Labour Laws in Pakistan

Labour laws in Pakistan have evolved significantly since independence in 1947, shaped by the country's socio-political changes. These laws are founded on the Constitution of Pakistan, which upholds Islamic principles of social justice.

Initially, Pakistan inherited key legislation from British India, such as the Trade Union Act of 1926 and the Industrial Dispute Act of 1926, essential for early labour rights, including trade union formation and collective bargaining.

Today, the Constitution guarantees equality before the law, prohibits all forms of forced and child labour, and secures the freedom to form unions and engage in collective bargaining. These provisions underpin all subsequent labour laws and policies designed to protect workers in Pakistan.

However, a major contextual challenge is that nearly 70% of Pakistan’s workforce operates in the informal sector, lacking access to formal protections and benefits. Labour laws, while robust on paper, often fail to reach these segments effectively.

This streamlined version focuses directly on the evolution of labour laws in Pakistan, their constitutional basis, and their impact on worker protections today.

Devolution of Labour Laws – 18th Constitutional Amendment (2010):

In 2010, the 18th Constitutional Amendment devolved labour legislation to the provinces. As a result, each province now holds the authority to create its own labour laws. While many federal laws are still in effect, provinces like Punjab and Sindh have begun developing their own regulations, such as provincial minimum wage laws, to reflect regional needs and priorities.

Constitutional Provisions and Labor Rights

The Constitution of Pakistan establishes robust protections for labor rights, integral to the country’s legal and ethical framework. These constitutional provisions are foundational in shaping labor practices and legislation across Pakistan, ensuring that labor rights are upheld in alignment with fundamental principles of social justice inspired by Islamic teachings.

Key labour rights included in the Constitution are:

• Prohibition of Forced Labor and Child Labor: The Constitution explicitly forbids all forms of slavery, forced labor, and child labor, ensuring that employment is both fair and voluntary.
• Freedom of Association and Union Rights: Workers are guaranteed the right to form associations and trade unions. This right is crucial for collective bargaining, allowing workers to negotiate their wages, working conditions, and benefits collectively.
• Right to Work and Business: Every citizen has the right to enter any lawful profession or to conduct any lawful trade or business. This provision supports the pursuit of personal and professional aspirations within the bounds of law.
• Equality and Non-Discrimination: The Constitution mandates equality before the law and prohibits discrimination on the basis of sex alone. This is vital for creating a workplace environment where all individuals can thrive without bias.

These constitutional rights are not just theoretical; they drive the enactment of specific labor laws that detail the mechanisms and protections necessary to enforce these rights. They also set the stage for the government to take active steps in safeguarding these rights through legislation and regulation, ensuring that labor practices across Pakistan are just, equitable, and supportive of workers' welfare.

List of Labour Laws in Pakistan

Pakistan's labor laws encompass a broad framework designed to govern the relationship between employers and employees, ensuring fair treatment, safe working conditions, and equitable employment practices. Here's an overview of the primary labor laws and their applications in Pakistan:

Employees' Old Age Benefits Act, 1976

The Employees' Old Age Benefits Act, 1976 applies to every industry and establishment in Pakistan that employs five or more individuals. This legislation ensures that employees receive retirement benefits, which are funded through contributions from both employers and employees to a fund managed by the Employees' Old Age Benefits Institution (EOBI). This act is crucial for providing financial security to workers after retirement, ensuring they have a stable income.

Provincial Employees Social Security Ordinance, 1965

The Provincial Employees Social Security Ordinance, 1965 extends health and old age benefits to workers across various sectors. This ordinance requires employer contributions based on employee wages and is applicable to all establishments notified by Provincial Governments. It plays a significant role in safeguarding workers' health and providing financial stability in old age through benefits that cover medical expenses and pensions.

The Industrial and Commercial Employment (Standing Orders) Ordinance, 1968

Under the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, any industrial or commercial establishment employing twenty or more workers must regulate conditions of service, including work hours, termination rules, and other employment terms. This ordinance aims to standardize employment practices and ensure fair treatment of workers within the industrial and commercial sectors.

Workers’ Children (Education) Ordinance, 1972

The Workers’ Children (Education) Ordinance, 1972 mandates that establishments employing ten or more workers contribute towards funding education for workers' children. This ordinance ensures that the children of workers have access to educational opportunities, promoting better future prospects and contributing to the overall development of society.

