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Payroll and Benefits Guide Pakistan

Last updated: Aug 29, 2023

Currency
Pakistan Rupee (PKR)
Employer Taxes
Unknown
Payroll Frequency
Bi-Monthly / Monthly
Employee Costs
2%
Capital
Islamabad
Date Format
dd/mm/yyyy
Fiscal Year
1 July - 30 June
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Contribution

Employer Employer Payroll Contributions
5%
Pension
5%
Total Employment Cost
Employee Employee Payroll Contributions
1%
Pension
40-rupee flat rate each month
Healthcare
1% plus 40-rupee per month Total Employee Cost
Employee Income Tax
0%
0-600,000 PKR
2.5%
600,001-1,200,000 PKR
15,000 PKR (+12.50% on excess)
1,200,001-2,400,000 PKR
165,000 PKR (+22.50% on excess)
2,400,001-3,600,000 PKR
435,000 PKR (+27.50% on excess)
3,600,001-6,000,000 PKR
1,095,000 PKR (+35.00% on excess)
6,000,001-12,000,000 PKR

Super tax is imposed on high-earning persons having income of more than PKR 150 million. Income of a person for that matter comprises of their taxable income under all heads of income including profit on debt, dividend, capital gain, brokerage/commission, and imputable income.

An enhanced super tax rate of 10% is applicable for certain specified sectors for the tax year 2022 or 2023 only:

The rate of super tax is as under: 2022 & onwards
Income exceeds PKR 150 million but does not exceed PKR 200 million 1%
Income exceeds PKR 200 million but does not exceed PKR 250 million 2%
Income exceeds PKR 250 million but does not exceed PKR 300 million 3%
Where income exceeds PKR 300 million 4%

 

Employer taxes

Highest
Lowest

Employee taxes

Highest
Lowest

Minimum Wage

General

The national minimum wage in Pakistan is 25,000 PKR per month. The province of Punjab revised the minimum wage from PKR 25,000  to PKR 32,000.  The wages of semi-skilled, skilled, and highly skilled workers will also be raised, reaching PKR 35,000.

MINIMUM WAGE (PER MONTH)

Highest
Lowest

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

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.
Anytime worked over 9 hours per day is considered overtime and needs to be paid at a rate of 200% salary. Employees receive compensation equivalent to 300% of their typical pay for overtime hours worked on public 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.

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
1 Jan 2024 Monday New Year’s Day Optional Holiday
5 Feb 2024 Monday Kashmir Day
7 Feb 2024 Wednesday Shab e-Meraj Tentative / Optional Holiday
8 Feb 2024 Thursday General Election Day
14 Feb 2024 Wednesday Basant Panchami Optional Holiday
25 Feb 2024 Sunday Shab e-Barat Tentative / Optional Holiday
23 Mar 2024 Saturday Pakistan Day
24 Mar 2024 Sunday Holi Optional Holiday
29 Mar 2024 Friday Good Friday Optional Holiday
1 Apr 2024 Monday Easter Monday Optional Holiday
10 Apr 2024 Wednesday Eid-ul-Fitr
11 Apr 2024 Thursday Eid-ul-Fitr Holiday Tentative
12 Apr 2024 Friday Eid-ul-Fitr Holiday Tentative
13 Apr 2024 Saturday Eid-ul-Fitr Holiday Tentative
13 Apr 2024 Saturday Baisakhi Optional Holiday
21 Apr 2024 Sunday Ridván Optional Holiday
1 May 2024 Wednesday Labour Day
17 Jun 2024 Monday Eid al-Adha Tentative
18 Jun 2024 Tuesday Eid al-Adha Holiday Tentative
19 Jun 2024 Wednesday Eid al-Adha Holiday Tentative
16 Jul 2024 Tuesday Ashura Tentative
17 Jul 2024 Wednesday Ashura Holiday Tentative
14 Aug 2024 Wednesday Independence Day
26 Aug 2024 Monday Chelum Tentative / Optional Holiday
15 Sep 2024 Sunday Giarhwin Sharief Tentative / Optional Holiday
16 Sep 2024 Monday Eid Milad un-Nabi Tentative
11 Oct 2024 Friday Durga Puja Optional Holiday
13 Oct 2024 Sunday Dussehra Optional Holiday
17 Oct 2024 Thursday Birthday of Guru Balmik Sawami Ji Optional Holiday
1 Nov 2024 Friday Diwali/Deepavali Optional Holiday
9 Nov 2024 Saturday Iqbal Day
25 Dec 2024 Wednesday Christmas Day / Quaid-e-Azam Day
26 Dec 2024 Thursday Day After Christmas (Christians only)

