The Employers & Labour Bureau.

PAKISTAN EMPLOYMENT LAWS

Employment Regulations
The labour policy issued by the Government of Pakistan lays
down the parameters for the growth of trade unionism, the
protection of workers' rights, the settlement of industrial
disputes, and the redress of workers' grievances. The policy also
provides for the compliance with international labour standards
ratified by Pakistan. At present, the labour policy as approved in
year 22 is in force. !ith the efforts of Government and
enlightened elements within labour and employers, a forum i.e.
"!orkers #mployers $ilateral %ouncil of Pakistan &!#$%'P(" has
been established which facilitates the resolution of issues relating
to bilateral rights.
)abour is a *concurrent sub+ect,, under the Pakistani
%onstitution- that means that both .ederal and Provincial
Government are responsible for that. /n practice, in order to
guarantee more uniformity, Province may stipulate their own
regulation according with the conditions set by the .ederal
Government. 'ther regulations are accepted only for specific
needs of the Province at issue. The total labour force of Pakistan
is comprised of appro0imately 12.34 million people, with 526
within the agriculture sector, 3.46 in the manufacturing 7
mining sector and remaining 52.46 in various other professions.
%hild )abour Awareness of the problem provided the basis for
enactment of the Employment of Children Act, !! in
Pakistan, which has been followed by a number of administrative
and other initiatives to address the issue of child labour
effectively. The %onstitution of the %ountry also protects the
rights of children and states-
"No child below the age of fourteen shall be engaged in any
factory or mine or in any other hazardous employment. All forms
of forced labour and human trafficking are prohibited."
"or# $ermits
To enter Pakistan, for any kind of reason, you need to provide the
following documents in order to get a visa-
1 8ully filled 9isa form.
2 'riginal Passport &valid for at least si0 months( along
with its photocopy.
3 Two recent passport si:e photographs &with white
background(.
4 Any other document&s( that can be helpful in obtaining
a visa.
.or any kind of visa re;uirement, these are the documents you
need. %oncerning business visa, the Pakistan<s Government has
worked up a .riendly )ist &$9)( of => %ountries, including ?nited
@ingdom- that means, the businessmen from these %ountries will
receive a 9isa on Arrival &9'A( for 1 days validity on stay. /n
order to profit by this special term, businessmen arriving in
Pakistan need to provide-
1 Aecommendation letter from %%7/ of the respective
country of the foreigner.
2 /nvitation letter from $usiness organi:ation duly
recommended by the concerned Trade 'rgani:ationB
Association in Pakistan.
3 Aecommendatory letter by Conorary /nvestment
%ounsellor of $'/ B %ommercial Attach posted at Dissions
abroad.
The Employment %ar#et
$ased on an estimated population of 35>m people in midE25
and a participation rate of 16, the government estimates the
si:e of the labour force to be about 55m, =26 rural and 116
urban. The employed labour force is defined as individuals of at
least ten years of age who work for at least one hour during the
reference period and are either "paid employees" or "selfE
employed". According to the government's 21B5 economic
survey, the total number of employed persons was 53.1m in Fune
25, compared with 5.4m a year earlier. 8uring 21B5, the
number of employed persons in urban areas increased from
31.3m to 31.5m, and that in rural areas grew from 22.5m to
22.>m. #mployment increased at the rate of 2.36, the same as
in the previous year.
Agriculture remains the largest employer in Pakistan, employing
52.36 of the total labour force, according to the 21B5
economic survey. The proportion of people employed in the
community and socialEservices sector increased from 35.26 of
the total labour force in 2 to 34.46 in Fune 25G in the trade
sector, the share increased from 31.46 in 2 to 35.H6 in Fune
25. The manufacturing and mining, construction and transport
sectors employed 31.H6, =.36 and 4.>6, respectively, of the
total in Fune 25, compared with 33.=6, 4.H6 and 46 in 2.
The estimated official unemployment rate was at H.16 from Fuly
22 through Fune 25, with rural and urban rates of 2.=6 and
>.H6, respectively.
There is growing international pressure on Pakistan to improve its
labour standards, especially for child labour. The government also
faces the task of retraining an estimated 24, workers from
the public sector who are considered surplus. There is no legal
retirement age in the private sectorG workers may retire
according to company policy, which ranges by age from 44 to =
years and by years of service from 34 to 25.
?nEskilled, semiEskilled and skilled labour is available and there
are a number of employment agencies in Pakistan. Cowever, for
skilled managerial staff, it is best to advertise in the local press
and conduct your own interviews.
