OverviewSOURCE VERIFIED
IT companies in Pakistan must comply with multiple federal labor laws. While the 18th Amendment devolved labor to provinces, several key pieces of legislation remain under federal jurisdiction, particularly concerning cross-provincial matters and specific sectors. This guide covers all federal labor laws applicable to IT/ITeS companies with current rates, jurisdiction labels, and practical compliance guidance.
Jurisdiction: Federal/ICT — these laws apply nationwide regardless of province. Provincial laws (
SESSI,
PESSI, etc.) apply
in addition to these federal requirements.
Key Federal Labor Laws for IT CompaniesSOURCE VERIFIED
1. Industrial Relations Act 2012SOURCE VERIFIED
Governs industrial relations including trade union registration, collective bargaining agents (CBA), strikes, lockouts, and dispute resolution. Applies to establishments with 5+ employees. IT companies with 10+ workers are covered.
| Aspect | Details | Jurisdiction |
|---|
| Trade Union Formation | 5+ employees may form a union | Federal/ICT |
| Collective Bargaining Agent | Elected by majority union members | Federal/ICT |
| Strike Notice Period | 15 days written notice required | Federal/ICT |
| Dispute Resolution | National Industrial Relations Commission (NIRC) | Federal/ICT |
| Unfair Labour Practices | Both employer and worker prohibited | Federal/ICT |
2. Shops and Establishments Ordinance 1969SOURCE VERIFIED
The most directly applicable law for IT companies (offices, software houses). Regulates working hours, leave entitlements, employment of women and young persons, and general employment conditions.
Key Provisions
- Working Hours: Maximum 9 hours/day, 48 hours/week
- Overtime: Double rate for hours exceeding 9/day
- Weekly Rest: Minimum 1 full day off per week
- Annual Leave: 14 days earned leave + 10 casual leave + sick leave
- Maternity: 12 weeks (6 weeks pre + 6 weeks post-natal mandatory)
- Employment of Young Persons: 14-18 years limited to 6 hours/day
Federal social security scheme. Every employer with 5+ employees must register with EOBI.
| Parameter | Details | Jurisdiction |
|---|
| Employer Contribution | 5% of gross salary | Federal/ICT |
| Employee Contribution | 1% of gross salary | Federal/ICT |
| Maximum Insurable Wages | PKR 37,000/month (FBR Notifications) | Federal/ICT |
| Registration Threshold | 5+ employees | Federal/ICT |
| Pension Eligibility | 15 years contribution, age 60 (men) / 55 (women) | Federal/ICT |
| Minimum Pension | PKR 10,000/month (Federal EOBI minimum pension) | Federal/ICT |
| Invalidity Pension | PKR 7,500/month (5 years contribution) | Federal/ICT |
| Survivors' Pension | 75% of pension to widow/dependents | Federal/ICT |
Legal Reference: EOBI Act 1976
4. Payment of Wages Act 1936SOURCE VERIFIED
Ensures timely payment of wages. Stipulates payment intervals (monthly for salaried employees), permitted deductions, and penalties for non-compliance.
| Requirement | Detail | Jurisdiction |
|---|
| Payment Interval | Monthly for salaried staff (within 7 days of wage period end) | Federal/ICT |
| Permitted Deductions | EOBI, tax, social security, advance — with written authorization | Federal/ICT |
| Maximum Deduction | 50% of wages (Federal EOBI) (75% for cooperatives) | Federal/ICT |
| Late Payment Penalty | Fine + compensation at 10% of delayed wages | Federal/ICT |
5. Workmen Compensation Act 1923SOURCE VERIFIED
Provides compensation to employees (or dependents) for injury or death arising out of employment.
| Injury Type | Compensation | Jurisdiction |
|---|
| Death | PKR 400,000 or 60 months' wages (whichever is higher) | Federal/ICT |
| Permanent Total Disablement | PKR 400,000 or 60 months' wages | Federal/ICT |
| Permanent Partial Disablement | Proportionate to loss of earning capacity | Federal/ICT |
| Temporary Disablement | 50% of monthly wages for disablement period | Federal/ICT |
6. Workers Welfare Fund Ordinance 1969SOURCE VERIFIED
Annual contribution based on company profit/income. Contributions fund workers welfare schemes including housing, education, and marriage grants.
