Pakistan Gratuity Calculator
Work out the gratuity owed to an employee in Pakistan when they leave. Enter the last drawn monthly salary, years of service and province to see the amount at 30 days' wages for each year of service (60 days in Balochistan), under current provincial law.
- Sindh Terms of Employment Act 2015
- ICA (Standing Orders) Ordinance 1968
- KP Standing Orders Act 2013
- Balochistan Standing Orders Act 2021
- Income Tax Ordinance 2001
The employee
Partial years > 6 months round up to the next full year
Rates: 30 days' wages per year of service (60 in Balochistan), part years over 6 months count as a full year. For estimation only.
Results
Paid once, at the end of service
- One month’s salary per completed year
| Last drawn salaryMonthly | Rs 150,000 |
|---|---|
| Years of service (input) | 7 years |
| Years of service (rounded)Over 6 months rounds up | 7 years |
| ProvinceSindh Terms of Employment Act 2015 | Sindh |
| RateStanding Order 16(6) | 30 days / year |
| Estimated gratuitySalary x Years | Rs 1,050,000 |
Assumes continuous service with the same employer. See how each figure is worked out.
The rules in Sindh
Sindh Terms of Employment Act 2015
- Minimum service
- Over 6 monthsMet
- Years counted
- 7 years
- Rate
- 30 days / year
- Salary used
- Last drawn monthly salary
- Paid on
- Resignation, termination, retirement, or death
- Misconduct
- Not paid on dismissal
- Alternative
- A registered provident fund
- Per completed year
- Rs 150,000
- Exempt from an approved fund
- Rs 300,000
Hire through RecruitGo
No Pvt. Ltd. company needed. We employ them for you.
- Last drawn salaryPer month
- Rs 150,000
- RecruitGo EOR feePer employee per month
- 15%, min $99
- Gratuity provisioned monthly, so there is no large lump-sum payout
- Contracts under the Standing Orders Ordinance, with EOBI and provincial social security registration
- Onboarding in 3 to 5 business days, without SECP registration
How it is computed
How this gratuity was worked out
Each figure above, worked out from a last drawn monthly salary of Rs 150,000 and 7 years of service in Sindh.
Years of service
- You entered 7 years.
- A whole number of years, so all 7 years count.
- Partial years greater than 6 months are rounded up to the next full year; 6 months or less are not counted.
Source: Sindh Terms of Employment Act 2015, Standing Order 16(6): part years over 6 months count as a full year.
Salary used
- Last drawn monthly salary: Rs 150,000.
- The law uses the wages for the last month of service, not an average over the employment period. For a piece-rated worker, it is the highest pay drawn in the last 12 months.
- Allowances such as housing, transport, or bonuses are typically excluded unless the employment terms state otherwise.
Source: Sindh Terms of Employment Act 2015, Standing Order 16(6): wages at the end of service; for piece-rated workers, the highest pay in the last 12 months.
Gratuity amount
- 30 days' wages for each completed year, which is one month’s salary: Rs 150,000.
- Rs 150,000 × 7 years = Rs 1,050,000.
- Balochistan pays 60 days' wages a year; the other provinces and Islamabad pay 30.
Source: Sindh Terms of Employment Act 2015, Standing Order 16(6): 30 days / year.
Eligibility
- Sindh sets no separate minimum service: a part year of more than 6 months counts as a full year.
- 7 years counted.
- The benefit applies upon resignation, termination, retirement, or death of the employee. It is not paid on dismissal for misconduct.
Source: Sindh Terms of Employment Act 2015, Standing Order 16(6).
Tax treatment
- From an approved gratuity fund: exempt up to PKR 300,000 or the actual amount received, whichever is lower.
- From an approved fund, Rs 300,000 of the Rs 1,050,000 would be exempt and Rs 750,000 taxable in the year of receipt.
- Not from an approved fund: fully taxable as part of the employee's income in the year of receipt.
Source: Income Tax Ordinance 2001.
Paying for it
- It builds up at one month’s salary a year: about Rs 12,500 a month, or 8.33% of salary.
- Employers can substitute gratuity with a registered provident fund.
- Through our Employer of Record service in Pakistan, gratuity is provisioned monthly, so there is no large lump-sum payout.
Source: 30 days’ wages per completed year, provisioned monthly by RecruitGo.
Legal Reference
What is Gratuity in Pakistan?