Engagement and &ismissal
/f your company counts more than 2 workers, you have to
submit to the /ndustrial and %ommercial #mployment &Itanding
'rders( 'rdinance that was enacted in 3>=H to address the
relationship between employer and employee and the contract of
employment. The 'rdinance applies to all industrial and
commercial establishments throughout the country. #very
employer in an industrial or commercial establishment is re;uired
to issue a formal appointment letter at the time of employment of
each worker. The labour contract has specific compulsory
contents, basically- the main terms and conditions of
employment, namely nature and tenure of appointment, pay
allowances and other fringe benefits admissible, terms and
conditions of appointment. .or the termination of a contract
there<re specific rules.
/n the case of workers in other establishments, domestic
servants, farm workers or casual labour engaged by contractors,
their labour contracts are generally unwritten and can be
enforced through the courts on the basis of oral evidence or past
practice. Aegarding lawful profession or occupations and lawful
trade or business, the article 3H of the %onstitution allowed every
citi:en the right to enter in this sort of occupations.
?sually no permanent +obs don<t re;uire any notice or pay in lieu
of notice when they are dismissed. .or permanent workers that<s
not possible. The services cannot be terminated for any reason
other than misconduct unless one month<s notice or wages in lieu
thereof has been furnished by the employer or by the worker if he
or she so chooses to leave his or her service. 'ne month<s wages
are calculated on the basis of the average wage earned
during the last three months of service. All terminations of
service in any form must be documented in writing stating the
reasons for such an act.
/f a worker is aggrieved by an order of termination he or she may
proceed under Iection 5= of the /ndustrial Aelations 'rdinance
22, aimed at regulating the labourEmanagement relations in
the country, and bring his or her grievance to the attention of his
or her employer, in writing, either him or herself, through the
shop steward or through his or her trade union within three
months of the occurrence of the cause of action. .orms of
termination have been described as removed, retrenched,
discharged or dismissed from service.
To safeguard against any colourful e0ercise of power, victimi:ation
or unfair labour practices, the )abour %ourts have been given
powers to e0amine and intervene to find out whether there has
been a violation of the principles of natural +ustice and whether
any action by the employer was bonaEfide or un+ust.
Employees' Rights and Remuneration
/n Ieptember 22 the government adopted a new labour policy
that aims eventually to consolidate more than 4 e0isting labour
laws into +ust seven. 'f these, a new /ndustrial Aelations
'rdinance 22 &/A' 22( was passed in 'ctober 22 to
replace the /A' 3>=>. The other si0 new laws being drafted are
the !ages 'rdinance, the %ondition of #mployment 'rdinance,
the Cuman Aesource 8evelopment 'rdinance, the 'ccupational
Iafety and Cealth 'rdinance, the )abour !elfare and Iocial
Iafety 'rdinance, and the Aeformation of )abour Fudiciary
'rdinanceG these are e0pected to be presented for parliamentary
approval by the end of 25. The government also aims to reform
the labour +udiciary, improve working conditions and strengthen
democratic trade unionism. Cowever, the trade unions have
strongly critici:ed both the policy and the /A' 22.
The unions oppose the /A' 22 on various grounds. They point
out that it has curtailed the power of courts to order the
compulsory reinstatement of workers after wrongful termination,
allowing them instead to order only compensation. .urthermore,
courts may no longer send employers to prisonG they may order
fines of up to only PAs. 4,. ?nions claim that their
registration process has been made more difficult. They also
argue that a designated collectiveEbargaining agent could
previously have ordered a reEaudit of the company's accounts and
that unions could have presented a panel of auditors from which
the government would choose oneG this is no longer possible
under the /A' 22. The /A' 22 has also curtailed the power
of the Jational /ndustrial Aelations %ommission, and proposes to
abolish the labour appellate tribunal. Ieveral +oint negotiating
forums have been eliminated and replaced with a workers' council
that promises little. The government claims that these moves are
meant to improve dialogue and reduce litigation.
The /A' 22 &like its predecessor, the /A' 3>=>( gives
employees the right to strike and employers the right to lock out,
but it provides for more e0tensive preliminary conciliation and
arbitration proceedings than the /A' 3>=>. Cowever, the
#ssential Iervices Daintenance Act of 3>42 restricts union activity
in stateEadministered sectors, including railways, postal services,
telephone and affiliated services, and airports and seaports. The
/A' specifies the procedure to be followed before a strike can
legally be called, although its provisions are not always followed.
