Details & Regulations

AUDIT CERTIFIED — MAY 2026

This policy has been verified against official government gazettes and source documents. View Audit Log

100% Verified

Labor & Employment Law

Pakistan's labor law is complex — federal legislation sets baseline standards while provinces have significant autonomy. IT companies must comply with both levels. The 18th Amendment devolved labor subjects to provinces.

Federal Labor LegislationSOURCE VERIFIED

Law	Key Provisions	IT Company Impact	Jurisdiction
Industrial Relations Act 2012	Trade unions, collective bargaining, strikes	Applies if 50+ employees	Federal/ICT
Factories Act 1934	Working hours, safety, leave entitlements	Applies to IT offices (factory definition debated)	Federal/ICT
Shops & Establishments Ordinance	Working hours, weekly rest, employment conditions	Most applicable to IT offices	Federal/ICT
Minimum Wages Ordinance 1961	Minimum wage floor	Current minimum: PKR 37,000/month (federal — FBR Notifications)	Federal/ICT
Payment of Wages Act 1936	Timely wage payment	Must pay within 7 days of wage period	Federal/ICT
EOBI Act 1976	Pension, survivor benefit, invalidity	5% employer + 1% employee contribution	Federal/ICT
Workers Welfare Fund Ordinance 1969	Housing, education, marriage grants	2% of income if 5+ employees	Federal/ICT
Companies Profits (Workers Participation) Act 1968	Profit sharing with workers	5% of profit for 100+ employee companies	Federal/ICT
Anti-Sexual Harassment Act 2010	Protection at workplace	Mandatory: inquiry committee, Code of Conduct	Federal/ICT

Legal Reference: EOBI Act 1976

Provincial Labor LawsSOURCE VERIFIED

Province	Key Legislation	IT-Specific Notes	Social Security Body
Punjab	Punjab Industrial Relations Act 2010, Punjab Shops Act	PITB provides IT sector facilitation	PESSI (6%+1%)
Sindh	Sindh Industrial Relations Act 2013, SESSI, Sindh Labour Code 2024 (draft — not yet enacted; verify enactment status)	SESSI provides social security for Sindh workers	SESSI (6% employer + 1% employee)
Khyber Pakhtunkhwa	KP Industrial Relations Act, KP Labor Policy	KPITB promotes IT sector	ESSI
Balochistan	Balochistan Shops Act	Limited IT-specific provisions	Limited

EOBI & Social Security RatesSOURCE VERIFIED

EOBI (Federal/ICT)

Employer contribution: 5% of wages
Employee contribution: 1% of wages
Max Insurable Wage: PKR 37,000/month (FBR Notifications)
Benefits: Old-age pension, survivor pension, invalidity pension
Registration: Required for 5+ employees
Min Pension: PKR 10,000/month

SESSI (Sindh Only)

Employer contribution: 6% of wages
Employee contribution: 0% (employer bears full)
Registration: Required for 5+ employees in Sindh
Benefits: Medical, disability, maternity, death
Death Grant: PKR 200,000
Max Insurable: PKR 7,000/month

PESSI (Punjab Only)

Employer contribution: 6% of wages
Employee contribution: 1% of wages
Registration: Required for 5+ employees in Punjab
Benefits: Medical, disability, maternity
Helpline: 042-111-786-786
Portal: pessi.punjab.gov.pk

IT Sector Employment Best PracticesSOURCE VERIFIED

Employment ContractsSOURCE VERIFIED

Clause	Recommendation	Legal Basis
IP Assignment	All work product belongs to company	Copyright Ordinance 1962
Confidentiality/NDA	Mandatory for all employees with data access	Contract law / PECA 2016
Non-compete	Enforceable if reasonable in scope and duration	Contract Act 1872
Remote Work Policy	Include equipment, hours, data security provisions	Shops & Establishments
Contractor vs Employee	Correct classification affects tax and labor compliance	ITO §153 / EOBI Act
Anti-Harassment	Mandatory inquiry committee + Code of Conduct	Anti-Harassment Act 2010

Minimum Wages by Province (2025-26)SOURCE VERIFIED

Province	Minimum Monthly Wage (PKR)	Jurisdiction
Federal/ICT	37,000	Federal/ICT
Punjab	37,000	Punjab
Sindh (Unskilled)	40,000	Sindh
Sindh (Highly-skilled)	51,745	Sindh
Khyber Pakhtunkhwa	37,000	KP
Balochistan	37,000	Balochistan

Tax Rates Affecting IT Employment CostsSOURCE VERIFIED

Tax	Rate	Jurisdiction	Reference
Corporate Tax (PSEB IT export)	0.25%	Federal/ICT	ITO §154A
Corporate Tax (domestic IT)	20%	Federal/ICT	ITO §154A
WHT on Salary	Progressive 5-35%	Federal/ICT	ITO §12
Startup Tax Credit	100% for 3 years	Federal/ICT	ITO §65F(b)
SST Sindh IT concessional	3%	Sindh	SRO 981(I)/2015
SST Punjab IT	0% (Zero-Rated)	Punjab	PRA Act 2012

