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Hiring Employees in Pakistan: Everything You Need to Know

The definitive guide to outsourcing in Pakistan

We’ve helped our clients save upwards of $25,000 annually per employee by outsourcing to Pakistan. Though hiring from a third-world country can be very light on the pocket, it comes with its own unique set of challenges. If you plan to make hires yourself, here’s everything you’ll need to know.

The Biggest Advantage of Hiring in Pakistan: The Needle Mover

Pakistan’s purchasing power is much lower than that of the US. A salary on the lower end in the US is considered a high-end salary in Pakistan. So, you can get by paying a “lower” salary (in context to the States) in Pakistan.

For example, a customer service representative may cost you about $12-15/hour in the States, while the same role would only cost you about $8/hour in Pakistan. Software engineering roles can cost you upwards of $70,000 annually in the US, but start at $15,000 per year and top out at around $35,000 yearly in Pakistan. 

The best part? There is very little compromise on the quality of the work. Oftentimes, you may even see an improvement in work quality.  Pakistanis are street smart, excellent problem-solvers, and will often come up with one-of-a-kind solutions for problems that their colleagues may not think of.

With some countries, however, adjusting to time zones can be an issue. Constantly staying in touch with your Pakistani employees can be a challenge, especially when going at it on your own. If 24/7 communication is on your priority list, we recommend going with a BPO company to solve the problem altogether.

In a nutshell, you can expect to save upwards of at least $15,000 (sometimes $20,000-$30,000) per year per employee without compromising on quality. 

Maternity Leaves, PTO, National Holidays, Termination, and Much More: All The Laws You Need to Know about:

Some important acts which dictate employment laws in Pakistan include:

  1. The Industrial And Commercial Employment Ordinance (Standing Orders), 1968
  2. Industrial Relations Act, 2012
  3. Maternity and Paternity Leave, 2020

Of course, there are many others as well, but you don’t need to know Pakistan’s employment laws like the back of your hand – we handle it for you. However, here are some important takeaways:

Maternity and Paternity Leaves

According to the “Maternity and Paternity Leave Act, 2020,” female employees are entitled to a paid maternity leave of up to 180 days for the first child, 120 for the second, and 90 for the third (and any after third). In some provinces (like Punjab) the minimum duration of maternity leave is 90 days.

The same act also states that male employees are entitled to paid paternity leave no longer than 30 days. Paid maternity and paternity leaves are only mandatory up to 3 times in employment. Employers who do not comply with this can face up to 6 months of imprisonment and/or a fine of PKR 100,000/-.

On-the-Spot Termination is a Big No-No (Most of the Time)

One major difference between employment in the US and Pakistan is that Pakistan doesn’t have at-will employment. This means that employers cannot fire employees on the spot without giving a notice. Termination without notice is only possible if there’s mutual consent or on the basis of:

  • Disciplinary issues
  • Performance issues
  • Engagement in criminal activities
  • Breach of confidentiality
  • Falsification of records
  • Unauthorized absences

For employees employed for more than three months but less than twelve, either a 30-day notice must be given or wages in lieu thereof. For employees with over a year of service, a 60-day notice is mandatory (or paying wages in lieu thereof). 

An employee is entitled to severance pay if (s)he is terminated without cause. This pay is thirty days’ worth of compensation for every year of service. Note that this calculation is based on the employee’s last drawn salary. However, this amount can’t exceed three months worth of pay. 

Standing Orders Ordinance, 1968 has established guidelines for termination. Something to be noted is that only permanent workers must give (and receive) notice of termination. Temporary workers, contractors, freelancers and probationers are NOT entitled to either a notice or severance pay. 

Note: Employees terminated on the basis of misconduct are not entitled to severance pay.

Working Hours, Overtime, and Holidays

A standard workweek is a 40-hour workweek (8 hours per day, Monday to Friday). Anything outside this is considered overtime. Overtime pay is 2x that of normal pay, and employees cannot do more than 8 hours of overtime per week. 

In Ramadan, a holy month greatly celebrated by Muslims around the world, the official workday is six hours long. Ramadan lasts for about 30 days, followed by a 3-day Eid (a religious observation).

You can expect about ten to fifteen national holidays per year. In 2022, there were a total of 14 national holidays. The days for religious holidays aren’t exact, and change every year. 

Nonetheless, here’s a rough timeline:

5th FebKashmir Solidarity Day
23rd MarchPakistan Day
1st MayLabour Day
~Mid of AprilEid-ul-Fitr (3 days)
~ Beginning of JulyEid-ul-Azha (3 days)
~ Mid of AugustAshoora (2 days)
14th AugustIndependence Day
~ Mid of OctoberEid Milad-un-Nabi
9th NovemberIqbal Day
25th DecemberQuaid-e-Azam Day

PTO, Sick Leave, and Casual Leave

Other than these national holidays, employees are entitled to a PTO of 14 days (minimum). Employees are also entitled to 14 days casual leave with full pay, and an additional 16 sick days leave with 50% pay. 

Social Security and Old-Age Pension

It is mandatory for an employer to register their employees with Employees’ Social Security Institution (ESSI) and Employees’ Old-age Benefits Institution (EOBI) which provide sickness, maternity, disability, survivor benefits, and pensions to retired workers. Both the employee and employer must contribute to this.

Worth the Hassle?

If you haven’t hired employees from Pakistan before, it will take you some time to get used to the laws and national holidays. This can be quite a challenge, especially if you don’t have a lot of time on your hands.

Considering you can save north of $15,000 annually per employee in staffing and overhead costs, we would say it’s worth it.

Don’t want to get your hands dirty and deal with all of these laws? You can still hire from Pakistan. We outsource roles for our clients from Pakistan, and take care of all the dirty work so that you don’t have to.

If you’re interested in saving more than $15,000 annually per employee by outsourcing, get in touch with us Here.

If you’d like to come back to this information at some point in the future, you can download a free PDF guide that accompanies this article by clicking here. 

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