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
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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
Sources
Statutory rates and rules verified against the following authorities. We update this page when rates change.