the top 1% of global tech talent pools, as evidenced by their participation in international competitions and contributions to global projects.

Pakistani working hours, holidays, and leave

You’ll want to understand Pakistan’s work schedule and leave policies so that your employment arrangements are compliant and in line with what your new hires expect. The labor laws here balance what employees need with what you need to run your business. You’ll find rules about work hours, breaks, and benefits that protect workers without tying your hands operationally.

The workweek reality

Pakistani labor law is pretty straightforward about work limits. But the reality on the ground can be more flexible than you might expect:

• Standard workweek. 48 hours maximum across 6 days, usually 8-9 hours daily
• Overtime rules. Anything beyond standard hours pays double rate, capped at 60 total hours weekly
• Rest day requirement. One full day off per week is mandatory
• Daily limits. 9 hours regular time, 12 hours absolute maximum, including overtime
• Quarterly caps. No more than 150 overtime hours per employee every three months

Leave that actually matters

Pakistani employees get generous leave packages that put many Western countries to shame. The system reflects deep cultural values around family, health, and religious observance:

• Annual leave. 14 days minimum after your first year, stackable up to 28 days
• Sick time. 10 paid days plus 30 more for serious hospitalization
• Maternity leave. 180 days for first child, 120 for second, 90 for third (all fully paid)
• Paternity leave. 30 paid days, available three times during employment
• Casual leave. 10 days with full pay for personal matters
• Pilgrimage leave. 30 unpaid days for Hajj, once per employment

National public holidays: What to note

Pakistan mixes fixed national holidays with shifting religious observances that follow the lunar calendar. Fixed dates include:

• Pakistan Day. March 23
• Labor Day. May 1
• Independence Day. August 14
• Quaid-e-Azam Day. December 25

Pakistan’s moving Islamic holidays (lunar calendar; shift ~10 days earlier each year):

• Eid-ul-Fitr. 3-day break at the close of Ramadan
• Eid-ul-Adha. 2-3-day break about two months after Eid-ul-Fitr
• Ashura. 2 days of mourning (9th and 10th of Muharram)
• Eid Milad un Nabi. The birthday of Prophet Muhammad

When planning around Pakistan’s holiday calendar, you’ll want to build wiggle room into project timelines during Eid periods because most offices pause for at least two days. Also, it’s best to wait for the government’s annual gazette before locking in release dates to align your team’s time off with official announcements. Finally, offering optional leave for minority-faith observances signals respect for a diverse workforce and helps keep morale high year-round.

Employee benefits and statutory contributions in Pakistan

Compensation starts with salary, but employee benefits seal the deal. In Pakistan, statutory programs lay the groundwork while market-leading perks decide who signs your offer.

• Social security coverage. Mandatory contributions to the provincial Employees’ Social Security Institute (ESSI) for medical care (employer 6% / employee 1% of minimum wage) and to the federal Employees’ Old-Age Benefits Institution (EOBI) for pensions (employer 5% / employee 1%); EOBI payouts climbed 15% in 2025.
• Minimum-wage floor. PKR 37,000 per month federally for FY 2025-26, with Sindh and Punjab already proposing PKR 40,000 for unskilled roles.
• Paid leave entitlements. At least 14 days’ annual leave, robust sick-leave provisions, extended maternity/paternity allowances, and all gazetted public holidays covered by law.
• Retirement and savings sweeteners. Employer-matched provident funds (8-10% of salary per side) and discretionary gratuity schemes boost long-term security.
• Health protection trend. No universal mandate yet, but regulators back employer-funded group health insurance; multinationals typically extend family-wide medical plans and wellness stipends.
• Common competitive perks. Remote work allowances for high-speed internet and backup power, USD-pegged performance bonuses to hedge local inflation, and education allowances for credentials like AWS or ACCA. These are extras that lift offers from basic to irresistible.

Payroll and taxation in Pakistan

Getting payroll right in Pakistan means juggling progressive tax slabs, mandatory contributions, and strict filing calendars—all while paying people on time in the currency that makes sense for them. Below is a practical snapshot of what global employers need to know.

