Practice Area
Employment Law
We advise employers on hiring, contracts, discipline, termination and the statutory contributions that come with a payroll, under Pakistan's federal and provincial labour regimes. We act for founders, HR teams and CFOs who want a workforce that is documented, compliant and terminable lawfully when it has to be.
Employment law in Pakistan is a provincial subject with a federal residue. Since the Eighteenth Amendment devolved labour, each province has been rewriting its own code, so the statute that governs a factory in Lahore is not the one that governs its twin in Karachi, and an employer operating across provinces may answer to the federal Industrial Relations Act 2012 as well. For a Punjab-based business the working set is the Standing Orders Ordinance 1968 as applied in Punjab, the Punjab Industrial Relations Act 2010, the Shops and Establishments Ordinance 1969, the Factories Act 1934 for manufacturers, and the federal EOBI scheme with Punjab's social security regime alongside. The first question in every mandate is jurisdictional: which law, which forum, which category of employee.
We act for employers, and we work at the front of the process. Most employment disputes are lost before they are filed — in a missing appointment letter, a defective show-cause notice, an inquiry that skipped a step — and the labour courts decide cases on the file the employer built months earlier. So our practice is weighted toward building that file well: contracts and handbooks that fit the applicable regime, discipline and termination run in the lawful sequence, and statutory registrations done before an inspector makes them urgent.
The clients this page is written for are growing businesses — the startup past its first ten hires, the SME that has never been inspected, the manufacturer with a unionised floor — for whom employment compliance arrives suddenly, usually attached to a dispute or a diligence questionnaire. For those clients we run a standing arrangement: the workforce map, the document set, the monthly contribution rhythm, and a phone call before any significant exit rather than after it.
Where disputes come regardless, we defend them — grievance petitions before the labour courts, proceedings before the NIRC, harassment matters before inquiry committees and the Ombudsperson, and contract claims by senior executives in the civil courts. The defence is strongest when we wrote the record it rests on.
Everything on this page is stated as of mid-2026. Provincial labour statutes, wage notifications and contribution rates change frequently — Punjab revises its minimum wage most years — and the governing regime must be confirmed for the specific establishment and province before any step is taken. Nothing here is advice on a particular employee or dispute.
When Businesses Need This
The moments this practice exists for.
- 01You are past your first ten hires and nobody has an appointment letter, a contract or a policy to point to.
- 02You need to exit a non-performer or a misconduct case, and you have heard that a wrong step turns a termination into two years before a labour court.
- 03An EOBI or social security inspector has visited, and the company has never registered or contributed.
- 04A harassment complaint has landed and the company has no inquiry committee, no code of conduct on the wall and no idea of the timeline it is now on.
- 05You are restructuring — closing a line, cutting a shift, reducing headcount — and need the retrenchment done in the lawful sequence.
- 06A key employee has resigned to join a competitor with your data, and you want to know which of your contract's restraints are real.
- 07Half your team is on contractor agreements that describe employees, and diligence for a raise or sale is three months away.
How It Works
The process, stage by stage.
1
Workforce map
We start with who is employed, where and as what: province by province, workman or non-workman, permanent, probationer or contractor. In Pakistani employment law the classification decides the statute, the forum and the remedy, so we draw this map before giving any advice on any individual.
2
Document set
We build or repair the core paper: appointment letters and contracts aligned with the applicable standing orders, an employee handbook that reflects Pakistani law rather than a foreign template, and the registers and notices the labour statutes require an establishment to keep and display.
3
Statutory registrations and contributions
We bring the company current on EOBI, provincial social security, and the levies that attach at its headcount and profit thresholds, and we set the monthly compliance rhythm so contributions and returns stop depending on memory.
4
Discipline and termination support
When an exit is coming, we plan it before the first notice: the choice between termination simpliciter and dismissal for misconduct, the show-cause and domestic inquiry where one is needed, settlement of statutory dues, and the paper trail a labour court will one day read. The file we build in week one is the defence.
5
Dispute defence
Where a grievance petition, labour court case or ombudsperson complaint comes anyway, we defend it — with the advantage, for retained clients, of having written the record it will be decided on.
