Pakistan PEO Services

Pakistan, a developing country, has a GDP of $315.00 billion, which is projected to grow at around 5% and be $360.00 bilion by 2020. The country’s export commodities include leather goods, pharmaceuticals, textiles, surgical instruments, sports goods, medical instruments, chemicals, and carpets/rugs.

The government has undertaken a process of economic liberalization including privatization of state-owned enterprises to attract foreign investment and reduce the budget deficit.

Currency

Pakistani Rupee

Principal Language

Urdu, English

Government

Parliamentary Republic, Federal Republic, Islamic Republic

Capital City

Islamabad

Major Cities

Karachi, Lahore, Rawalpindi, Peshawar, Multan, Quetta

Work hours vary by industry; factory workers work for 48 hours in a week and this limit increases to 50 hours in a week if the factory is seasonal and 56 hours if the factory operates 24 hours in a day. The general work hour limit is 9 hours while in the case of a seasonal factory it is 10 hours.

The 48-hour work limit also applies to commercial establishments, shops, and mines. During Ramadan, reduced working hours must be observed in the commercial, manufacturing, and service sectors.

Minimum Wage

There is no national minimum wage in Pakistan. The provinces of Khyber Pakhtunkhwa, Balochistan, Punjab and Sindh, and the capital Islamabad each have a monthly minimum wage of 15,000 rupees.

Overtime

Employees who work overtime are given twice their regular pay. Contract employees are not entitled to increased pay for working overtime.

Wage Payment

Wage periods cannot be more than 1 month and employees must be paid before the 7th day after the wage period’s last day. The wages must be paid on a working day.

Mandatory Bonuses

Employees who make a profit in any year are required to give a bonus to their employees within 3 months of the year-end. If the profit is equal to or exceeds 1 month’s payroll, employers are required to give all employees a bonus equal to 1 month’s pay subject to a maximum of 30% of the profit. If the profit does not exceed 1 month’s payroll, the bonus may not be less than 15% of total profit. Employees who complete a continuous employment period of 90 days qualify for bonus pay.

Pension Plan

Male employees get eligible for a full pension at age 60, female employees get eligible at age 55, and miners get eligible at age 50 after making at least 15 years’ contributions. Male employees can retire early at age 55 while female employees can retire early at age 50 after making 15 years’ contributions. The pension benefit equal to 2% of the average monthly wages in the last 12 months multiplied by the number of years of insured employment is paid. The minimum old-age pension is 3,000 rupees each month.

Early pension:

The pension is reduced by 0.5% for every month that the pension is taken before the regular retirement age.

Old-age Grant

The old-age grant is provided to male employees aged 60, female employees aged 55, and miners aged 50. A lump sum equal to 1 month’s earnings for every year of covered employment is provided.

Social Security

Employers are required to contribute up to 7% of wages to Social Security and up to 5% to Employee Old Age Benefit. No contributions are required if wages exceed PKR 400/day or PKR 10,000/month. Social Security provides four types of benefits:

• Survivor’s Pension
• Old-age Pension
• Old-age Grant
• Invalidity Pension

Employers must submit both employee and employer contributions to a bank assigned by the Employees’ Old-age Benefits Institution before the 15th of each month.

Survivor Pension

Survivor pension equal to 100% of the deceased’s minimum pension is given to the surviving spouse or divided equally among spouses. In case there is no surviving spouse, the pension is divided equally among eligible orphans. In case there are no eligible orphans and the surviving spouse passes away within first 5 years of receiving the survivor pension, the survivor pension is provided to the deceased’s surviving parents for up to 5 years after the death of the insured’s spouse. If there are no surviving parents, the remaining balance of the initial 5 years of survivor pension can be paid to a dependent.

Health Insurance

In Pakistan, 78% of the population pay health care expenses out of pocket. Three-quarters of healthcare expenses in the country are borne by the private-sector insurance companies.

Disability Pension

Disability pension equal to 2% of average monthly wages in the last 12 months multiplied by the number of years of insured employment is paid.

Workers’ Compensation

Under the Workmen’s Act, employees are required to compensate employees for any work-related injuries during the course of employment. In case the injury results in total disability or death, the employer is required to pay the worker up to PKR 500,000 based on the provisions in each province.

Employees who suffer a temporary injury receive half their monthly wages for up to 1 year or 1/3rd of their monthly wages for up to 5 years in case of chronic lung disease. Employers are not required to pay employees for injuries that result in partial disability lasting less than 4 days. Employers are also not required to pay for injuries if the employee was drunk at the time of injury, willfully disregarded regarded safety rules, or willfully disobeyed orders or other measures in place for the safety of workers. Under the Standing Orders Ordinance, commercial and industrial establishments with 50 or more employees are required to provide workers’ compensation insurance to permanent workers.