How to Calculate Overtime in Pakistan Payroll — Complete Guide
Overtime calculation in Pakistan trips up many businesses because the rate is not a single number — it depends on what day the overtime was worked. The Factories Act 1934 and the Provincial Shops and Establishments Ordinances together define three tiers: working-day overtime, non-working-day (weekly off) overtime, and gazetted-holiday overtime. Here is exactly how each works in 2026, with examples.
The three tiers, plainly
1. Working-day overtime
Hours worked beyond the standard 8-hour working day (or whatever your contract specifies, often 9 hours including lunch) are paid at double the ordinary hourly rate. So if an employee's basic hourly rate is PKR 200, their overtime hour on a working day is PKR 400.
2. Weekly off / rest-day overtime
If an employee works on their weekly off day (typically Sunday), the entire day's work is paid at double the ordinary rate, with a guaranteed compensatory rest day in the following week. If the compensatory day is not given, the rate effectively becomes triple.
3. Gazetted-holiday overtime
Work on a gazetted holiday (Eid, Independence Day, etc.) is paid at triple the ordinary rate — the holiday pay plus double-rate overtime. This is the highest-cost overtime category and is the most commonly miscalculated.
A worked example
Take an employee with a basic salary of PKR 60,000 per month, working a standard 26-day month (8 hours per day = 208 hours). Ordinary hourly rate is PKR 60,000 / 208 = roughly PKR 288/hour.
- Working day overtime (8 hours extra one week): 8 × (288 × 2) = PKR 4,608
- Sunday work (8 hours, no comp day): 8 × (288 × 3) = PKR 6,912
- Eid day work (8 hours): 8 × (288 × 3) = PKR 6,912
Total monthly overtime for this employee: PKR 18,432 — on top of the PKR 60,000 basic. Get a tier wrong and the payslip is wrong, and the employee disputes it.
Where it gets complicated
- Shift-based work — night-shift premiums often layer on top of overtime rates
- Sectoral exemptions — some industries (security, hospitality) have different rules under their provincial ordinances
- Salaried vs hourly — overtime applies primarily to workmen; managerial/supervisory roles are usually exempt
- Caps — most provinces cap overtime at 50 hours per quarter; beyond that, you need labour-department approval
Why a payroll calculator with hard-coded "1.5x" is wrong for Pakistan
A lot of imported HR software assumes the US/UK pattern of "time-and-a-half" overtime. That is simply wrong for Pakistan. The correct setup needs three configurable tiers (working day, weekly off, gazetted holiday) per company, each with its own multiplier, and the system needs to know which calendar dates fall into which tier (working/off/holiday) for the year.
Zaffre HRM's payroll engine ships with the three-tier model pre-configured and a Pakistan calendar that already knows the 2026 gazetted holidays. Per-employee overtime eligibility can also be set so managers and exempt staff don't accidentally get overtime calculations.
What to do today
- Audit your last three months of payroll — did you apply the correct tier on each overtime hour?
- If you're using a "1.5x" or single-rate overtime configuration, fix it
- Make sure your 2026 calendar has the correct gazetted holidays marked
- Document overtime approval workflows so weekend work has prior sign-off (otherwise it becomes a dispute later)
If your current payroll tool cannot handle tiered overtime, book a Zaffre HRM demo — we will show you the configuration on a sandbox in 10 minutes.