Payroll and Benefits Guide - Pakistan

Pakistan
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Currency

Pakistan Rupee (PKR)

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Capital

Islamabad
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Employer Taxes

5.00%

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Date Format

dd/mm/yyyy
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Fiscal Year

1 Jan – 31 Dec

Fun Facts

Pakistan is the sixth most populous country in the world, with a population of over 225 million people.

Pakistan is home to the second-highest mountain peak in the world, K2, which stands at 8,611 meters (28,251 feet).

The Indus River, one of the longest rivers in Asia, flows through Pakistan.

The Lahore Fort and the ancient city of Taxila are UNESCO World Heritage sites in Pakistan.

The official languages are Urdu and English.

The Badshahi Mosque in Lahore is one of the largest mosques in the world.

Pakistan

Contributions

Employee Payroll Tax

Contribution TypeRate
Pension1.00%
Healtcare40-rupee flat rate each month

Employer Payroll Tax

Contribution TypeRate
Pension5.00%

Payroll

Payroll Cycle

The payroll can be daily, weekly, bi-monthly, or monthly. The employer must pay salaries at least once a month.

13th Salary

There are no legal obligations for 13th-month payments.

Work Hours and Week

The standard workweek consists of 45 hours a week, 9 hours a day.

Overtime

All work more than the standard working hours a week is to be paid as overtime and is regulated by employment contract/collective agreements. When an employee is requested to work overtime or work on holidays, there are maximums in relation to the number of hours allowed.
Pakistan

Leave

Paid Time Off

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.

Public Holidays

The local government decides each year if holidays falling on the weekend are lost or moved to a working day in exchange.

Sick Days

Employees have the right to avail themselves of 10 days of casual sick leave for unforeseen circumstances, such as sudden illness or urgent matters.

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 legal provisions regarding parental leave.

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.

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

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

The standard rate of VAT in Pakistan is 17.00%.