Essential Employment Contract Clauses in Pakistan - Free Downloadable Templates in Fillable PDF and Word Formats Online

Employment contracts in Pakistan are governed by various federal and provincial labor laws. This guide covers essential clauses and compliance requirements for Pakistani employers.

Legal Framework in Pakistan

Federal Laws

• Pakistan Contract Act, 1872: Basic contract principles
• Industrial and Commercial Employment Ordinance, 1968: Employment terms
• EOBI Act, 1976: Old-age benefits
• Workers' Welfare Fund Ordinance, 1971: Welfare contributions

Provincial Laws

• Punjab Industrial Relations Act, 2010
• Sindh Industrial Relations Act, 2013
• KPK Industrial Relations Act, 2010
• Balochistan Industrial Relations Act, 2010
• Provincial Shops and Establishments Acts

Essential Clauses for Pakistani Employment Contracts

1. Job Description and Designation

Clearly define:

• Job title and grade
• Department and reporting hierarchy
• Duties and responsibilities
• Key performance indicators
• Location of work

2. Compensation Structure

Salary Components:

• Basic Salary
• House Rent Allowance
• Utilities Allowance
• Conveyance Allowance
• Medical Allowance
• Special Allowances

Statutory Deductions:

• EOBI contribution
• Income Tax
• Professional Tax (where applicable)

Variable Pay:

• Performance bonus
• Sales incentives
• Annual increment

3. EOBI Compliance

Employees' Old-Age Benefits Institution requirements:

Applicability:

• Establishments with 5+ employees
• Monthly wages up to PKR 35,000

Contribution Rates:

• Employer: 5% of minimum wage
• Employee: 1% of minimum wage

Benefits:

• Old-age pension
• Invalidity pension
• Survivor's pension

4. Social Security (PESSI/SESSI)

Provincial social security schemes:

Punjab (PESSI):

• Employer contribution: 6% of wages
• Applicable for wages up to PKR 22,000

Sindh (SESSI):

• Employer contribution: 6%
• Similar applicability

5. Minimum Wage Compliance

Pakistan's minimum wage (revised periodically):

• Current: PKR 32,000/month (as of 2024)
• Varies by province for certain categories

6. Working Hours

Under Industrial and Commercial Employment Ordinance:

• Maximum 48 hours per week
• Maximum 9 hours per day
• Overtime at 2x rate
• Weekly rest day mandatory

7. Leave Entitlements

Statutory Leave:

• Annual Leave: 14 days per year
• Casual Leave: 10 days per year
• Sick Leave: 8-16 days (half pay to full pay)
• Maternity Leave: 12 weeks (6 weeks pre, 6 weeks post)
• Festival Leave: As per gazetted holidays

8. Probation Period

Standard provisions:

• Duration: 3-6 months
• Notice during probation: 1 week to 1 month
• Benefits may be limited
• Confirmation letter required

9. Notice Period and Termination

Notice Periods:

• During probation: 7-14 days
• Permanent employees: 1-3 months
• Senior management: 3 months

Termination Grounds:

• Misconduct (with inquiry)
• Poor performance (documented)
• Redundancy
• Incapacity

Retrenchment Rules:

• Last in, first out principle
• Compensation: 30 days wages per year of service
• Notice to labor department required

10. Gratuity/End of Service Benefits

Customary provision (not statutory for all):

• After 5+ years of service
• Formula: 30 days wage × years of service
• Often included in employment policies

11. Confidentiality and Non-Compete

Enforceable in Pakistan:

• Confidentiality during employment
• Reasonable post-employment confidentiality
• Non-solicitation of clients
• Protection of trade secrets

Limitations:

• Unreasonable restraints may be challenged
• Courts balance employer and employee interests

12. Dispute Resolution

Options include:

• Internal grievance procedure
• Labour Court (for workmen)
• Labour Appellate Tribunal
• Civil Courts (for non-workmen)
• Arbitration (if agreed)

Statutory Compliance Checklist

Registration Requirements

• EOBI registration
• Social Security registration (provincial)
• Labour Department registration
• Professional Tax registration

Mandatory Records

• Wage register
• Attendance register
• Leave register
• Overtime register
• Service book/personnel file

Statutory Returns

• Annual returns to Labour Department
• EOBI monthly returns
• Social Security returns
• Income tax returns (Form E)

Specific Considerations by Industry

Manufacturing/Industrial

• Factories Act compliance
• Health and safety requirements
• Overtime limitations
• Night work regulations

Commercial/Services

• Shops and Establishments Act
• Different working hour rules
• Holiday requirements

IT/Technology Sector

• Often exempt from some labor laws
• Contract terms more flexible
• EOBI still applicable

Download Free Pakistani Employment Contract Templates

Our website offers free, fillable employment contract templates for Pakistan in PDF and Word formats:

• Standard Employment Contract
• Probationary Agreement
• Fixed-Term Contract
• Consultant Agreement
• Internship Agreement
• Offer Letter Template
• Appointment Letter Template

All templates are updated with current Pakistani labor law requirements and include EOBI compliance clauses.