As of April 2026, EOBI and SESSI websites have been experiencing downtime. Verify requirements directly. Consult a qualified labor advisor for comprehensive compliance. Pakistan Deep Intelligence, April 2026

Provincial Labor Law Comparison for IT Sector

Item	Federal/ICT	Sindh	Punjab	KP	Balochistan
Working Hours	8 hr/day, 48 hr/week	9 hr/day, 48 hr/week	8 hr/day, 48 hr/week	8 hr/day, 48 hr/week	8 hr/day, 48 hr/week
Overtime Rate	2× normal rate	2× normal rate	2× normal rate	2× normal rate	2× normal rate
Paid Leave	14 days annual	14 days annual	14 days annual	14 days annual	14 days annual
Medical Leave	10 days	16 days (casual+sick)	10 days	10 days	10 days
Maternity Leave	12 weeks (180 days under ICT Act 2023)	180 days (Sindh Act 2018)	16 weeks	16 weeks	12 weeks
Minimum Wage	PKR 37,000/mo (Federal/ICT — FBR Notifications)	PKR 37,000/mo (Sindh Labour Laws)	PKR 37,000/mo (PRA Punjab — PSTS Act 2012)	PKR 37,000/mo (KPRA Notifications)	PKR 37,000/mo (Notification)
EOBI	5% employer + 1% employee	—	—	—	—
SESSI/PESSI/KP ESSI	—	6% + 1% (SESSI)	6% + 1% (PESSI)	6% + 1% (KP ESSI)	N/A — EOBI only
Gratuity/Provident	1 mo salary per year (gratuity)	1 mo salary per year	1 mo salary per year	1 mo salary per year	1 mo salary per year
Notice Period (Termination)	30 days	30 days	30 days	30 days	30 days

EOBI & Social Security — IT Company Obligations

EOBI (Federal) — Employees' Old-Age Benefits Act 1976

Applicability: All establishments with 5+ employees (ICT & federally administered areas)
Employer Contribution: 5% of wages (ceiling PKR 37,000/month — FBR Notifications)
Employee Contribution: 1% of wages
Benefits: Old-age pension (60 years), invalidity pension, survivor's pension, medical treatment
Registration: Via EOBI portal or regional offices within 30 days of hiring

Provincial Social Security

SESSI (Sindh): 6% employer + 1% employee — covers medical care, sickness benefit, maternity
PESSI (Punjab): 6% employer + 1% employee — same scope as SESSI
KP ESSI: 6% employer + 1% employee
Balochistan: No provincial ESSI established; EOBI is the only statutory social security scheme (5+ employee (per §1(b) EOBI Act 1976)s)

Important: IT companies must register with BOTH EOBI (federal) AND the relevant provincial social security institution. Non-registration carries penalties up to PKR 50,000 per violation (per EOBI Act 1976 §20).

Key Federal Labor Statutes

Statute	Scope	Key Provisions
Industrial Relations Act 2012 (ICT)	Trade unions, CBA	Right to form unions, collective bargaining, strike procedures
West Pakistan Shops & Establishments Ordinance 1969	Working conditions	Hours, leave, overtime, registration of establishments
Maternity Benefit Ordinance 1958	Maternity	6 weeks pre + 12 weeks post-natal leave (180 days under ICT Act 2023)
Workers' Welfare Fund Ordinance 1971	Welfare	Housing, education, medical for workers (1% of profit from industrial employers with 100K+)
Companies Profit (Workers' Participation) Act 1968	Profit sharing	5% of profit allocated to workers' participative fund (100K+ employees)

IT Sector Labor Compliance Checklist

☐ Register establishment with provincial labor department within 30 days
☐ Obtain EOBI registration (5+ employees in ICT/federal areas)
☐ Register with provincial social security (SESSI/PESSI/KP ESSI; Balochistan: EOBI only)
☐ Display labor law notices (working hours, wages, leave entitlements) at workplace
☐ Maintain attendance registers and wage records (retain for 3 years)
☐ Issue written employment contracts with all mandatory terms
☐ Ensure minimum wage compliance (PKR 37,000+ monthly, varies by province — check latest notification)
☐ Provide EOBI cards to all eligible employees
☐ File annual returns with labor department
☐ Comply with anti-harassment law (Protection against Harassment of Women at Workplace Act 2010)

Labor & Employment Law

Details & Regulations

Labor & Employment Law

Federal Labor LegislationSOURCE VERIFIED

Provincial Labor LawsSOURCE VERIFIED

EOBI & Social Security RatesSOURCE VERIFIED

IT Sector Employment Best PracticesSOURCE VERIFIED

Employment ContractsSOURCE VERIFIED

Minimum Wages by Province (2025-26)SOURCE VERIFIED

Tax Rates Affecting IT Employment CostsSOURCE VERIFIED

EOBI (Federal) — Employees' Old-Age Benefits Act 1976

Provincial Social Security

Labor Law Compliance Checklist

Source Citations (4)

Related Topics