%ertain actions are punishable as unfair labour practices- closure
of an establishment without prior permission from the labour
court &e0cept for power failure, epidemic or civil commotion(G
illegal lockoutsG illegal strikesG and slowEdown tactics.
The !orkmen's %ompensation Act applies broadly to labourers
earning less than PAs. 4, per month and entitles them to
compensation for in+uries resulting from onEtheE+ob accidents.
#mployers are liable if incapacity lasts beyond a minimum of
seven days. This law was modified with retroactive effect from
Fuly 23.
Employees social security ordinance, !().
An #mployees Iocial Iecurity scheme was introduced in Pakistan
under the provisions of the $ro*incial Employees +ocial
+ecurity ,rdinance, !(). The main ob+ective is to provide
comprehensive medical cover to the secured workers and their
family members including parents and to provide financial
assistance in case of sickness and employment in+uries. The
Iocial Iecurity scheme is implemented on the basis of the
contributory principle. The main source of income is the Iocial
Iecurity %ontribution, which is collected under Iection 2 of the
'rdinance from the employers of the notified industrial and
commercial establishment at a rate of 26 of the wages paid to
their workers who are drawing wages up to As. 4,BE p.m. or
As. 2BE per day. The workers once covered under this scheme
remain secured even if their wages e0ceed As. 4,BE per
month.
"or#ers -elfare fund ordinance, !..
Through the 'rdinance, the government has constituted a fund
called "!orkers' !elfare .und" for the welfare of workers. The
.und consists of-
1 An initial contribution of Aupees one hundred million by
the .ederal Government,
2 Iuch moneys, as may from time to time, be paid by
industrial establishments under the 'rdinance.
An industrial establishment, the total income of which in any year
is not less than one hundred thousand rupees shall pay to the
.und in respect of that year a sum e;ual to two percent of so
much of its total income as is assessable under the /ncome Ta0
'rdinance, 23.
The .und is applied to-
1 The financing of pro+ects concerned with the
establishment of housing estates or construction of houses
for workersG and
1 The financing of other welfare measures including
education training, reEskilling and apprenticeship for the
welfare of workers.
The Companies $rofits /"or#ers' $articipation0 Act, !(1
&the Act( provides for participation of workers in the profits of the
companies. The Act applies to %ompanies engaged in as
industrial undertaking that fulfils the prescribed criteria and such
companies are re;uired to-
1a. #stablish a workers' participation fund in
accordance with the scheme as soon as the accounts
for the year in which the scheme becomes applicable
to it are finali:ed, but not later than nine months after
close of the yearG
2b. Iub+ect to ad+ustments, if any, pay every year to
the .und not later than nine months after the close of
that year five percent of its profits during such year,
which shall, where the accounts have been audited by
an auditor appointed under section 21E$ of the
/ndustrial Aelations 'rdinance, 3>=> &KK/// of 3>=>(,
be assessed on the basis of such auditG and
3c. .urnish to the .ederal government and the $oard,
not later than nine months after the close of every
year of account, its audited accounts for that year,
duly signed by its auditors. The fund is distributed
among workers of prescribed categories.
Employees old age benefits act, !.(
The #mployees 'ld Age $enefits Act, 3>2= &the Act( is applicable
to every industry or establishment where ten or more persons are
employed directly or indirectly. This statute intends to provide
security and benefit for old age to employees of industrial,
commercial or other organi:ations covered by it. The #mployee
'ld Age $enefits /nstitute &the /nstitute( formed under it collects
and receives contributions, donations, be;uests and all other
payments. /t deals with pensions, invalidity pension, widow's
pensions, old age grants and other benefits, out of contribution
payable to the /nstitute by every employer of industry.
%ontribution shall be payable monthly by the employer to the
/nstitute in respect of every person in his insurable employment,
at the rate of five percent of his wages.
