Planning to hire employees in Pakistan? Here’s a quick guide

Pakistan offers a large and skilled workforce, making it an attractive market for employers looking to expand. Competitive salary expectations, combined with a growing pool of qualified professionals across industries, continue to drive hiring interest.

However, navigating employment in Pakistan requires careful attention to compliance. The country does not follow a single, unified labor code; instead, regulations are delegated to the provincial level.

This means that key aspects such as minimum wages, social security, and working conditions can vary between provinces.

As a result, employment laws in Pakistan depend largely on where your employee is based, adding a layer of complexity for businesses managing distributed teams.

In this guide, we cover the essential aspects of hiring in Pakistan, including compliant hiring methods, contract requirements, onboarding processes, tax obligations, and leave entitlements. We also explain how an Employer of Record (EOR) like Payoneer Workforce Management can help streamline compliance and workforce management.

How to hire in Pakistan

You can engage employees or contractors in Pakistan using any one or more of the following methods: 

1) Set up a legal entity in Pakistan

Once you have decided between common types of legal entities, including sole proprietorships, partnerships, and private limited companies, register with SECP. 

The Securities and Exchange Commission of Pakistan (SECP) is the relevant authority responsible for overseeing the incorporation and regulation of such companies.

You need a valid tax number from the Federal Board of Revenue (FBR) and to enroll with the provincial labor department. Now, you’ll have direct control over hiring, firing, and government filings, which matters if you plan to build a large team with a physical office.

However, as per conservative estimates, a full entity rarely makes financial sense for foreign-owned companies in Pakistan. It is quicker and more beneficial to partner with an EOR instead.

2) Hire contractors in Pakistan

Pakistan is one of the most preferred countries when hiring contractors, and so the talent pool for contract work is deep.

However, the problem arises when a “contractor” works fixed hours, reports to a single manager, and uses a company email. Provincial authorities can and do reclassify these relationships. 

When that happens, you owe back payments on the Employees’ Old-Age Benefits Institution (EOBI), social security, and gratuity. 

Nonetheless, a contractor management system simplifies the hiring process in Pakistan for you.  

3) Use an Employer of Record (EOR)

Since an EOR typically has a local entity in Pakistan, all you need to do is select the candidate. From there on, the EOR acts as the legal employer, supporting payroll, employment contracts, tax filings, and statutory benefits. 

An EOR solution like Payoneer Workforce Management helps streamline and navigate compliance for workforce management in Pakistan. 

Where to find employees in Pakistan

Job posting sites like LinkedIn and Indeed Pakistan are popular methods. However, especially outside Islamabad and Lahore, you need local job boards, and ideally, Urdu-language listings.

1) Popular job boards in Pakistan

• Rozee.pk: Pakistan’s largest local board
• Mustakbil.com
• Bayrozgar.com
• PakistanJobs.pk
• Portal of Pakistan Employment Services (government-run)

2) Work with local recruitment agencies

Salary discussions often happen in Urdu. Contract terms are clearer when explained in the employee’s first language. A local recruiter who understands the hiring process in Pakistan saves time, particularly for senior or specialized roles where negotiation gets detailed. 

Companies that are also sourcing talent in Bangladesh or Sri Lanka will find similar dynamics around local language support.

3) EOR support

Most EORs support with payroll and benefits. They help draft localized contracts, handle provincial registrations, and manage the onboarding paper trail. This way, your team stays focused on interviews and candidate fit.

Read more about how to onboard contractors if you’re engaging freelancers alongside full-time hires.

Onboarding employees in Pakistan

Here’s a common onboarding process checklist that you can follow: 

• Conduct a background check (most recommended for BFSI; consent-based elsewhere)
• Provide an offer letter, and subsequently, draft a written employment contract 
• Register employees for social security and taxation purposes, both at the federal and provincial levels.
  • For example, Federal Board of Revenue (FBR) registration and Employees’ Old-Age Benefits Institution (EOBI) enrollment at the federal level, and Punjab Employees Social Security Institution (PESSI) or Sindh Employees Social Security Institution (SESSI) in Sindh provincial social security sign-up
• Ensure that payroll is set for the pay date on the last day of the month.

Alternatively, an EOR helps you navigate the local registrations. For an employment cost breakdown, try the employee cost calculator.

