Hire in Pakistan. Skip the Entity Setup.
Pakistan offers one of the largest English-speaking workforces in South Asia, with deep talent pools in IT, BPO, finance, and engineering. RecruitGo handles contracts, payroll, EOBI, provincial social security, tax withholding, and compliance so you can start hiring in days.
What Is an Employer of Record in Pakistan?
An Employer of Record (EOR) is a locally registered company that legally employs workers in Pakistan on your behalf. RecruitGo's Pakistani entity becomes the legal employer. We sign the employment contract, register employees with EOBI (Employees' Old-Age Benefits Institution) and the relevant provincial social security institution, withhold and file income tax with the Federal Board of Revenue (FBR), and manage all labor compliance.
You retain full control over the employee's work, schedule, and responsibilities. They report to you, work on your projects, and function as part of your team. We handle everything that Pakistani employment law places on the employer.
Without EOR: Setting up a private limited company in Pakistan requires SECP registration, FBR tax registration, provincial social security enrollment, and Ministry of Interior security clearance for foreign directors. While Pakistan allows 100% foreign ownership and has no minimum capital requirement like Indonesia, the full setup still takes 4 to 8 weeks when factoring in security clearance and bank account opening. See full EOR vs entity comparison →
Who Should Use EOR in Pakistan?
What It Costs to Hire Through EOR
Pakistan's statutory employer costs are relatively low compared to other markets. EOBI is calculated on the minimum wage (not actual salary), keeping pension costs fixed. Provincial social security is the main variable, ranging from 6% to 7% of wages depending on province and wage cap. There is no mandatory 13th month pay or statutory bonus.
| Component | Monthly (PKR) | Rate / Basis |
|---|---|---|
| Gross salary | 150,000 | — |
| EOBI (employer) | 2,000 | 5% of minimum wage (PKR 40,000) |
| Provincial SSI (PESSI) | 9,000 | 6% of wages (Punjab) |
| Gratuity provision | ~12,500 | ~8.33% (30 days/year) |
| Total loaded cost (before EOR fee) | ~173,500 | ~116% |
* EOBI is calculated on minimum wage (PKR 40,000 in Punjab as of FY 2025-26), not actual salary. Provincial SSI rates: Punjab (PESSI) 6%, Sindh (SESSI) 7%, KPK (ESSI) 6%. SSI applies to establishments with 5+ employees and is subject to provincial wage caps. Gratuity provision assumes 30 days' wages per year of service. EOR management fee not included above.
How this compares: Pakistan's total employer statutory cost is roughly 14 to 16% above gross salary, comparable to Thailand (~3 to 4% but without gratuity) and significantly lower than Indonesia (~27 to 33%) or the Philippines (~18 to 22%). The key cost advantage is that EOBI is fixed at the minimum wage level, so for higher-salaried roles, the EOBI contribution as a percentage of actual salary becomes negligible.
How Hiring Works Through EOR
You share the role, salary, location (Lahore, Karachi, Islamabad, or elsewhere), and start date. We confirm compliance requirements across the relevant province and return a cost breakdown within 24 hours.
We draft an employment contract compliant with the Standing Orders Ordinance and applicable provincial labor law. We register the employee with EOBI and the provincial social security institution (PESSI, SESSI, or ESSI), and set up income tax withholding with FBR.
We calculate and disburse salary in PKR, process all statutory contributions, withhold and file income tax monthly with FBR, and provide payslips. Before Eid, we coordinate any agreed bonuses. Gratuity is provisioned monthly.
Pakistan’s labor law is governed at both federal and provincial levels. We monitor changes across Punjab, Sindh, KPK, Balochistan, and Islamabad Capital Territory, including minimum wage adjustments, EOBI rate changes, and evolving provincial labor regulations.
EOR vs Pakistani Entity vs Contractors
| EOR | Pvt. Ltd. (SECP) | Contractor | |
|---|---|---|---|
| Time to first hire | 3 to 5 days | 4 to 8 weeks | Immediate |
| Setup cost | None | PKR 50K to 200K+ | None |
| Foreign ownership | Not applicable | 100% allowed | Not applicable |
| MOI security clearance | Not required | Required for foreign directors | Not applicable |
| Compliance risk | Handled by EOR | Your responsibility | High |
| Gratuity/severance | Managed by EOR | Your responsibility | None (risk if misclassified) |
| Best for | 1 to 15 people, speed | 20+, permanent ops | Short-term projects only |
The MOI clearance factor: While Pakistan allows 100% foreign ownership and has no minimum capital requirement for Pvt. Ltd. companies, foreign directors and shareholders require post-incorporation security clearance from the Ministry of Interior. SECP processes the incorporation first (2 to 3 working days), but MOI clearance can take additional weeks. If clearance is denied, the company's registration or the foreign director's appointment is cancelled. EOR eliminates this risk entirely.
