Minimum wage and social-security contributions: current rates and exposure

Minimum wage in Pakistan is not one number. It is a set of provincial notifications, revised annually, that also drive the arithmetic of old-age benefit and social-security contributions. An employer that sets pay once and forgets the July reset accrues arrears automatically. This alert states the position as of late February 2026, midway through fiscal year 2025-26.

What changed

The provincial budgets for 2025-26 raised the general minimum wage for unskilled workers again, continuing several years of steep annual increases [exact rates notified by each province and for the Islamabad Capital Territory for FY 2025-26 — TO BE VERIFIED BY REVIEWING LAWYER]. Skilled and semi-skilled categories carry separate, higher rates notified by the provincial minimum wage boards under the Minimum Wages Ordinance 1961 and its provincial successors, including Sindh's own minimum wage legislation [instruments and category schedules — TO BE VERIFIED BY REVIEWING LAWYER].

The contribution bases moved with the wage. Contributions under the Employees' Old-Age Benefits Act 1976 are calculated as five per cent from the employer and one per cent from the employee against the notified wage base, which has been raised in step with minimum-wage increases [current EOBI contribution base and any pending changes — TO BE VERIFIED BY REVIEWING LAWYER]. Provincial social security — SESSI, PESSI and their counterparts — takes six per cent from the employer against wages up to a secured-wage ceiling, and the ceilings have also been revised [current rates and ceilings by province — TO BE VERIFIED BY REVIEWING LAWYER].

What it means

Coverage is broader than most employers assume. The minimum wage notifications reach commercial and industrial establishments generally, not only factories, and they apply to workers engaged through contractors as much as to those on the direct payroll [scope of coverage and principal-employer exposure — TO BE VERIFIED BY REVIEWING LAWYER]. A services firm with office staff below the notified skilled rates is in breach in the same way a factory is.

The arithmetic cascades. When the minimum wage rises in July, three numbers move at once: the wage itself, the EOBI contribution and, for workers within the ceiling, the social-security contribution. Overtime, calculated as a multiple of the ordinary rate, moves with it. Payroll systems that hard-code last year's figures produce a clean-looking ledger and a growing arrear.

The exposure compounds and persists. Unpaid contributions are recoverable as arrears with statutory increases, in some cases as arrears of land revenue, and the statutes carry prosecution provisions for default [recovery mechanics and officer liability — TO BE VERIFIED BY REVIEWING LAWYER]. Workers can pursue the shortfall under the Payment of Wages Act 1936 and before the labour courts. There is no practical amnesty for old months: an inspection in 2026 can price a mistake made in 2023. Buyers in acquisitions now routinely quantify this in due diligence and take it out of the price.

The paperwork is the defence. Wage registers, signed pay slips, contribution challans and contractor invoices showing headcount are what an inspector or a labour court will ask for. An employer that paid correctly but cannot show it is treated much like one that did not pay.

What this means for you

Diarize the July reset now: when the 2026-27 budgets issue, obtain each province's notification and re-run payroll, overtime, EOBI and social-security figures against it in the same month. Reconcile headcount across payroll, EOBI and social-security returns — the mismatch is the audit trigger. Pull contractor arrangements into the review: require proof of the contractor's own registrations and contributions, and price the risk that liability travels to you if the contractor defaults. If a shortfall exists, quantify it, take advice, and approach the institution before it approaches you; the arrears are the same, the increases and prosecution risk are not. Keep five years of wage and contribution records where they can be produced in a week, not a quarter.