Minimum Wages Ordinance, 1961

The Minimum Wages Ordinance, 1961 sets wage standards, but today each province sets its own minimum wage levels annually, based on local economic conditions and cost of living. This law is vital for ensuring that workers receive fair compensation for their labor, protecting them from exploitation and helping to alleviate poverty among working-class families.

Payment of Wages Act, 1936

The Payment of Wages Act, 1936 is designed to ensure the timely and fair disbursement of wages to workers employed in any factory or industrial or commercial establishment. It prohibits unauthorized deductions from wages, thus safeguarding the financial interests of employees.

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Workmen’s Compensation Act, 1923

The Workmen’s Compensation Act, 1923 requires employers to compensate workers who suffer employment-related injuries or diseases. Applicable to certain classes of employers and their workers, this act is a fundamental piece of legislation that ensures workers are financially protected in the event of work-related accidents or health issues.

The Factories Act, 1934

The Factories Act, 1934 applies to any premises in Pakistan where ten or more workers are employed. It addresses crucial aspects of worker welfare, including health and safety regulations, working hours, leave entitlements, and other protections. This act is integral to maintaining safe working environments and ensuring the health and well-being of factory workers.

Punjab Shops and Establishments Ordinance, 1969

Specific to Punjab, the Punjab Shops and Establishments Ordinance, 1969 governs the operation of shops and commercial establishments, regulating work hours, conditions of service, and employment terms to ensure that workers in this sector are treated fairly and their working conditions are up to standard.

Companies Profits (Workers’ Participation) Act, 1968

The Companies Profits (Workers’ Participation) Act, 1968 applies to companies that meet specific criteria based on the number of employees or financial thresholds. It mandates the distribution of a portion of company profits to workers, fostering a sense of ownership and participation among employees and aligning their interests with the growth and success of the company.

Disabled Persons (Employment and Rehabilitation) Ordinance, 1981

The Disabled Persons (Employment and Rehabilitation) Ordinance, 1981 requires establishments employing a certain number of workers to hire persons with disabilities. This ordinance ensures that disabled individuals are given equal employment opportunities and benefits, promoting inclusivity and equal rights in the workplace.

Apprenticeship Ordinance, 1962

Applicable to all industrial establishments notified by the Government, the Apprenticeship Ordinance, 1962 regulates the training and employment of apprentices in various trades. This ordinance ensures that apprentices receive proper training and are well-prepared to enter the workforce, enhancing the skill levels of workers and supporting the development of the industry.

Employment of Children Act, 1991

The Employment of Children Act, 1991 is a crucial piece of legislation in Pakistan that governs the employment of minors across all sectors. This act is designed to safeguard children from exploitation and the dangers associated with labor at a young age, especially in hazardous conditions.

Key Provisions:

• It sets the minimum age for employment at 14 years in non-hazardous work.
• Children between 14 and 18 years old are considered "adolescents" and may only be employed under conditions that do not harm their health and well-being.
• The law strictly prohibits the employment of children under the age of 14 in any factory or mine, except in non-industrial work or family businesses where the work is not hazardous.
• Regular inspections and penalties are enforced to ensure compliance with the act, aiming to protect children from exploitation and harmful labor.

While the above list includes foundational and federal labour laws, several provinces have enacted their own updated laws following the 18th Constitutional Amendment. These provincial laws either replace or supplement existing federal legislation within their jurisdiction.

Provincial Labour Laws Introduced After the 18th Amendment

Following the 18th Constitutional Amendment in 2010, labour became a provincial subject, allowing each province to develop and enforce its own labour legislation. Several provinces have since enacted new laws to replace or modernize earlier federal laws. Here’s an overview of the key provincial labour acts introduced post-devolution:

Sindh Terms of Employment (Standing Orders) Act, 2015

This act replaces the federal Industrial and Commercial Employment  (Standing Orders) Ordinance, 1968 in Sindh.

Key Features:

• Regulates terms and conditions of service in industrial and commercial establishments.
• Covers appointment letters, termination procedures, disciplinary actions, etc.
• Expands protection for contract and temporary workers.
• Applies to all establishments employing 50 or more workers in Sindh.

