Labour-law compliance: the filings employers miss

Since the Eighteenth Amendment devolved labour to the provinces in 2010, there is no single Pakistani labour law to comply with. There are four provincial regimes plus the Islamabad Capital Territory, each with its own registrations, contributions and inspectors. Most enforcement does not start with a dispute; it starts with a missing filing. This alert states the position as of late March 2026.

What changed

The provinces have finished building their own statute books. Sindh replaced most of the inherited West Pakistan-era laws with its own: the Sindh Shops and Commercial Establishments Act 2015, the Sindh Factories Act 2015, the Sindh Terms of Employment (Standing Orders) Act 2015 and the Sindh Employees' Social Security Act 2016 [current texts and amendments — TO BE VERIFIED BY REVIEWING LAWYER]. Punjab, Khyber Pakhtunkhwa and Balochistan operate adapted versions of the 1960s statutes with their own amendments, and Sindh and Punjab have enacted occupational safety and health legislation [instruments — TO BE VERIFIED BY REVIEWING LAWYER]. Registration and returns are moving onto provincial portals, which makes gaps easier for departments to see [portal status by province — TO BE VERIFIED BY REVIEWING LAWYER].

What it means

The filings employers most often miss fall into four groups.

Establishment registrations. Every office, branch or shop generally requires registration under the shops and establishments law of its province — including a pure back-office with no customers. A factory requires separate registration and licensing under the applicable factories legislation. An employer incorporated in Karachi with a sales office in Lahore answers to two departments, not one.

Contribution registrations. The Employees' Old-Age Benefits Act 1976 remains federal in operation and requires registration and monthly contributions once the employer crosses the statutory headcount threshold [threshold and post-devolution status — TO BE VERIFIED BY REVIEWING LAWYER]. Provincial social security institutions — SESSI in Sindh, PESSI in Punjab and their counterparts — require separate registration and monthly contributions for secured employees up to the notified wage ceiling. These are distinct systems; registration with one is not registration with the other.

Employment documentation. The standing orders legislation requires written appointment letters stating terms and classification, and requires compulsory group insurance for permanent workers [coverage thresholds and insurance requirement — TO BE VERIFIED BY REVIEWING LAWYER]. Wage registers, leave records and displayed notices of hours remain inspectable items under the factories and shops laws.

Profit-linked payments. Companies above the statutory thresholds must establish a workers' participation fund and allocate five per cent of profits under the companies profits (workers' participation) legislation, and pay the workers' welfare fund levy — an area complicated since devolution by parallel federal and provincial statutes and collection by provincial revenue authorities in Sindh and Punjab [thresholds, rates and the federal-provincial split — TO BE VERIFIED BY REVIEWING LAWYER]. Provincial professional tax on establishments is small, annual and routinely forgotten.

Two further points. Workers engaged through contractors do not remove the exposure; the labour statutes reach the premises and, in several regimes, the principal employer [scope — TO BE VERIFIED BY REVIEWING LAWYER]. And arrears of contributions are recoverable with increases and, in some statutes, prosecution — the cost of a missed registration compounds monthly.

What this means for you

Map the footprint first: list every location, its province, its headcount and what it does, then check each against the registrations that province requires. Reconcile the payroll to EOBI and social-security records — headcount mismatches between the payroll and the contribution returns are the first thing an inspector checks. Issue appointment letters where they are missing and place the group insurance where it is not. Bring workers' participation fund and welfare fund positions current before the next audited accounts, since auditors and acquirers now look for both. Where arrears exist, take advice on regularizing voluntarily; a disclosed arrear negotiated with the department costs less than the same arrear found in an inspection.