Income-tax withholding

• FY 2025-26 slabs run from 0% on annual income up to PKR 600,000 to 35% on income above PKR 4.1 million.
• Employers act as withholding agents, deducting tax each pay cycle and uploading monthly challans through the Federal Board of Revenue (FBR) IRIS portal.
• Unused tax credits and any annual reconciliation occur when employees file individual returns by 30 September (individuals/AOP) or 31 December (companies with a December year-end).

Employer-side payroll taxes

• EOBI pension. 5% of the statutory minimum wage (PKR 37,000 for FY 25-26); employee kicks in 1%.
• Provincial social security (ESSI/SESSI, etc.). ~6% employer, 1% employee up to the wage ceiling—rates vary by province.
• Workers’ Welfare Fund. 2% of accounting profit, where applicable.
• Workers’ Participation Fund. 5% of profits for qualifying industrial undertakings.

Payment frequency and currency

• Most firms pay monthly; the Shops & Establishments Ordinance requires wages to be released within seven days after the month-end.
• Salaries are routinely denominated in PKR, yet many tech employers peg pay to USD or EUR and settle in PKR at mid-market rates on pay day to shield staff from exchange swings.
• Cross-border entities must channel payments through State Bank-approved routes to avoid being classed as untaxed foreign remittances.

Mandatory deductions and remittances

• Income-tax withholding (variable by slab)
• EOBI (5% / 1%)
• Provincial social-security (about 6% / 1%)
• Any court-ordered or union deductions. All payments land in government coffers no later than the 15th of the following month to dodge default surcharges.

Key dates and reports

• 15th monthly. Pay all withheld taxes and contributions; upload challans to the IRIS portal.
• Quarterly. File provincial social-security returns (deadlines differ slightly by province).
• June 30th. Close the withholding-tax year; issue annual salary certificates to staff.
• September 30th. Employees file individual returns reflecting employer-withheld taxes (auto-populated if payroll was compliant).
• December 31st. Companies file annual corporate returns, including proof of Workers’ Fund contributions and payroll schedules.

Master these pillars and your Pakistan payroll will run smoothly, keeping regulators happy, employees paid, and expansion plans on schedule.

Hiring options in Pakistan

When deciding to employ talent in Pakistan, you’ll typically choose one of two routes. You can either open a local company or hire through an Employer of Record (EOR).

Establishing a legal entity

Setting up a private limited company begins with the Securities & Exchange Commission of Pakistan, followed by tax registration with the Federal Board of Revenue and getting approval for a bank account. The entire process often runs six to ten weeks and can stretch longer if sector licences or provincial clearances apply. Once the entity exists, you own every legal duty: payroll filings, social-security and EOBI payments, labor inspections, contract drafting, and annual audits.

Partnering with an employer of record

An employer of record hires your talent through its own local company, so you skip incorporation costs and liability. Onboarding can start in about two weeks, which suits product launches or pilot teams that need speed. The EOR issues compliant contracts, runs payroll in rupees, withholds taxes, and files all monthly returns, while you direct the day-to-day work of the employee.

Worker classification: Employee vs. contractor

Pakistan’s labor statutes offer little explicit guidance on “independent contractors.” In practice, officials rely on common law tests of control, integration, and economic dependence. If a worker follows your schedule, uses your tools, and represents your brand, regulators can treat them as an employee, no matter what the contract says.

Misclassification carries teeth. Audits can trigger backdated EOBI and social security contributions, retroactive holiday pay, and fines that scale with the wage shortfall. Disgruntled contractors may also sue for wrongful dismissal or unpaid benefits, exposing IP and data in the process.

A contractor suits short, deliverable-based projects where the individual sets their own hours and invoices you for the results. An employee is the right fit when the role is ongoing, core to operations, and subject to your day-to-day direction.

When in doubt, err on the side of employment or partner with an EOR. This partner becomes the local legal employer, issues compliant contracts, handles payroll, and assumes the risk of misclassification. This enables you to use flexible talent without wagering on the grey zones of Pakistani labor law.