Sindh Minimum Wages Act, 2015

This act replaces the federal Minimum Wages Ordinance, 1961 in Sindh.

Key Features:

• Establishes a Minimum Wage Board for Sindh.
• Sets different wage rates based on skill level, region, and nature of work.
• Provides mechanisms for review and revision of minimum wages annually.

Sindh Factories Act, 2015

This act is Sindh’s updated version of the Factories Act, 1934.

Key Features:

• Regulates working conditions, hours, health and safety in factories.
• Mandates fire safety, cleanliness, protective gear, and welfare facilities.
• Introduces stricter penalties and better reporting requirements.

Sindh Maternity Benefits Act, 2018

This law replaces the Maternity Benefit Ordinance, 1958 in Sindh.

Key Features:

• Guarantees 12 weeks of paid maternity leave (6 pre-delivery + 6 post-delivery).
• Mandates leave for adoptive and surrogate mothers.
• Applies to all commercial, industrial, and service establishments in Sindh.

Sindh Employees’ Social Security Act, 2023

This law replaces the Provincial Employees’ Social Security Ordinance, 1965 for Sindh.

Key Features:

• Provides medical care, old-age benefits, and compensation for injury.
• Establishes a Sindh Social Security Institution (SSSI).
• Expands coverage to new categories of workers, including informal sector workers.

Balochistan Shops and Establishments Act, 2015

This law updates and expands on the earlier Shops and Establishments Ordinance for Balochistan.

Key Features:

• Regulates work hours, rest periods, overtime, holidays, and working conditions.
• Applies to all commercial establishments in Balochistan.
• Includes specific protections for women and young workers.

Punjab Domestic Workers Act, 2019

This law is a new addition (not a replacement) designed specifically for domestic workers in Punjab.

Key Features:

• Recognizes domestic workers as formal employees.
• Regulates working hours, rest periods, age limits, and rights.
• Prohibits employment of children under 15 in domestic work.
• Ensures access to dispute resolution and social security.

Specific Employment Provisions

In Pakistan, labor laws detail various specific provisions concerning employment contracts, types, terms, and working conditions. These laws are crafted to ensure fairness in employment practices across different sectors. Here’s a detailed look at these essential aspects of employment law in Pakistan:

Contract Types and Employment Terms

Permanent Contracts: The most common employment type, where employees are hired for indefinite periods and enjoy full benefits and protections under the law.

Probationary Contracts: Employers may hire employees on a probationary basis, typically lasting three months, to assess suitability before confirming their appointment.

Temporary Contracts: Used for specific tasks or limited periods, these contracts do not generally offer the same level of job security or benefits as permanent contracts.

Apprenticeships: Designed for on-the-job training, these contracts are regulated under the Apprenticeship Ordinance, ensuring that apprentices are fairly treated and adequately trained.

Working Hours, Breaks, and Rest Periods

Standard Working Hours: The typical work week is limited to 48 hours, with a standard of 9 hours per day.

Overtime: Employees working beyond the standard hours must be compensated at a rate higher than the regular pay, often twice the normal rate.

Breaks and Rest: Employees are entitled to rest breaks during work hours, typically one hour for lunch and prayers. Weekly rest days are usually observed on Sundays.

Wage Regulations

Minimum Wage: The government sets a minimum wage applicable to all workers, ensuring they receive fair compensation for their labor.

Payment of Wages: Wages must be paid regularly and on time, typically monthly. The Payment of Wages Act regulates these payments and prohibits unauthorized deductions.

Leave and Benefits

Pakistan’s labor laws provide structured entitlements to various types of leave and benefits, ensuring employees' well-being and support during significant life events.

Annual Leave

As per the Factories Act, 1934, employees are entitled to annual leave with full pay after they have completed 12 months of continuous service with an employer. This typically includes at least 14 days of leave per year.

Maternity Leave

Under the Maternity Benefit Ordinance, 1958, applicable to factories and some commercial establishments, female employees are entitled to 12 weeks of maternity leave with full pay.

However, the law’s application varies by sector, and some provinces, like Sindh, have passed newer maternity benefit laws with expanded coverage.