The Legal Framework
The law this work runs on.
- West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968
- The backbone of employment terms for workmen in Punjab establishments above the applicable size threshold [CURRENT THRESHOLDS AS AMENDED IN PUNJAB TO BE VERIFIED BY REVIEWING LAWYER] — classification of workers, terms of service, termination and dismissal procedure, and gratuity where no provident fund applies.
- Punjab Industrial Relations Act, 2010
- Trade unions, collective bargaining, unfair labour practices and the labour judiciary for establishments within Punjab. Its federal counterpart, the Industrial Relations Act 2012, covers Islamabad and trans-provincial establishments through the National Industrial Relations Commission — and which statute applies is a live threshold question for multi-city employers.
- Punjab Shops and Establishments Ordinance, 1969
- Registration, working hours, overtime, rest and leave for shops and commercial establishments in Punjab — the statute most offices actually sit under. Small businesses are routinely surprised that it applies to them and requires registration with the labour department.
- Factories Act, 1934
- Working conditions, hours, safety and welfare in factories, as adapted by the provinces after devolution. Manufacturing clients carry this regime on top of the standing orders and industrial relations statutes.
- Employees' Old-Age Benefits Act, 1976
- The federal pension scheme. Registration and monthly contributions are compulsory for establishments at the statutory headcount threshold [CURRENT THRESHOLD AND CONTRIBUTION RATES TO BE VERIFIED BY REVIEWING LAWYER], and EOBI assesses arrears with penalties against employers who register late.
- Provincial Employees' Social Security Ordinance, 1965
- Medical care and cash benefits for secured workers through the Punjab Employees' Social Security Institution, funded by employer contributions on wages up to the notified ceiling. Like EOBI, it is enforced by inspection and arrears assessment, and contractor headcount is frequently attributed to the principal employer.
- Minimum wage law as applied in Punjab
- Minimum wages are fixed by provincial notification and revised — typically with the budget — under the Punjab minimum wage legislation [CURRENT STATUTE AND NOTIFIED RATE TO BE VERIFIED BY REVIEWING LAWYER]. Paying below the notified rate is an offence and a recurring inspection finding.
- Protection Against Harassment of Women at the Workplace Act, 2010
- Requires employers to adopt a code of conduct, display it, and constitute an inquiry committee; the 2022 amendments broadened who counts as an employee and what counts as a workplace. Complaints run to the internal committee or the Ombudsperson on statutory timelines that do not wait for the employer to get organised.
- Contract Act, 1872
- Section 27 voids most post-employment non-competes. Enforceable protection of the business lies in confidentiality obligations, garden leave, properly drafted notice periods and the law on misuse of confidential information — not in the two-year restraint clause copied from a foreign precedent.
Statutory references are stated as of the page’s as-of date and flagged where verification is pending; the law moves, and the current position should be confirmed before relying on it.
Common Mistakes
The errors we see most — and their price.
- Hiring without appointment letters, then discovering in litigation that the standing orders fill the silence on terms the employer never chose.
- Dismissing for misconduct without a show-cause notice and domestic inquiry, which converts a defensible exit into a reinstatement order with back pay.
- Labelling everyone management to escape workman protections, when the labour courts classify by actual duties, not by job title.
- Skipping EOBI and social security registration until an inspector arrives, and then facing years of arrears, penalties and personal exposure for officers.
- Running a Pakistani workforce on a translated foreign handbook, complete with at-will termination language that has no meaning in Pakistani law.
- Withholding final settlement — gratuity, leave encashment, certificates — from a departing employee out of grievance, and handing them a second, easier claim.
- Relying on a non-compete clause that section 27 of the Contract Act 1872 makes void, while neglecting the confidentiality and data controls that would actually have been enforceable.
- Papering long-serving, supervised, full-time staff as contractors, and building a misclassification liability that EOBI, social security and any diligence exercise will each find independently.
Representative Scenarios
The shape of the work.
Illustrative scenarios, not case reports — composites drawn to show how matters of this kind run.
