What Are The Labor Law Requirements After Company Registration In Pakistan?

Once a Company Registration In Pakistan is done with the Securities and Exchange Commission of Pakistan (SECP) and begins operations, it must comply with several labor laws and employment regulations. These laws are designed to protect the rights of workers, ensure fair treatment, and promote a balanced employer-employee relationship. Labor law compliance is not just a legal obligation—it also builds a company’s credibility and fosters a healthy workplace culture.

This article outlines the major labor law requirements that companies must fulfill after registration in Pakistan.

1. Employment Contracts

Under Pakistani labor laws, companies are required to issue written employment contracts to all employees. These contracts should clearly define:

• Job title and description

• Working hours and conditions

• Salary and benefits

• Probation and confirmation period

• Termination conditions

• Leave entitlements

The Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 mandates that employees in establishments with 20 or more workers must be provided with standing orders outlining their terms of employment.

2. Minimum Wage Compliance

Companies must pay at least the government-declared minimum wage, which varies by province and is revised periodically. The minimum wage applies to all unskilled and certain categories of skilled labor. As of 2024, the minimum wage in most provinces is around Rs. 32,000 per month, though this may change based on government policy.

Failing to comply with minimum wage laws can result in fines and penalties.

3. Working Hours and Overtime

According to the Factories Act, 1934, the standard working hours in Pakistan are:

• 8 hours per day

• 48 hours per week

Any work beyond this limit qualifies as overtime, which must be paid at double the normal hourly wage. Additionally, workers are entitled to one weekly holiday (usually Sunday) and periodic rest intervals during long shifts.

4. Leave Entitlements

After Company Registration In Pakistan, companies must ensure employees receive their entitled leaves, including:

• Annual Leave: 14 days per year (with pay)

• Sick Leave: 10 days per year (with pay)

• Casual Leave: 10 days per year (with pay)

• Maternity Leave: 12 weeks (as per Maternity Benefits Ordinance, 1958)

• Public Holidays: As declared by the government

Failing to grant or record leaves properly can lead to labor disputes and non-compliance issues.

5. Employees' Old-Age Benefits Institution (EOBI) Registration

Under the EOBI Act, 1976, companies with five or more employees must register with the Employees’ Old-Age Benefits Institution (EOBI). Employers must:

• Register themselves and all eligible employees with EOBI

• Contribute 5% of the employee’s salary, while employees contribute 1%

This provides financial security to employees after retirement, including pensions, old-age grants, and survivor benefits.

6. Social Security Registration

Companies must also register with the Provincial Employees Social Security Institution (PESSI) to provide healthcare and medical coverage for their employees. The employer contributes a fixed percentage of the employee's wages, typically around 6%, while the employee contribution is optional.

Registered employees receive free medical treatment, injury compensation, and maternity benefits through government-run hospitals and clinics.

7. Workplace Health and Safety

According to the Factories Act, 1934 and related laws, companies must:

• Maintain hygienic working conditions

• Provide safety equipment and proper ventilation

• Ensure fire safety and emergency exits

• Appoint a Health & Safety Officer (in larger workplaces)

Violations may lead to inspections, fines, or operational shutdowns.

8. Maintaining Records and Inspections

Employers must maintain various records, including:

• Employee attendance registers

• Payroll and wage records

• Leave and overtime records

• EOBI and Social Security contributions

Labor inspectors may visit the workplace at any time to verify compliance with these requirements.

9. Grievance and Dispute Resolution

Companies should establish an internal grievance redressal mechanism to resolve workplace disputes. If unresolved, matters may be taken to labor courts under the Punjab Industrial Relations Act, 2010 or its provincial equivalents.

Conclusion

Labor law compliance in Pakistan by Hamza & Hamza Law Associates is essential for all registered companies, regardless of size. From issuing employment contracts to ensuring minimum wage, registering for EOBI and social security, and maintaining health and safety standards—each requirement is critical to building a legally compliant and ethical workplace. Non-compliance can result in legal penalties, reputational damage, and employee dissatisfaction. Proactive adherence to labor laws helps companies foster a positive work environment while avoiding legal trouble.