Sick Leave

The entitlement and specifics of sick leave can vary by sector and individual employment contracts, but typically, employees are entitled to up to 10 days of paid sick leave per year. Extended sick leave may require medical certification.

Casual Leave

Casual leave provisions are also often outlined in employment contracts or internal company policies, typically granting up to 10 days per year for personal emergencies or urgent matters.

Festival Leave

Festival leave is usually specified in the employment contract or company policy, aligning with national and regional public holidays recognized by the government each year.

Other Leaves

• Bereavement Leave: Some organizations offer bereavement leave for employees who have lost a close family member, providing them time to grieve and manage familial affairs.
• Study Leave: Aimed at promoting personal development, some employers offer leave for employees to pursue higher education or professional training.

Each of these leave types is designed to support the employee’s health, familial, and personal needs while maintaining their employment rights and benefits. These provisions not only ensure compliance with the laws but also promote a healthy work-life balance, contributing to higher employee satisfaction and retention.

Health, Safety, and Occupational Hazards

In Pakistan, labor laws rigorously address health, safety, and occupational hazards to protect workers across a wide range of sectors. These regulations aim to ensure safe and humane working conditions by placing clear obligations on employers to minimize risks and foster a secure work environment. The following are key laws and frameworks that define workplace safety standards in Pakistan:

The Factories Act, 1934

The Factories Act remains one of the most significant pieces of legislation concerning occupational health and safety. It mandates that all factories maintain clean and safe working conditions, including adequate ventilation, lighting, sanitation, and drinking water facilities.

The Act requires machinery to be properly maintained and guarded to prevent workplace injuries. It also outlines protocols for fire safety, the use of personal protective equipment (PPE), and the reporting of workplace accidents. Regulations on the handling of hazardous materials and emergency response mechanisms are also included.

In provinces like Sindh, this law has been updated by the Sindh Factories Act, 2015, which builds upon the original framework and strengthens provisions specific to local industries and hazards.

Occupational Safety and Health Ordinance, 1965

This federal ordinance applies broadly to industrial and commercial establishments and establishes general principles for occupational safety and health.

Employers are legally required to maintain a workplace free from recognized hazards that could result in serious injury or death. The ordinance also introduces mandatory safety training for workers, emergency preparedness, and hazard mitigation strategies.

While this ordinance continues to apply in several provinces, Sindh has enacted a more detailed law — the Sindh Occupational Safety and Health Act, 2017 — which addresses a wider range of modern workplace hazards and introduces formal requirements for risk assessments, safety committees, and compliance audits.

Sindh Occupational Safety and Health Act, 2017

This is a province-specific law that enhances and expands workplace safety regulations for establishments operating in Sindh. It applies to all sectors, including industrial, commercial, agricultural, and construction.

Key features include mandatory health and safety policies, worker training, regular risk assessments, and the establishment of occupational safety committees. It also addresses chemical exposure, noise pollution, radiation, and ergonomic hazards — areas not deeply covered under earlier legislation.

The law aims to bring Sindh’s workplace safety framework closer to international standards and includes penalties for non-compliance.

Provincial Employees Social Security Ordinance, 1965

Although primarily intended to provide social protection, this ordinance includes provisions for occupational health services. Employers contribute to the social security system, which supports employees injured at work through access to medical care, rehabilitation, and monetary compensation.

In Sindh, this ordinance has been replaced by the Sindh Employees’ Social Security Act, 2023, which introduces more inclusive coverage and aims to bring informal and semi-formal sector workers into the safety net.

Mines Act, 1923

This act governs occupational safety in the mining sector — one of the most hazardous industries in Pakistan. It lays out detailed safety standards for ventilation, dust control, use of protective equipment, and mine design.

The act also mandates the provision of safety lamps, training on emergency procedures, and regular mine inspections. Employers are held responsible for implementing safety measures and reporting incidents to authorities.

Mining operations are subject to frequent inspections, and penalties are enforced for non-compliance, ensuring the safety of workers in this high-risk environment.

Boilers and Pressure Vessels Ordinance, 2002

This ordinance regulates the installation, operation, and inspection of boilers and pressure systems — especially in factories, textile units, and power plants.

