Payroll & Employment Guide Pakistan flag

Payroll & Employment Guide Pakistan

Pakistan is an emerging talent hub in South Asia, known for its large, youthful population, English proficiency, and cost-effective workforce. With a growing number of tech professionals and increasing digital adoption, it’s becoming an attractive destination for global companies looking to hire remotely or scale operations without breaking the bank.

Payroll & Employment Guide Pakistan
CurrencyPakistani Rupee (PKR)
LanguagesUrdu, English
Minimum wage37,000 PKR
Employment cost13-15%
Working hours48 hours per week
VAT18%
Probation periodUp to 3 months
Paid leave days14 days per year
Categories

Hiring guide

Pakistan offers a growing, cost-efficient workforce with a solid base of English-speaking professionals, especially in IT and services. Employers must comply with local labour laws that govern wages, contracts, taxation, and employee protections.

Get details on Pakistan’s employment laws, tax obligations, and cost structures in our complete hiring guide before expanding.

Learn more

Employment contracts

Employment contracts in Pakistan must be in writing and should clearly state the terms of employment, including working hours, duties, salary, and benefits. Both fixed-term and permanent contracts are allowed.

Notice periods: Usually 1 month.

Termination of employment: Permissible through resignation, misconduct, redundancy, or mutual agreement

Want to learn more about employment contracts in Pakistan? Get our full template now!

Employee benefits

Employers in Pakistan are legally obligated to provide certain mandatory benefits. To stay competitive, many businesses offer additional perks.


Mandatory benefits: Life insurance, paid vacations, religious holidays, etc.
Common perks: Health insurance, transport allowance, meal allowance, bonuses, professional development, flexible working hours, and company events.

Leave policies: Annual leave, sick leave, casual leave, maternity leave, paternity leave, bereavement leave, marriage leave, pilgrimage leave.

Want to learn more about all the employee benefits available in Pakistan?

Taxes

In Pakistan, employers are responsible for deducting income tax and contributing to the national pension scheme (EOBI). Tax rates vary depending on income levels and regional laws.

  • Income tax: Salaried individuals pay between 5% to 35%, with exemptions for those earning below PKR 600,000 annually. For annual taxable income up to PKR 600,000, no tax is levied. Income between PKR 600,001 and PKR 1,200,000 is taxed at 5%, while income from PKR 1,200,001 to PKR 2,400,000 is taxed at 10%. For incomes between PKR 2,400,001 and PKR 3,600,000, the rate is 15%; from PKR 3,600,001 to PKR 6,000,000, it’s 20%; between PKR 6,000,001 and PKR 12,000,000, the rate increases to 25%; and any amount above PKR 12,000,000 is taxed at 35%. These brackets apply specifically to salaried individuals.
  • Corporate tax: Generally 29% for companies, with variations for specific sectors.
  • Sales tax: Standard rate is 17% on goods and services.
  • Withholding tax: Deducted at source on various payments like salaries, dividends, and contracts.
  • Property tax: Levied on property ownership, rates vary by location.
  • Customs duty: Imposed on imported goods, rates depend on the product type.

Payroll

Payroll in Pakistan must follow local wage laws and tax deadlines. Salaries must be paid monthly, with payroll taxes withheld and reported accordingly.

Salary payment deadline: By the 10th of the following month (7th for small businesses)

Taxes and contributions payment deadline: Monthly, aligned with salary payment

Payroll declarations deadline: Monthly reporting of taxes and EOBI contributions

Payroll currency: PKR (Pakistani Rupee)

EOR services

Using EOR services in Pakistan allows you to legally employ individuals in the country without opening legal entities there. The EOR takes over all the legal responsibilities as an official employer, including:

  • Legal employment and contracts
  • Payroll processing
  • Tax withholding
  • Benefits administration
  • Onboarding/offboarding employees

PEO services

Using PEO services in Pakistan provides HR and administrative support, while you remain the legal employer. PEO services are ideal for employers who already have legal entities in Pakistan but need support to manage their workforce operations, including:

  • HR support and workforce administration
  • Payroll and benefits management
  • Compliance and local labour law guidance
  • Employment contracts assistance

Payroll calculator

Native Teams provides a payroll calculator adjusted per Pakistan’s labour laws. Estimate gross-to-net salaries, tax withholdings, and employer costs in Pakistan with our localised calculator. Designed to meet all payroll and compliance requirements.

Note: The information provided above is for general guidance only and should not be considered a substitute for legal advice. We strongly recommend consulting with qualified professionals who specialise in local labour laws before making any hiring decisions. While the data was accurate at the time of writing, labour regulations are subject to change, and it is your responsibility to stay informed about the latest developments.

Last update: August 8, 2025

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Frequently asked questions

Freelancers and gig workers in Pakistan are generally considered self-employed and are responsible for managing their own taxes and social security contributions. As a client, you are not required to make contributions on their behalf. 

However, to avoid potential misclassification, it’s important that the working arrangement does not resemble an employer-employee relationship. Always ensure that you have a clearly defined contract that outlines the scope of work, deliverables, payment terms, and other key conditions.