Employment Contracts in Pakistan
Pakistani labor law strongly encourages written employment contracts. The Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 and its provincial equivalents govern the terms of employment for workers. Contracts must be in Urdu or English and specify salary, duties, working hours, leave entitlements, and termination conditions.
Permanent Employment
The default for ongoing roles
Fixed-term Contract
For project-based or temporary work
Probation in Pakistan: Probation periods are typically 3 to 6 months. During probation, either party can terminate without notice. After confirmation as a permanent employee, the full protections of the Standing Orders Ordinance apply, including mandatory notice periods and gratuity entitlements.
Income Tax for Salaried Individuals
Pakistan uses a progressive income tax system for salaried individuals, administered by the Federal Board of Revenue (FBR). Employers withhold tax monthly and remit to FBR. Pakistan's tax year runs from July 1 to June 30. The following rates apply for FY 2025-26 (July 2025 to June 2026), as enacted under the Finance Act 2025.
| Annual taxable income (PKR) | Tax rate |
|---|---|
| Up to 600,000 | 0% (exempt) |
| 600,001 to 1,200,000 | 1% of amount exceeding 600,000 |
| 1,200,001 to 2,200,000 | PKR 6,000 + 11% of amount exceeding 1,200,000 |
| 2,200,001 to 3,200,000 | PKR 116,000 + 23% of amount exceeding 2,200,000 |
| 3,200,001 to 4,100,000 | PKR 346,000 + 30% of amount exceeding 3,200,000 |
| Over 4,100,000 | PKR 616,000 + 35% of amount exceeding 4,100,000 |
Filer vs non-filer: Pakistan maintains an Active Taxpayer List (ATL). Individuals not on the ATL face significantly higher withholding rates on banking, property, and vehicle transactions. Your EOR ensures employees are properly registered with FBR and appear on the ATL. A surcharge of 9% applies to salaried individuals with taxable income exceeding PKR 10 million.
Employee Benefits and Leave Entitlements
Mandatory leave entitlements
Common additional benefits
Pakistan has no mandatory 13th month pay or statutory bonus. However, competitive employers typically offer:
Eid planning: Eid-ul-Fitr (end of Ramadan) and Eid-ul-Adha are Pakistan's most significant holidays, each with 3 official days off. In practice, many employees take additional leave around these periods. Plan project timelines accordingly, similar to Songkran in Thailand or Lebaran in Indonesia. Ramadan also affects working hours, with many offices shifting to reduced schedules.
Termination Rules and Gratuity
Termination in Pakistan must follow the procedures set out in the Standing Orders Ordinance and its provincial equivalents. Permanent employees cannot be terminated without written notice specifying the reason for termination. Termination during maternity leave, sickness, or injury is prohibited.
Notice period
Permanent employees must receive at least 1 month's written notice or 1 month's wages in lieu of notice. During probation, either party can terminate without notice. Employees resigning must also provide 30 days' notice unless the contract specifies otherwise.
Gratuity (severance pay)
Employees terminated for any reason other than misconduct are entitled to gratuity. The rate is 30 days' wages for each completed year of service, with any period exceeding 6 months counted as a full year. Gratuity is calculated on the last drawn wages or the highest salary drawn in the last 12 months, whichever is higher.
| Years of service | Gratuity entitlement |
|---|---|
| Less than 1 year | None (unless contract provides otherwise) |
| 1 year | 30 days’ wages |
| 2 years | 60 days’ wages |
| 3 years | 90 days’ wages |
| 5 years | 150 days’ wages |
| 10 years | 300 days’ wages |
| 15 years | 450 days’ wages |
Provident fund alternative: Employers can substitute gratuity with a registered provident fund. If a provident fund is in place, the employer is not required to pay separate gratuity. Many larger employers prefer this structure because it spreads the cost and provides employees with a savings mechanism. Your EOR provisions gratuity monthly to avoid large lump-sum liabilities.
Termination for misconduct
An employer may terminate without gratuity only for proven misconduct, but must follow a formal disciplinary process: issue a show-cause notice detailing the allegations, conduct an impartial inquiry giving the employee a chance to defend themselves, and issue a final written order. Failure to follow this procedure exposes the employer to claims of wrongful dismissal in labor courts.