Key employment laws and requirements in Pakistan

If you’re engaging local talents, you can shape your expansion strategy with the following statutory employment regulations in Pakistan:

Employment contracts

The written contracts in Pakistan should include the following details: 

• Personal details, job title
• Employment type (permanent, probationary, temporary, fixed-term)
• Scope of work
• Hours, schedule, overtime terms
• Salary, payment method, pay cycle, all in Pakistani Rupee (PKR)
• Leave entitlements, rest days
• Probation period (max six months)
• Notice period and termination terms

Employment benefits

You must maintain a proper compliance mechanism to ensure that the following statutory benefits are passed on to all employees proportionately:

• Annual leave: Employees who complete one year of service qualify for 14 days of paid annual leave in Pakistan. 
• Sick leave: Employees get 8 days of sick leave each year.
• Maternity leave: These leaves vary by birth order, that is, 180 days for the first child, 120 days for the second, and 90 days for the third. 
• Paternity leave: Fathers in Pakistan are entitled to 30 days of paternity leave.
• Leave carry forward policy: Unused earned leave can accumulate up to 30 days. Sick leave carries forward up to 16 days.
• Minimum wage: Set wages according to the federal minimum wage: PKR 37,000/month.

Working hours and holidays

Governed by the Factories Act 1934 and Shops and Establishments Ordinance 1969:

• Working hours: A standard workweek in Pakistan runs 48 hours across six days, with daily shifts capped at eight to nine hours. 
• Overtime: Additionally, overtime is allowed but tightly regulated.
  • No more than 3 extra hours in a single day, and total working hours, including overtime, cannot exceed 12 hours in a day or 60 hours in a week. The annual overtime ceiling sits at 624 hours. 
  • Overtime pay is double the normal rate, and that same 2x rate applies on public holidays too. Sunday is the default weekly rest day.

In Pakistan, employees are entitled to get 10 public holidays. These holidays are declared each year by the Cabinet Division. At the same time, religious dates shift with the lunar calendar.

Here’s the list of public holidays in Pakistan:

• Kashmir Day
• Pakistan Day
• Labor Day
• Independence Day
• Eid-ul-Fitr (3 days)
• Eid-ul-Adha (2 days)
• Eid Milad-un-Nabi
• Ashura
• Quaid-e-Azam Day

Tax obligations

Employers are obliged to deduct income tax monthly and remit it to the Federal Board of Revenue (FBR) at progressive rates between 0% to 35%.

Further, you must consider deductions for social security contributions on top of that:

• Employees’ Old-Age Benefits Institution (EOBI): 5% of minimum wage (employer), 1% (employee)
• Total employer cost: approximately 2.32% on a USD 60,000 annual salary (varies by province)

Termination and severance

Terminations need to be handled carefully. You may terminate employment contracts on valid grounds, including: 

• Employee resignation
• Mutual agreement
• Probation not confirmed
• Misconduct, poor performance, or unauthorized absence

However, the notice period rule still applies. You must observe a notice period as follows: 

• Probation: not mandatory 
• Post-probation: 30–60 days (or pay in lieu)

Employees may be entitled to severance pay in Pakistan upon termination. The payable severance depends on factors such as their length of service, the reason for termination, and the applicable labor laws.

Further, gratuity kicks in after five consecutive years of service as follows: 

• 30 days’ wages per year of service. 
• For periods over six months, round up to a full year. 
• Regional calculations differ.

Explore Payoneer Workforce Management in Pakistan

Hiring employees in Pakistan means juggling provincial labor codes, separate tax registrations, and leave rules that don’t always match across regions. Scale that across multiple countries, and the admin work compounds quickly.

Payoneer Workforce Management assists businesses with engaging talent in Pakistan and 160+ countries, without setting up a local entity. It helps you:

• Onboard talent quickly
• Run payroll from one dashboard
• Stay compliant with local laws
• Manage taxes, benefits, timesheets, and more

Book a demo today!

FAQs

1) Can a foreign company hire employees in Pakistan?

Yes. You can engage local talent by registering an entity, engaging contractors, or using an EOR. Companies without a local presence usually go with EOR, as it supports contracts, payroll, and compliance.

2) What is the current minimum wage in Pakistan?

The current minimum wage in Pakistan is PKR 37,000/month at the federal level. However, Punjab and Sindh set separate, sometimes higher, minimums by industry. It is always recommended to pay whichever is higher.

3) What happens if you misclassify a worker?

You risk back payments for pension schemes, social security, gratuity, and any missed benefits. Typically, authorities evaluate control, exclusivity, and financial independence. However, a contractor management system helps streamline this.

4) What is the difference between an EOR and an Agent of Record?

An Employer of Record (EOR) can act as a legal employer for local employees. Whereas the Agent of Record (AOR) helps manage contractor engagements as per statutory requirements.

You may read the full AOR vs EOR breakdown. Payoneer Workforce Management offers both on one platform.

5) How does Payoneer Workforce Management assist with hiring in Pakistan?

Payoneer Workforce Management helps handle onboarding, payroll, and labor law compliance across Pakistan and 160+ countries. It offers EOR, AOR, and contractor management, all through one dashboard.