Pakistan is one of the developing countries in the world, ranking 46th in terms of nominal GDP. They have managed to minimize their poverty score by 80% in a matter of a decade and have since provided opportunities for their people’s career growth. Trade and services occupy the largest component of their economy while agriculture comes at second.
** The minimum wage in 2020 is PKR17,500 per month .
Income from Salary Exceeds 75% of Taxable Income
The minimum wage is 17,500 PKR per month.
Wages can be paid on a daily, weekly, bimonthly, or monthly basis.
Wage period cannot exceed one month.
Employees can only work a maximum of 9 hours a day and a maximum of 48 hours a week.
Employees are paid 200% of their regular pay on normal days.
Employees are paid 300% of their regular pay during holidays.
The public holidays can be found here.
Employees are given 14 days of annual leave after completing 12 months of service.
It cannot be divided separately.
Employees are paid their normal wages during leave.
Factory workers receive half of their pay due before the beginning of the leave.
Employees are given 121 days of sick leave per year.
During their sick leave, employees are paid 75% of their salary.
If employees are ill with tuberculosis or cancer, they are given a maximum leave of 365 days and they receive their full wages.
To receive these benefits, the employee must have at least 90 days of contributions in the six months before sickness or injury.
Employees are entitled to 3 months of paid maternity leave.
No employer is permitted to terminate the female employee while she is on maternity leave.
Employees have one-month leave for each of their first three children.
A written letter should be provided when terminating a contract and reasoning for the termination must be sufficient.
Both employee and employer should provide a month’s time notice.
If sufficient notice is not provided, a monthly salary in lieu shall be provided.
Severance pay amounts to 30 days’ wages for each completed year of service.
Employees in Pakistan are usually given 3 months probation period
There are two general social security schemes in Pakistan that provide coverage for their employees. The first one, The Provincial Employees Social Security (PSSS), gives benefit coverage for employees in cases of sickness, maternity, employment, injury or death. The second one, The Employees Old Age Benefit (EOBI) provides four types of benefits to insured employees or their survivors: Old-Age Pension (or Reduced Pension), Survivors’ Pension, Invalidity Pension and Old-Age Grant (if an employee is not eligible for pension).
Pakistan offers Employee stock options for their employees as a way to retain talent and motivate workers. Just recently, they have allowed not only publicly listed companies but also start-up companies to offer ownership rights to their employees as compensation. For more information regarding their recent announcement and their regulations surrounding this benefit, you may refer to the following links: Press Release; SECP website
The standard VAT rate in Pakistan is 17%.