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Employment Law in Pakistan

The Constitution of Pakistan provides a federal democratic State, based on Islamic principles of social justice, though Pakistan has often alternated between civilian rule and extended periods of military rule.

The Islamic Republic with its federal capital at Islamabad is comprised of four provinces: Punjab, Sindh, North West Frontier and Baluchistan, in addition to the Federally Administered Tribal Areas. All residual powers fall to the Provincial Governments.

The Constitution of Pakistan contains a range of provisions concerning labour rights.

  • the Constitution prohibits all forms of slavery, forced labour and child labour

  • the Constitution provides a fundamental right to exercise the freedom of association and the right to form unions

  • the Constitution proscribes the right of its citizens to enter upon any lawful profession or occupation and to conduct any lawful trade or business

  • the Constitution lays down the right to equality before the law and prohibition of discrimination on the grounds of sex.

The Federal Laws of Pakistan are published by the Government in a document called the Gazette of Pakistan. The Ministry of Justice, Law and Parliamentary Affairs in addition publishes individual Acts through the Official Gazette.

After the independence, Pakistan inherited different legislations from British India which includes Trade Union Act 1926, Industrial Employment Act 1946, Industrial Dispute Act 1926 and factories Act 1934. These laws provided the basis for labour laws and policies and were progressive as they allowed trade union activities in all sectors. Employees had the rights of collective bargaining and even strike.

The Trade Union Ordinance 1960 was circulated and established the principle of compulsory recognition of trade unions by employers. It also included the unfair labour practices, both on the part of employers and employees.

The Industrial Dispute Act 1926 was replaced by Industrial Dispute Ordinance 1959, in the Ayub regime, changed the system, more enterprises were included in the public sector. The compulsory adjudication system made employees going from one court to another court for years in the quest for justice. During Yahaya Khan Regime, the second military dictator, labour legislation was rewritten with emphasis on two points: the trade union movement should remain plant based and delinked from the politics.

Legislation has its basis from the law of contract (the law of “master and servant”) and industrial relations regulations are considered departure from common law. Since creation of Pakistan, five labour policies have been announced by the governments in the year 1955, 1959, 1969, 1972 and 2002.

Between 2000 to 2002, 20 laws consolidated into following six draft laws.

  • Industrial Relations Ordinance

  • Conditions of Employment Ordinance

  • Payment of Wages Ordinance

  • Occupational Safety & Health Ordinance

  • Labour Welfare & Social Security Ordinance

  • Human Resources Development & Control of Employment Ordinance.

Sindh is still in the process of making proposals for reforming labour law while Punjab has enacted an industrial relations act, which allegedly has many anti-labour provisions.

The main sources of employment law are as follows.

  • The West Pakistan Shops and Establishments Ordinance 1969 regulates the work hours and other conditions of work and employment of persons employed in shops and commercial, industrial and other establishments in Pakistan. Applicable on employees.

  • The West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968 applies to all industrial and commercial establishments in Pakistan where 20 or more employees are employed.

  • The West Pakistan Maternity Benefit Ordinance 1958 regulates the employment of women in establishments in Pakistan.

  • The Employers’ Liability Act 1938 provides that certain defences shall not be raised in suits for damages in Pakistan in respect of injuries sustained by employees.

  • The Employees Old-Age Benefits Act 1976 provides for certain old age benefits for the persons who are employed in industrial, commercial and other organisations.

  • The Disabled Persons (Employment and Rehabilitation) Ordinance 1981 provides for the employment, rehabilitation and welfare of disabled persons.

  • The Employment of Children Act 1991 prohibits the employment of children in certain occupations and to regulate the conditions of work of children.

  • The Essential Personnel (Registration) Ordinance 1948 provides compulsory registration of essential personnel at Employment Exchanges in Pakistan.

  • The Companies Profits (Workers Participation) Act 1968 provides the participation of employees in the profits of companies.

  • The Workers’ Welfare Fund Ordinance 1971 provides the establishment of a Workers’ Welfare Fund providing residential accommodation and other facilities for employees

  • The Workmen’s Compensation Act 1923 provides the payment by certain classes of employers of compensation for injury caused to an employee by accident arising out in the course of employment.

  • The Provincial Employees’ Social Security Ordinance 1965 introduces a scheme of social security for providing benefits to certain employees or their dependents in the event of sickness, maternity, employment injury or death.

  • The Employee Cost of Living Act 1973 provides the payment of a cost of living allowance to employees and applies to all “undertakings” in Pakistan.

  • The Workers’ Children 1972 provides the education of employees’ children.

Employment Law in Pakistan: Quick Facts
  • Probationary periods, during which the employer or employee may terminate the employment contract without notice. The duration is for three months. Probation Period

  • An employment contract is defined as an agreement between an employer and an employee, whereby the latter commits to working for, and under the management and supervision of, the former in return for a wage. Employment Contracts

  • All employees must have a standard format written employment contract, containing specified minimum information.

  • The minimum wage is PKR 15,000. Minimum Wage

  • Employees’ normal working time must not generally exceed 48 hours per week. Working Hours and Days

  • Employees are generally entitled to a one-hour break after six hours’ work and to a weekly rest day, usually on Sundays. Rest Breaks and Rest Periods

  • Employees are entitled to paid annual leave after they have completed one year’s service. Annual Leave

  • Pregnant employees are entitled to maternity leave on full pay. An employer must not dismiss a pregnant employee nor send her any notice during her pregnancy or maternity leave. Maternity Leave

  • Employees are generally entitled to of sick leave 121 days in case of ordinary illness and 365 days in case of chronic disease. Sick Leave

  • The employer may not discriminate between working men and women with regard to: type of work, amount of wage or salary, employment, promotion, professional qualifications, and apparel. Prohibition of Discrimination

  • There is a general, non-specific ban on any discrimination that prejudices equal opportunity employment, equal access to jobs, equal continuity of employment or equal enjoyment of rights, and on discrimination between employees with the same work duties. Disability is the only grounds on which discrimination is specifically prohibited. Discrimination

  • Employers must provide employees with adequate means of protection against hazards of occupational injury and disease that may occur during work. They also have a range of specific obligations in this area. Employers’ Obligations and Rights

  • In principle, an employer may dismiss an employee at any time without notice on certain misconduct-related grounds. Other reasons of termination will lead to unlawful termination and full end of service gratuity. Termination of Employment