2actories Act, !34 Aegulates the working conditions in
factories, employing 3 or more workers
$ayment of "ages Act, !3( 8etermines the mode of
payment of salaries and wages to the industrial workers
%inimum "ages ,rdinance, !( Ipecifies the minimum
wage to be paid to different categories of workers
"est $a#istan 5ndustrial & Commercial Employment /+.,.0
,rdinance, !(1 Provides the framework and guidelines for the
service rules of industrial and commercial workforce
$un6ab 2air $rice +hops ,rdinance, !. Provides criteria for
the establishment of fair price shops at industrial units where 3
or more workers are employed
Employment Record of +er*ice Act, !)Provides guidelines
for the maintenance of service records of workers in industries
Canteen Rules, !)!/t envisages provision of a canteen facility,
where 24 or more workers are employed
5ndustrial Relations ,rdinance, 7887/t provides framework
for the industrial relations between management and the
workers. /t regulates trade union activities
9a:ardous ,ccupations Rules, !.1 Gives guidelines for
protection of workers against certain ha:ardous occupations in
the factories
Employment of Children Act, !!Aegulates the employment
of children
%aternity Benefit ,rdinance, !)!Provides certain facilities to
those female employees, who are e0pectant
+hops & Commercial Establishments ,rdinance,
!(!Aegulates the employment and working conditions of
workers in shops as well as commercial establishments &such as
banks, offices etc.(
Road Transport "or#ers ,rdinance, !(Provides guidelines
for welfare of transport workers
"or#ing 9ours
The .actories Act limits adults to an eightEhour working day or a
5HEhour working week. The only e0ception is seasonal
businesses, which operate no more than 3H days a year. /n
those businesses &eg timberErelated work in mountainous areas(,
employees are limited to a tenEhour working day or a =Ehour
working week. Dany foreign companies observe a fiveEday week
of 52E54 hours. Government offices have a fiveEday working week
of 52 hours. There is no discrimination about working hours on
the basis of se0.
Termination of Employment
#mployee termination can be difficult. Pakistani laws establish
procedures for terminating employees, although unionsEespecially
in the public sectorEcan resist layEoffs. #ither the employer or the
employee may terminate employment upon serving one month of
notice or &for an employer( granting one month of salary. Courly
paid workers who are retrenched must be given either two weeks'
notice or two weeks' wages.
"ages and Benefits
The Tripartite Jational !age %ouncil was set up in 2 to
determine the minimum wage for different business activities,
industries and occupations in different provinces.
'n the council's recommendations, in 'ctober 23 the
government approved PAs. 2,4 per month as the minimum
wage for unskilled workers by amending the !est Pakistan
Dinimum !age for ?nskilled !orkers 'rdinance of 3>=>. The
minimum wage was given retrospective effect from August 23,
and it applies to all establishments. The new minimum wage
included the e0isting costEofEliving allowance of PAs44E=4.
Although the figure is higher than the PAs3,4 minimum wage
that had been set in 3>>1, it is lower than the PAs1, per
month proposed by the government's labour adviser. The
government also intends to revise the minimum wage every three
years instead of every nine years, as previously.
Jevertheless, the actual average monthly wage had been around
this level, since inflation has put increasing pressure on
employers to raise wages- the average wage for unskilled workers
in Fuly 25 was PAs1,, with provisions for a one Eday
weekend every week on Iunday and a half working day of four
hours on .riday before afternoon prayers. /n the market of dailyE
wage unskilled workers, wages are PAs>E3H4 per day.
Dandatory benefits for workers include bonuses, allowances for
education of employees' children and pension contributions.
#mployees are also entitled to 35 days of paid leave plus 3 days
of casual leave during each calendar year and 3= days of sick
leave at half the daily wage during every 32 months of service.
.oreignEowned companies generally provide more generous fringe
benefits &such as healthcare, retirement plans and other
privileges, including employeeEshareEownership plans( than do
locally owned firms. The minimum wages in Pakistan might seem
low compared with those of many other Asian countries.
%inimum "ages
The Government has prescribed the rates of minimum wages to
be paid which are as follows-
Category %inimum -age/Rs. $er
month0
DinisterialEA 1,3 to 1,334
DinisterialE$ 2,HH to 2,>=
DinisterialE% 2,24 to 2,H3
Cighly IkilledEA 1,3 to 1,3>
Cighly IkilledE$ 2,>4 to 1,5
IkilledEA 2,HH to 2,>=
IkilledE$ 2,H to 2,H44
IemiEIkilledEA 2,= to 2,==
IemiEIkilledE$ 2,44 to 2,=
?nskilled 2,4
DiscellaneousEA 1,4
DiscellaneousE$E/ 2,24
DiscellaneousE$E// 2,= to 2,=34
Employment of 2oreigners
Pakistan places no restrictions on employing foreigners, and
foreign companies may appoint foreign citi:ens as chief
e0ecutives in Pakistan. %ompanies that want to employ foreigners
must first seek permission from the government's $oard of
/nvestment. This is, however, merely a formality, and usually
takes no more than two to three weeks.
Please note that this information was last updated in July
2008. The Information shown is for guideline purposes.
The Employers & Labour Bureau.