- —Illustrative: a manufacturer dismissed a storekeeper for theft on strong CCTV evidence but skipped the domestic inquiry. The labour court did not reach the evidence — the defective procedure decided the case, and the company paid reinstatement and back wages for a theft it could have proven.Illustrative
- —Illustrative: a fifty-person software house had never registered with EOBI. An inspection triggered an arrears assessment reaching back years, with penalties, at the same moment an investor's diligence questionnaire asked for the contribution record.Illustrative
- —Illustrative: a harassment complaint reached the Ombudsperson because the employer had no inquiry committee to receive it internally. The company conducted its first committee appointment and its first inquiry under a statutory deadline, in the worst possible case to learn on.Illustrative
- —Illustrative: a retailer retrenched eight staff by paying a month's salary and closing the matter, without the retrenchment sequence or the statutory dues calculation. Five of the eight filed grievance petitions, and the settlement eventually paid exceeded a lawful retrenchment by a multiple.Illustrative
Questions, Answered
What clients ask about employment law.
No. At-will employment is a US concept with no Pakistani equivalent. For workmen, the standing orders regimes govern how employment ends — termination simpliciter with notice or pay in lieu, or dismissal for misconduct after due process — and labour courts police both. Senior non-workmen are governed by their contracts, with more room to agree exit terms. The classification question comes first in every exit.
A workman, broadly, is an employee doing manual, clerical or operational work rather than exercising genuinely managerial authority — and courts look at real duties, not designations. Workmen get the protective statutes: standing orders, labour courts, reinstatement as a remedy. Non-workmen sue on their contracts in civil court, where the remedy is damages. Most employment cases are won or lost on this threshold.
Under the standing orders framework as applied in Punjab, a probationer serves an initial trial period — historically three months for permanent-track roles [CURRENT PERIOD AND EXTENSIONS TO BE VERIFIED BY REVIEWING LAWYER] — during which termination is simpler, and after which the employee acquires permanent status with full protections. The common failure is silence: no letter stating probation, its length or its confirmation terms, which means the protections arrive by default.
For establishments at the applicable thresholds in Punjab, as of mid-2026: minimum wage at the notified rate, EOBI registration and contributions, social security contributions to PESSI, leave and working-hour entitlements under the Shops and Establishments Ordinance or Factories Act, and gratuity or provident fund under the standing orders regime. Profit-linked levies — workers' participation and welfare fund — attach to larger companies. The exact set depends on headcount, sector and province, which is why we start with the workforce map.
After employment ends, almost never — section 27 of the Contract Act 1872 voids agreements in restraint of trade, and Pakistani courts apply it to post-employment non-competes with rare exceptions. What is enforceable: confidentiality undertakings, restrictions during employment, contractual notice periods, and claims arising from actual misuse of data or property. We draft for those, and we advise clients not to price any deal on the non-compete.
Documented process over time: clear standards communicated in writing, warnings that say what must improve and by when, a real opportunity to improve, and then termination with the notice or payment the applicable regime requires — distinct from a misconduct dismissal, which needs a show-cause notice and domestic inquiry. The labour court reads the file, so the file has to exist before the decision, not after it.
Very likely yes on all three. EOBI and provincial social security apply from statutory headcount thresholds that a twelve-person company typically crosses [THRESHOLDS TO BE VERIFIED BY REVIEWING LAWYER], and the harassment statute applies to workplaces without a size floor — the code of conduct and inquiry committee are obligations, not options, as of mid-2026. Early registration is cheap; inspection-triggered arrears are not.
Genuine contractors, yes — a business serving multiple clients, controlling its own work, bearing its own risk. But Pakistani authorities and courts look through labels at reality: full-time, supervised, integrated workers are employees however the agreement is titled, and EOBI and social security can assess the principal employer for a contractor's workforce. Misclassification is one of the two or three findings that most reliably appears in diligence on growing companies.
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Related Insights
Prepared by The First Counsel · As of 2026-07-12 · Pending professional review — statements flagged in the text are being verified
This publication is provided for general information only. It is not legal advice, and neither reading it nor corresponding with the firm about it creates a lawyer–client relationship. The position stated must be verified against current law before it is relied upon.