TL;DR, Hiring in Pakistan
- Fully-loaded employer cost: ~5% on top of gross
- EOBI (pension): fixed PKR contribution, not percentage-based
- Provincial Social Security applies in Sindh, Punjab, KP
- Gratuity: 30 days' salary per year of service on termination
Last reviewed:
Statutory employer costs in Pakistan
In Pakistan, statutory employer payroll costs are modest: EOBI pension contribution is a fixed PKR 1,920/month per employee (employer share), provincial social security adds 5–6% in some provinces (Sindh's SESSI, Punjab's PESSI) on a capped wage, and an Education Cess of ~2% applies in some provinces. Total employer burden typically lands at 4–6% of gross. Gratuity at 30 days' last-drawn salary per year of service is a major end-of-service liability.
| Contribution | Employer rate | Notes |
|---|---|---|
| EOBI (pension) | Fixed PKR ~1,920/mo | Employer share; covers pension, invalidity, survivors |
| Provincial Social Security (SESSI/PESSI) | ~6.0% | Capped wage base; applies in Sindh & Punjab |
| Workers' Welfare Fund | 2.0% | On profits; applies above turnover threshold |
Mandatory employee benefits
Beyond statutory contributions, Pakistan law requires the following benefits the employer must fund.
- Annual leave
- 14 days after 12 months continuous service; sick leave 8 days.
- Gratuity
- 30 days of last-drawn salary per completed year of service, payable on termination/resignation.
- Provident Fund
- Common but not statutory; typically 8.33% employer + employee match.
Termination, notice and severance
Probation
3 months standard; up to 9 months for management.
Notice period
30 days notice or 30 days' wages in lieu.
Severance
Retrenchment compensation: 30 days' wages per year of service.
Common compliance pitfalls
- USD payment is restricted, State Bank approval needed for outward remittance.
- Tax residency rules changed in 2022, non-resident Pakistanis paid abroad now have stricter reporting.
- Provincial labour laws differ, Sindh and Punjab have different social security regimes.
Frequently asked questions
EOBI is a fixed nominal contribution rather than percentage. The bulk of end-of-service liability is gratuity, which accrues monthly but pays out only at separation.
Generally no through a local EOR, salary must be PKR. Some platforms offer USD-pegged gross with PKR disbursement at official rate.
No, it's voluntary. But it's a common benefit at mid-large employers and improves retention; standard is 8.33% employer match.
Sources
Statutory rates and rules verified against the following authorities. We update this page when rates change.