Gratuity is a statutory end-of-service benefit paid to employees in Pakistan upon termination, resignation, retirement, or death. It serves as a financial reward for long-term service and is governed by various provincial and federal laws, including the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 in Punjab and Islamabad, the Sindh Terms of Employment (Standing Orders) Act 2015, the Khyber Pakhtunkhwa Industrial and Commercial Employment (Standing Orders) Act 2013, and the Balochistan Industrial and Commercial Employment (Standing Orders) Act 2021.
The standard formula is 30 days' wages (equivalent to one month's salary) for each completed year of service, with any part of a year over 6 months counted as a full year. Balochistan pays 60 days' wages a year under its 2021 Act. There is no separate minimum service period, so an employee with more than 6 months of continuous service qualifies. The gratuity is calculated on the employee's last drawn monthly salary at the time of separation.
Gratuity sits alongside the other statutory costs of employing someone in Pakistan, such as EOBI and provincial social security, which our guide to hiring in Pakistan covers. If you employ staff through an Employer of Record in Pakistan, gratuity is provisioned monthly rather than paid as one large sum when the employee leaves.
| Province / Territory | Minimum Service | Rate | Governing Law |
|---|---|---|---|
| SindhYours | Over 6 months | 30 days / year | Sindh Terms of Employment Act 2015 |
| Punjab | Over 6 months | 30 days / year | Standing Orders Ordinance 1968The Punjab Labour Code 2026 replaces this Ordinance in Punjab once it is in force. |
| KPK | Over 6 months | 30 days / year | KP Standing Orders Act 2013 |
| Balochistan | Over 6 months | 60 days / year | Balochistan Standing Orders Act 2021 |
| Federal / ICT | Over 6 months | 30 days / year | Standing Orders Ordinance 1968 |
Highlighted: Sindh, the province chosen in the calculator.
Eligibility
There is no separate minimum service period: a part year of more than 6 months counts as a full year, so more than 6 months of continuous service qualifies. The benefit applies upon resignation, termination, retirement, or death of the employee, but not on dismissal for misconduct.
Calculation
Gratuity is calculated as the last drawn monthly salary multiplied by the number of completed years of service, or twice that in Balochistan. A part year of more than 6 months counts as a full year; 6 months or less is not counted.
Tax Treatment
Gratuity from an approved fund may be exempt up to PKR 300,000. Amounts exceeding the exemption limit or from non-approved funds are taxable as income in the year of receipt.
Employing someone in the Gulf as well? The UAE gratuity calculator works out end-of-service gratuity under UAE labour law, which pays 21 days' basic salary a year for the first 5 years and 30 days a year after that.
More tools for end-of-service benefits and global payroll
Frequently Asked Questions
About gratuity in Pakistan
The provincial Standing Orders laws set no separate minimum. They pay gratuity for every completed year of service or any part of a year in excess of six months, so an employee with more than six months of continuous service qualifies, and six months or less earns nothing. This applies in Sindh, Punjab, KPK, Balochistan, and the Federal/ICT jurisdiction. Some company policies are more generous than the law.
Gratuity received by an employee is generally taxable under the Income Tax Ordinance 2001. However, certain exemptions apply. Gratuity received from an approved gratuity fund is exempt up to PKR 300,000 or the actual amount received, whichever is lower. If the gratuity is not from an approved fund, it is fully taxable as part of the employee’s income in the year of receipt. Tax treatment may vary based on individual circumstances, so consulting a tax professional is recommended.
Yes, under the Standing Orders laws. They classify workers as permanent, probationers, badlis, temporary, apprentices and contract workers, and the gratuity clause covers any worker who resigns or whose service is ended for a reason other than misconduct, without excluding any of these classes. The Sindh, KP and Balochistan Acts name temporary and contract workers in their definition of a worker. So a temporary or contract worker with more than six months of service earns gratuity on the same basis as a permanent employee, unless the employer runs a qualifying provident fund.
The Standing Orders laws use the wages for the last month of service, or, for a piece-rated worker, the highest pay drawn in the last 12 months. This means the gratuity is computed on the employee’s most recent monthly wages at the time of separation, not an average of wages over the employment period. Allowances such as housing, transport, or bonuses are typically excluded unless the employment terms state otherwise.
If an employer refuses to pay the legally mandated gratuity, the employee can file a complaint with the relevant Labour Court or the provincial Labour Department. Under the applicable provincial laws, employers who fail to pay gratuity can face penalties and be ordered to make payment with interest. Employees should maintain records of their employment tenure and salary to support their claim. Legal aid services and labor unions can also assist in pursuing such cases.