| Parameter | Details | Jurisdiction |
|---|
| Contribution Rate | 2% of income (Federal WWF) exceeding PKR 500,000 | Federal/ICT |
| Applicable To | All industrial establishments with 5+ employees | Federal/ICT |
| Due Date | December 31 annually | Federal/ICT |
7. Other Relevant Federal LawsSOURCE VERIFIED
| Law | Key Provisions | IT Relevance |
|---|
| Minimum Wages Ordinance 1961 | Sets federal minimum wage floor (PKR 37,000/mo — FBR Notification) | All IT companies must pay at least minimum wage |
| Companies Profit (Workers Participation) Act 1968 | 5% net profit allocated to workers welfare fund | Applies to 100+ employee companies |
| Factories Act 1934 | Working hours, safety, welfare provisions | Applies if IT company has manufacturing/hardware units |
| Anti-Sexual Harassment Act 2010 | Protection against Harassment of Women at Workplace | Mandatory: inquiry committee, Code of Conduct, Ombudsperson |
| Disabled Persons Act | 2% quota for disabled persons in employment | Applicable to companies with 100+ employees |
Compliance CalendarSOURCE VERIFIED
| Compliance | Frequency | Deadline | Jurisdiction |
|---|
| EOBI Contribution | Monthly | 15th of following month | Federal/ICT |
| Workers Welfare Fund | Annual | December 31 | Federal/ICT |
| Withholding Tax on Salary | Monthly | 15th of following month | Federal/ICT |
| EOBI Annual Return | Annual | 30 days after year-end | Federal/ICT |
| Anti-Harassment Report | Annual | Per Ombudsperson directive | Federal/ICT |
| Workers Participation Fund | Annual | Within 30 days of AGM | Federal/ICT |
Federal vs Provincial Social Security Cost ComparisonSOURCE VERIFIED
| Component | Rate | Jurisdiction | Employer/Employee |
|---|
| EOBI | 5% + 1% | Federal/ICT | Employer 5%, Employee 1% |
| SESSI | 6% | Sindh | Employer bears full 6% |
| PESSI | 6% + 1% | Punjab | Employer 6%, Employee 1% |
| Workers Welfare Fund | 2% | Federal/ICT | Employer (if income > PKR 500K) |
| Total (Sindh-based IT) | ~14% | Combined | Employer ~12% + Employee 1% |
| Total (Punjab-based IT) | ~0% (Zero-Rated) | Combined | Employer ~13% + Employee 2% |
Practical Tip: An IT company with 50 employees averaging PKR 150,000/month in Sindh pays approximately PKR 900,000/month in
EOBI +
SESSI contributions. The same company in Punjab pays ~PKR 150,000 more per month due to
PESSI's higher total rate.
SBP Teen Bank Accounts (BPRD CL 01/2026)SOURCE VERIFIED
The SBP has enabled 26 million teenagers (ages 13-18) to open independent bank accounts and digital wallets. This is relevant for IT companies hiring interns and young workers:
| Feature | Details | Reference |
|---|
| Eligibility | Teenagers 13-18 years with CNIC or B-Form | BPRD CL 01/2026 |
| Account Types | Savings and current accounts, digital wallets | SBP Framework |
| Monthly Limit | Per bank's risk assessment | SBP BPRD |
| KYC Requirement | Parent/guardian consent for 13-15; self for 16-18 | SBP Guidelines |
| Adult Account Ownership | 67% in Pakistan (per SBP) | SBP Financial Inclusion Survey |
Current Labor Context (April 2026)SOURCE VERIFIED
| Metric | Value | Source |
|---|
| Avg Monthly Wage | PKR 39,042 | PBS LFS 2024-25 |
| Avg Household Income | PKR 82,179/month | PBS |
| Labour Force Participation | 46.3% | PBS |
| Unemployment Rate | 7.1% | PBS |
| Population | 241.49 million | Census 2023 |
| Literacy Rate | 63% | PBS |
| Internet Usage | 57% | PBS |
| IT Sector Employment | ~500,000+ (estimated) (as of April 2026 — verify with PSEB data) | PSEB |
Critical Note: As of April 2026, the
EOBI website (
eobi.gov.pk), SECSSI, and Federal Labour websites have been experiencing downtime (SSL/DNS errors). Companies should verify current contribution rates and procedures directly with the relevant offices. The Sindh Labour Code 2024 (draft — not yet enacted; verify enactment status) consolidates many provisions — consult a qualified labor law advisor.
Pakistan Deep Intelligence, April 2026
Key Federal Labor ContactsSOURCE VERIFIED
| Organization | Contact | Website |
|---|
| EOBI | Regional offices (website often down) | eobi.gov.pk |
| FBR Helpline | 051 111 772 772 (Mon-Fri 8AM-11:30PM) | fbr.gov.pk |
| FBR Email | helpline@fbr.gov.pk | — |
| Workers Welfare Fund | Annual contribution by December 31 | — |
| NIRC | Industrial disputes resolution | — |
| FIA Cybercrime | Helpline 1991 | cybercrime.gov.pk |