Pakistan

Global Compliance Guide

Labor Requirements

The Labour Law in Pakistan is regulated mainly by the Shops and Establishments Ordinance, 1969 and Factories Act, 1934. The Act governs the terms and conditions of employment such as working hours, holidays and rest periods, wages, overtime, and employment conditions. The other acts that govern employment relationships are Maternity and Paternity Benefits Act 2020, Provincial Employees Social Security Ordinance, 1965, etc.

 

Application of Shops and Establishments Ordinance, 1969 – This Ordinance applies to employees working in shops, commercial, industrial, and other establishments and regulates the law relating to working hours, and other employment-related matters of employees working in such establishments.

 

Application of Factories Act, 1934 – This Act provides for working conditions such as hours of work, overtime, and other matters of employment for employees working in factories.

Hours & Pay Regulations

Normal Working Hours

Under the Shops and Establishments Ordinance, an employee shall not be allowed to work in excess of 9 hours per day and 48 hours per week. 

 

Day means the period of 24 hours beginning at midnight, provided that in the case of an employee, whose hours of work extend beyond midnight, day means the period of twenty-four hours beginning when such employment commences, irrespective of mid-night.

 

Week means a period of seven days beginning at midnight on Saturday night.

 

Spread Over – The working hours inclusive of breaks for rest or meal shall not exceed 12 hours in a day and 60 hours per week.

Under Factories Act, 1934, an employee shall not be allowed to work for more than 9 hours per day, 10 hours in case of a seasonal factory (only by male employees). The weekly working hour limit for employees 48 hours a week. In the case of seasonal employees, the weekly limit is increased to 50 hours. 

 

Day – means a period of twenty-four hours beginning at midnight.

 

However, if a factory is involved in work of continuous nature, an employee can be employed for up to a maximum of 56 hours weekly inclusive over time.

 

Spread Over An employee’s daily work hours shall not exceed 12 hours in a day including breaks and in the case of seasonal factory employees, an employee’s working hours shall not exceed 11.5 hours per day.

 

Restriction on double employment – An employee who has already been working in any factory, shall not be allowed to work in any other factory on the same day except in circumstances as may be prescribed by the authority. Shops and Commercial Establishments Act, 1969 § 7 – 8 and Factories Act, 1934 § 34.

 

Recording Requirements

Under the Shops and Establishments Ordinance, an employer shall maintain records and registers to furnish such information as may be prescribed by the government authority. Every employer shall maintain the following records and registers : 

      • Register of employment and remuneration in Form IV.
      • Register of leave-in Form V.
      • Inspection Book in Form VI (for establishments excluding shops). 

Under Factories Act, an employer shall maintain a record of employees including the name of the employee, the nature of work assigned, and other particulars as may be prescribed by the regulations. Shops and Commercial Establishments Act, 1969 § 23 and Factories Act, 1934 § 41, Shops and Commercial Establishments Rule, 1969 §8.

Overtime

Under the Shops and Establishments Ordinance, an employee who works in excess of 9 hours per day and 48 hours per week is said to perform overtime work. An employee shall not be allowed to work for more than 624 overtime hours in a year.

 

Pay– Employees who work overtime are compensated at double the rate of ordinary wages. Factories Act, 1934 § 47 – 47A.

 

Under the Factories Act, an employee who works in a non-seasonal factory for more than 9 hours per day and 48 per week and in a seasonal factory for more than 9 hours per day and 50 hours per week is said to perform overtime work. 

 

Pay – Such overtime work is compensated twice the ordinary rate of wages of an employee. Shops and Commercial Establishments Act, 1969 § 9

Night Work

Under Factories Act, an employee who works on a shift that extends over 12 am (midnight), in such a case, the hours of work performed by the employee after the midnight shall be considered as hours worked for the previous day and the day right after ending of such shift shall be considered as a period of 24 hours for the employee.

 

No woman shall be allowed to work in a factory except between 6 A. M. and 7 P.M. Women may be allowed to work up to 10:00 pm in two shifts per week with her consent if the employer arranges for the transport facilities.

 

However, the government authority may provide that the day right after such a shift (a shift extending over midnight) shall be considered as a period of 24 hours beginning when such shift begins in such a manner that the number of hours worked before midnight be counted towards the current day. Factories Act, 1934 § 46.

Breaks

Under Shop and Establishment Ordinance, an employee shall not be required or permitted to work continuously in any establishment for more than 6 hours, unless he has been allowed an unpaid interval for rest or meals of not less than 1 hour.

 

Under Factories Act, an employee shall not be allowed to work for more than 5 hours without a 30 minutes unpaid break. Employees who work for more than 6 hours of work shall be allowed a break for at least 1 hour, and employees working for more than 8.5 hours shall be allowed to have at least two breaks of 30 minutes each. Shops and Commercial Establishments Act, 1969 § 7, Factories Act, 1934 § 37

 

Weekly Rest Day

Under the Shops and Establishments Ordinance, an employee is entitled to 1 day of rest each week, which is in addition to public holidays and other leaves to which an employee is entitled. The day of rest will be chosen by the employer and informed to the authority within 2 months thereof.

 

An employee who is employed on daily wages shall be paid not less than his/her daily wages for the holiday, and where an employee is paid on piece-rate, he/she is entitled to the average of the wages received during the week for the holiday.