It is critical in preventing industrial accidents related to high-pressure systems. Employers are required to obtain certifications and conduct regular inspections under the supervision of qualified inspectors.

Dock Workers (Safety, Health, and Welfare) Act, 1974

Targeting workers in port and dockyard areas, this law ensures that dock workers operate in safe environments, particularly while handling hazardous materials or engaging in cargo operations. It mandates the use of protective equipment and safety procedures during the loading and unloading of goods.

Factories Rules (Provincial Variants)

Each province has issued its own Factories Rules under the broader Factories Act, which provide operational-level detail on how safety and health standards must be implemented.

For example, Punjab Factories Rules, 1978, and similar rules in other provinces cover waste disposal, machinery safeguarding, noise control, and health checks.

Environmental Protection Acts (Federal and Provincial)

Although primarily focused on environmental preservation, these laws intersect with occupational health when it comes to hazardous waste, chemical exposure, and air quality within workplaces.

The Pakistan Environmental Protection Act, 1997, and provincial counterparts like the Sindh Environmental Protection Act, 2014, impose requirements on businesses to manage pollutants and hazardous substances that may pose risks to workers as well as the environment.

Enforcement Mechanisms

Enforcement of occupational health and safety regulations is primarily managed by the provincial labour departments. These departments conduct periodic inspections, respond to complaints, and issue penalties for non-compliance. In Sindh, the Directorate of Occupational Safety and Health plays a key enforcement role.

Despite robust legal frameworks, enforcement challenges remain — particularly due to limited inspector capacity, lack of digitization, and the vast size of the informal economy, where most workers lack access to safety protections.

Conclusion

Labor laws in Pakistan form a comprehensive framework designed to safeguard workers' rights, ensure safe working environments, and promote fair labor practices. Over the years, these laws have been refined to align with international labor standards and respond to the evolving needs of the workforce. The foundation set by the Constitution of Pakistan, coupled with specific labor legislations, demonstrates the country's commitment to upholding the dignity and rights of its workers.

Key Points:

Robust Legal Framework: Pakistan’s labor laws cover a wide array of areas including employment terms, working conditions, leave entitlements, safety standards, and compensation for workplace injuries. These laws ensure that workers enjoy secure and humane working conditions.

Enforcement Challenges: While the legal framework is strong on paper, the actual enforcement of these laws can sometimes be inconsistent. This discrepancy often results from limited resources, varying regional implementations, and the need for greater awareness among workers about their rights.

Labour inspections, dispute resolution, and regulatory compliance are primarily handled by provincial labour departments, especially after the 18th Amendment. However, limited staffing, inconsistent inspections, and lack of digital recordkeeping often undermine effective enforcement.

Role of Government and Employers: The government continues to play a crucial role in enhancing labor law enforcement through regular inspections and the imposition of penalties for non-compliance. Employers are also encouraged to adopt best practices in human resource management and to ensure that labor laws are followed meticulously within their organizations.

Labour Market Informality and Gig Work: A major challenge is Pakistan’s large informal sector, which employs around 70% of the total workforce. These workers often lack contracts, benefits, or social protections. Moreover, gig and platform-based work (such as ride-hailing and freelancing apps) is expanding rapidly but remains largely unregulated, creating legal gaps in worker protections and employment classification.

Future Directions: Moving forward, Pakistan must focus on strengthening the enforcement mechanisms and increasing the capacity of labor departments to handle disputes and compliance checks. There is also a need for ongoing revisions to the laws to address new challenges in the labor market, such as those posed by the gig economy and technological advancements in workplaces.

The government can also explore the digitalization of labour records, online complaint systems, and unified provincial databases to ensure transparency, better enforcement, and access to benefits for workers, especially in remote or informal setups.

International Labour Standards and ILO Commitments: Pakistan is a member of the International Labour Organization (ILO) and has ratified over 30 international conventions, including those on child labour, forced labour, freedom of association, and occupational safety. These global commitments influence domestic laws and policies, even though enforcement remains a work in progress.

In conclusion, the labour laws in Pakistan are structured to promote social justice and economic efficiency by protecting workers' rights and enhancing labor market flexibility. Continued efforts to improve law enforcement and adapt to new labor market realities will be key to achieving sustainable economic growth and the well-being of Pakistani workers.