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Pakistan Labour Law 2026 — What Every SMB Owner Must Know

Zaffre HRM Team · May 30, 2026

Pakistani labour law is a patchwork of federal acts (Factories Act 1934, Shops & Establishments Ordinances, Industrial & Commercial Employment Ordinance) and provincial legislation that has diverged after the 18th amendment. For SMB owners, the practical question is: what do I have to comply with, and what does my HR/payroll software need to enforce automatically? Here is the 2026 plain-English summary.

1. Working hours

Standard: 8 hours per day, 48 hours per week (often interpreted as 9 hours per day including lunch break, 6 working days). Provincial laws vary slightly. Overtime beyond standard hours is paid at premium rates (see overtime calculation guide).

2. Minimum wage (2026)

Minimum wage is set by each province separately and revised typically each fiscal year. As of 2026, the unskilled-worker minimum wage hovers around PKR 37,000-40,000/month depending on province. Always verify against the latest provincial notification before processing payroll.

3. Weekly rest day

One full day off per week is mandatory. Working on the weekly rest day triggers double-rate compensation OR a compensatory rest day in the following week.

4. Leaves

  • Casual leave — typically 10 days/year, fully paid
  • Sick leave — typically 8-16 days/year depending on province, with medical certificate
  • Earned/annual leave — 14 days/year, accruable
  • Public holidays — gazetted holidays as per government notification
  • Maternity leave — 180 days for the first child, 120 for second, 90 for third (Maternity & Paternity Leave Act 2023 — varies by province)
  • Paternity leave — typically 30 days under the same act

5. Termination and notice period

The Industrial & Commercial Employment Ordinance generally requires 30 days' written notice (or one month's salary in lieu) from either side for permanent employees, after probation. Probation is typically 3-6 months. Wrongful termination claims can land at the labour court — a clear written contract and documented disciplinary process is your best protection.

6. Final settlement

On resignation, termination or retirement, employers must settle: unpaid salary, accumulated leave encashment, gratuity (where applicable), bonus arrears, loan / advance recovery, and provident fund withdrawal. See: final settlement guide (coming soon).

7. Social security obligations

  • EOBI — federal pension scheme, mandatory for 5+ worker establishments. See: EOBI guide.
  • Provincial Social Security — PESSI (Punjab), SESSI (Sindh), KPESSI (KP), BESSI (Balochistan). See: PESSI guide.
  • Provident Fund — voluntary but very common; once set up, becomes a contractual obligation
  • Gratuity — typically one month's basic salary per year of completed service, payable on exit after a minimum service period

8. Wage payment timing

Wages must be paid within 7 days of the close of the wage period (typically end of the calendar month). Late payment is itself an offence under the Payment of Wages Act.

9. Worker registration

Every worker (including contract workers) must have a written appointment letter, an issued CNIC, and a registration with the relevant social security and EOBI schemes within prescribed timeframes.

10. Record-keeping

Wage registers, attendance registers, leave registers, exit records, deduction records — must be maintained and produced on inspection. Going digital with a proper HRMS satisfies this if the records are exportable.

What this means for your HR/payroll software

  • Configurable working-hour rules per company / per role
  • Province-aware minimum wage tracking
  • Tiered overtime calculation (working / off / gazetted)
  • Leave types matching law (CL, SL, AL, maternity, paternity)
  • Notice-period and probation tracking
  • Automatic gratuity / final settlement calculation
  • EOBI + provincial SS integrated in payroll
  • Audit-ready exportable records

Zaffre HRM ships with these compliance defaults pre-configured for Pakistani law. Book a demo for an end-to-end walkthrough.

Critical caveat

Labour law is jurisdictional and changes frequently. This article is a high-level guide, not legal advice. For specific cases, consult a Pakistani labour-law practitioner and refer to current provincial notifications.