 

Under Factories Act, an employee is generally entitled to leave on Sunday. Employees shall be not allowed to work in a factory on a Sunday unless they had or will have a holiday for the whole day on one of the 3 days immediately before or after that Sunday. A notice regarding such requirements of an employee to work on Sunday shall be displayed in the factory.  Such substituted holiday shall be arranged in such a manner that an employee does not work for more than 10 days consecutively without a holiday for a whole day.

 

An employee who works on a Sunday and had a holiday on one of the 3 days immediately before Sunday, such Sunday shall be considered as his/her weekly hours of work for the preceding week.

 

Compensatory weekly rest – An employee who was not granted a weekly holiday, shall be entitled to compensatory holidays equivalent to the number of holidays lost. Shops and Commercial Establishments Act, 1969 § 6 and Factories Act, 1934 § 35

Public Holidays

Under Factories Act, an employee is entitled to all days declared by the government authority as paid festival holidays. Following is a list of general observed public holidays:

      • Kashmir Day, February 5
      • Pakistan Day, March 23
      • Labour Day, May 1
      • Eidul Fitr (2 days) 
      • Eidul Azha (3 days) 
      • Independence Day, August 14
      • Ashura holiday (2 days) 
      • Eid Miladun Nabi (SAW), October 19
      • Quaid-e-Azam Day, December 25

Compensation for working on a public/festival holiday – An employee may be required to work on a festival/public day on the condition that he/she will get an additional compensatory paid holiday and a substitute holiday.

 

Under the Shops and Establishments Ordinance, an employee is entitled to 10 days of paid festival holidays in a year. The days and dates for such holidays shall be notified by the employer in the beginning of the calendar year to employees.

 

Pay – The wage payable to employees for holiday is at a rate equal to the daily average amount earned by the employee during the 3 months preceding the holidays. Shops and Commercial Establishments Act, 1969  § 16 and Factories Act, 1934 § 49.

Annual Leave

Under the Shops and Establishments Ordinance, an employee who has been in continuous employment with the same employer for at least 12 months is entitled to 14 days of paid vacation. For the purpose of calculation of continuous employment with the same employer, the period during which an employee was on casual/sick leave and festival holidays shall also be considered.

 

Accumulation of Vacation 

For an employee who could not take leave either in part or whole in any period of 12 months, such leave is carried over to the next year and added to annual leave entitled to the employee in that year. If the total amount of leave due to an employee is 30 days, no further addition to leave is permitted. At the request of an employee, an employer may grant payment in lieu of vacation days not availed by the employee.

 

Pay – An employee is entitled to wages at a rate equal to the daily average amount earned by the employee during the 3 months preceding the vacation. 

 

An employee who has been granted at least 4 days of leave shall be paid wages for the period of leave allowed before the leave begins.

 

Under Factories Act, an employee who has completed 12 months of continuous service in a seasonal factory is entitled to a holiday for a period of 14 consecutive days during the subsequent period of 12 months. This period is inclusive of weekly holidays which an employee is entitled to. 

 

An employee unable to take the whole of the holidays in any one such period of 12 months is allowed to carry forward such leaves to the subsequent year on the condition that the number of holidays carried forward shall not exceed 14.

 

Pay – An employee is entitled to an amount equal to the average of his/her daily wages earned for the days on which he/she actually worked during the preceding 3 months, excluding the overtime pay. The employee shall be paid half of the total payment due to him/her for the holidays before the beginning of the holidays.

 

Termination of Employment 

An employee whose employment is terminated before he/she could take holidays or was refused his/her holidays shall be paid an amount equivalent to the daily average wages earned by such an employee for the days actually worked by him/her in the preceding 3 months. Shops and Commercial Establishments Act, 1969 § 14 and Factories Act, 1934 § 49A – 49G.

Minimum Wage

Effective June 1, 2016, the minimum wage is 17,500 Pakistani Rupees.

Special Leave

Sick Leave

Under the Shops and Establishments Ordinance, an employee is entitled to 8 days of paid sick leave every year. Such leave can be carried forward but the total accumulation shall not exceed 16 days at any one time.

 

Pay – An employee is entitled to wages at a rate equal to the daily average amount earned by the employee during the 3 months preceding the leave. 

 

Under Factories Act, an employee is also entitled to sick leave for a period of 16 days on his/her half average pay in a year.

Shops and Commercial Establishments Act, 1969 § 49H and Factories Act, 1934 § 15.

Casual Leave

Under the Shops and Establishments Ordinance, an employee is entitled to 10 days of paid casual leave in a calendar year. This leave shall not be granted for more than 3 days at a time and cannot be accumulated.

 

Pay – An employee is entitled to wages at a rate equal to the daily average amount earned by the employee during the 3 months preceding the leave. 

 

Under Factories Act, an employee is entitled to paid casual leave for a period of 10 days in a year on his/her full pay. An employee is also entitled to sick leave for a period of 16 days on his/her half average pay in a year. Shops and Commercial Establishments Act, 1969 § 49H and Factories Act, 1934 § 15.

Maternity Leave

A female employee is entitled to paid maternity leave for a period of 180 days for the birth of the first child, 120 days for the second child, and 90 days for the third child from the date of commencement of leave.  Unpaid leave can be granted for additional children depending upon the agreement between the employee and employer. Maternity and Paternity Benefits Act, 2020 § 3.

Paternity Leave

A male employee is entitled to 30 days of paid leave for the birth of his child from the date of commencement of leave. The leave is available for fathers a maximum of 3 times during the entire service.  Unpaid leave can be granted for additional children depending upon the agreement between the employee and employer. Maternity and Paternity Benefits Act, 2020 § 4.

Last updated on: March 1st, 2021