Work visas and immigration

Foreign professionals need a Pakistani work visa when performing any hands-on duties for pay inside the country. Short, unpaid business meetings can fall under a business visa regime instead. The most common categories are the general Work visa (issued in single- or multiple-entry formats for 3–12 months and renewable), the work visa for CPEC projects, the Journalist visa, the Domestic Aide visa, and the visa for transit/transport.

Employers registered with the Securities & Exchange Commission of Pakistan act as sponsors. They submit the online application through the Board of Investment portal, attach the signed employment contract, company registration certificates, and proof that no suitable local candidate was available. Security clearances follow, so processing typically takes four to eight weeks; multiple-entry requests fall on the longer end of that range.

The employee must provide a valid passport for at least six months, recent photos, academic credentials, and a cover letter explaining their interest in the role. After approval, the visa is affixed at a Pakistani mission abroad or issued electronically. Sponsors must keep the employee’s status current, file renewals on time, and notify authorities of job changes. Failure to do so can trigger fines or bar future sponsorships.

Termination and severance

Ending an employment relationship in Pakistan is a regulated affair. Federal statutes and provincial “Standing Orders” set the ground rules. Miss a step and a routine dismissal can snowball into a courtroom saga.

• Notice period. Permanent staff need at least 30 days’ written notice or pay in lieu; probationers and fixed-term workers follow whatever the contract says. Immediate dismissal is allowed only for proven misconduct after a domestic inquiry, and the charge sheet must document the offense.
• Severance (gratuity). Employees with 12-plus months of service receive one month of wages for each completed year (rounded up after six months). Provincial orders tweak the formula: Punjab and Islamabad use 30 days, Balochistan doubles it to 60 days. Employers may substitute an approved provident fund plan, but the statutory minimum still applies.
• Unlawful-termination risks. Skip due process, and you face back pay, reinstatement orders, and retroactive EOBI and social-security contributions. Labor courts also award damages for emotional distress or lost benefits when terminations violate redundancy rules or discriminate against protected classes.

How to Hire in Pakistan with Pebl

At Pebl, our global EOR services allow you to onboard Pakistani talent in days, not months, without opening a local entity. Our platform issues compliant, bilingual contracts, runs payroll in PKR pegged to the currency you choose, and remits every tax and social security payment on schedule, shielding you from misclassification or labor law missteps. You focus on work that moves the needle while we carry the legal, payroll, and compliance load end-to-end. Get in touch to learn more.

FAQs: Hiring in Pakistan

Making a first hire in Pakistan raises a predictable set of questions. The answers below clear up the most common points of confusion and help you move forward with confidence.

Can I hire remote employees in Pakistan without opening an entity?

Yes. A growing number of companies choose an EOR that already holds a local entity and becomes the legal employer on your behalf. The EOR issues compliant contracts, runs payroll in PKR, and files all taxes, so you can work with Pakistani talent while your company stays entity-free.

What is the current minimum wage?

As one of the lowest minimum wage countries, the federal floor for unskilled Pakistani workers sits at PKR 37,000 per month for fiscal 2025-26, while provinces such as Sindh and Punjab have notified higher rates of PKR 40,000 for the same category. Employers must follow the highest applicable rate for each work location.

Are written employment contracts required?

Pakistani law obliges employers to give every worker a formal appointment letter that spells out job duties, wages, hours, and notice terms. Most firms meet this standard with a full written contract in Urdu and/or English. Verbal terms invite disputes and hurt the enforceability of IP and confidentiality clauses.

How much notice is needed to terminate an employee?

Permanent staff are entitled to 30 days’ written notice—or pay in lieu—unless you dismiss them for proven misconduct after a domestic inquiry. Contract workers follow the notice term in their agreement, but anything shorter than one week risks a labor court striking it down.

Can I classify someone as a contractor to avoid payroll taxes?

Only if the person sets their own hours, uses their own tools, and invoices for results. Otherwise, regulators can reclassify them as an employee and backdate payroll taxes, benefits, and severance. Partnering with a Pakistani EOR mitigates this risk because the EOR vets each role and applies the correct worker status from the outset.

This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.

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