Working Hours and Overtime
Standard working hours are 9 hours per day and 48 hours per week, spread across 6 working days. Most office-based roles in urban centers follow a 5-day, 40-hour schedule by company policy. Women are restricted to working between 6 AM and 7 PM in certain industries.
| Scenario | Rate |
|---|---|
| Overtime (beyond 48 hours/week) | 2x ordinary hourly rate |
| Weekly rest day | Minimum 1 day per week (Friday or Sunday) |
| Maximum daily hours (general) | 9 hours |
| Maximum daily hours (women, certain industries) | 7 hours |
Ramadan hours: During Ramadan, many offices in Pakistan shift to reduced working hours (typically 6 to 7 hours/day). While this is not a statutory requirement for the private sector, it is widespread practice and should be factored into capacity planning for the month.
Minimum Wages by Province (FY 2025-26)
Pakistan sets minimum wages at the federal and provincial level. The federal budget for FY 2025-26 raised the minimum wage for unskilled workers. Each province may set its own rates, which can be equal to or higher than the federal floor.
| Province / Territory | Unskilled (PKR/month) | Approx. USD |
|---|---|---|
| Punjab | 40,000 | ~$143 |
| Sindh | 40,000 | ~$143 |
| Khyber Pakhtunkhwa | 40,000 | ~$143 |
| Islamabad Capital Territory | 40,000 | ~$143 |
| Balochistan | 37,000 | ~$132 |
These are legal floors for unskilled workers. Semi-skilled and skilled worker minimums are higher (PKR 38,200 and PKR 45,910 respectively at the federal level). Professional roles in Lahore, Karachi, and Islamabad typically start at PKR 60,000 to 150,000+ for entry to mid-level positions in tech, finance, and BPO.
Frequently Asked Questions
Your total cost is the employee’s gross salary plus statutory contributions (EOBI at PKR 2,000/month fixed, provincial SSI at 6 to 7% of wages, and a gratuity provision at ~8.33%), plus the EOR management fee. For a mid-level Lahore role at PKR 150,000/month, total loaded cost is approximately PKR 173,500, or about 116% of gross salary.
Typically 3 to 5 business days from signed agreement to the employee’s first day. This compares to 4 to 8 weeks for setting up your own Pvt. Ltd. company, factoring in SECP incorporation, FBR registration, bank account opening, and Ministry of Interior security clearance for foreign directors.
The EOBI Act ties contributions to the government-notified minimum wage, not actual earnings. This means for a PKR 150,000/month employee, the employer pays only PKR 2,000/month for EOBI (5% of PKR 40,000 minimum wage), not PKR 7,500 (5% of actual salary). This makes EOBI a very small fixed cost for mid-to-senior roles.
Gratuity (end-of-service benefit) is mandatory for employees terminated for reasons other than misconduct. The rate is 30 days’ wages per completed year of service. Employers can substitute it with a registered provident fund. Your EOR provisions gratuity monthly to avoid large lump-sum payouts.
No. Pakistan has no statutory bonus or 13th month pay. However, Eid bonuses of 1 to 2 months’ salary are common in practice and expected in many industries. These are discretionary and depend on company policy.
Yes. Pakistan’s labor law operates at both federal and provincial levels. Each province (Punjab, Sindh, KPK, Balochistan) and the Islamabad Capital Territory has its own social security institution, minimum wage notifications, and labor regulations. Your EOR handles all provincial compliance so you do not need to track these differences.
Under the Maternity and Paternity Leave Act 2020, female employees are entitled to 180 days for their 1st child, 120 days for the 2nd, and 90 days for the 3rd at full pay. Male employees get up to 30 days of fully paid paternity leave, available for the first 3 children.
You can, but misclassification risk is real. If the worker has fixed hours, uses your tools, reports to your managers, and performs core business functions, Pakistani labor courts will likely classify them as an employee. This triggers backdated EOBI, SSI, gratuity, and potential penalties. EOR eliminates this risk.
EOBI and Provincial Social Security
Pakistan has two mandatory employer programs: the federal EOBI pension system and provincial social security institutions. Unlike Indonesia or Thailand where contributions are based on actual salary, EOBI is uniquely calculated on the government-notified minimum wage, making it a fixed, predictable cost regardless of the employee's actual earnings.
EOBI (Employees' Old-Age Benefits Institution)
Provincial Social Security (ESSI/PESSI/SESSI)
Provincial social security provides medical care through SSI-approved hospitals, sickness and injury benefits, maternity benefits, and death grants for registered employees and their dependents. It applies to establishments with 5 or more employees. Each province maintains its own wage ceiling for contribution calculations. Your EOR manages registration, monthly calculation, and remittance for all programs across all provinces.