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.

Vacation Days
Public Holidays
Highest
Lowest

PAID MATERNITY LEAVE (DAYS)

Highest
Lowest

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

In Pakistan, probation periods are outlined in the employees’ employment contracts. The probation period is typically three months long.

VISA

VISA

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%.

Stay up to date on payroll & employment law changes

Version History

August 3, 2022
Employee income tax brackets have been updated.
May 24, 2022
The national minimum wage in Pakistan is now 19,870 PKR per month.
May 2, 2021
The minimum wage increased to 20,000 PKR per month.
October 27, 2020
Parental leave – Paternity leave has increased from 7 days to 1-month for the birth of their child.
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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...

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All questions are answered by our in-house compliance department working in conjunction with our local in-country partner for this specific country

Public Holidays Calendar

Pakistan
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PDF
ICS
Date Day Holiday Notes
1 Jan 2024 Monday New Year’s Day Optional Holiday
5 Feb 2024 Monday Kashmir Day
7 Feb 2024 Wednesday Shab e-Meraj Tentative / Optional Holiday
8 Feb 2024 Thursday General Election Day
14 Feb 2024 Wednesday Basant Panchami Optional Holiday
25 Feb 2024 Sunday Shab e-Barat Tentative / Optional Holiday
23 Mar 2024 Saturday Pakistan Day
24 Mar 2024 Sunday Holi Optional Holiday
29 Mar 2024 Friday Good Friday Optional Holiday
1 Apr 2024 Monday Easter Monday Optional Holiday
10 Apr 2024 Wednesday Eid-ul-Fitr
11 Apr 2024 Thursday Eid-ul-Fitr Holiday Tentative
12 Apr 2024 Friday Eid-ul-Fitr Holiday Tentative
13 Apr 2024 Saturday Eid-ul-Fitr Holiday Tentative
13 Apr 2024 Saturday Baisakhi Optional Holiday
21 Apr 2024 Sunday Ridván Optional Holiday
1 May 2024 Wednesday Labour Day
17 Jun 2024 Monday Eid al-Adha Tentative
18 Jun 2024 Tuesday Eid al-Adha Holiday Tentative
19 Jun 2024 Wednesday Eid al-Adha Holiday Tentative
16 Jul 2024 Tuesday Ashura Tentative
17 Jul 2024 Wednesday Ashura Holiday Tentative
14 Aug 2024 Wednesday Independence Day
26 Aug 2024 Monday Chelum Tentative / Optional Holiday
15 Sep 2024 Sunday Giarhwin Sharief Tentative / Optional Holiday
16 Sep 2024 Monday Eid Milad un-Nabi Tentative
11 Oct 2024 Friday Durga Puja Optional Holiday
13 Oct 2024 Sunday Dussehra Optional Holiday
17 Oct 2024 Thursday Birthday of Guru Balmik Sawami Ji Optional Holiday
1 Nov 2024 Friday Diwali/Deepavali Optional Holiday
9 Nov 2024 Saturday Iqbal Day
25 Dec 2024 Wednesday Christmas Day / Quaid-e-Azam Day
26 Dec 2024 Thursday Day After Christmas (Christians only)