Practice Area Articles
Pakistan
February 05, 2024
By Paul Hastings Professional
Back to International Employment Law
KEY DEVELOPMENTS FOR 2024
Inflation problems
The ongoing financial crisis in Pakistan and the high rate of inflation has severely affected employees, particularly those in blue-collar employment, across the country. In order to address this, the Federal and Provincial Governments have increased the minimum wage for unskilled workers to PKR 32,000 to provide much needed relief to blue-collar employees. In addition, the Sindh Government has increased the minimum wage for skilled workers in specified industries to PKR 33,280. Employers must ensure that all unskilled workers are paid in accordance with the updated minimum wage. Particularly, employers should be aware that the calculation of social security benefits is in accordance with the updated minimum wage rate.
Women in the workforce
Two of the biggest impediments to Pakistani women joining the workforce are domestic and childcare responsibilities. To facilitate working parents, the Federal Government has enacted the Day Care Centres Act, 2023, which mandates that every private establishment having at least 70 employees shall ensure the establishment of day-care centres at their premises. Non-compliance with this requirement can result in the imposition of fines of up to PKR 100,000 on employers and continued non-compliance can result in imprisonment of the concerned individual for six months. Employers employing seventy of more employees must establish a day care centre at their premises and must ensure compliance with any rules that are enacted in this regard.
Paternity leave developments
The labour laws of Pakistan did not mandate the provision of paternity leave in any governmental, commercial, or industrial establishment. Consequently, the Federal Government has enacted the Maternity and Paternity Leave Act 2023, which grants male employees working in public and private establishments under administrative control of the Federal Government the right to be granted paternity leave on full pay for a period of 30 days. However, such leave cannot be granted more than three times in the entire service of the male employee. Private sector employees should note that this law is only applicable to private establishments under the administrative control of the Federal Government, and all other private establishments are still not mandated by law to provide paternity leave. Accordingly, any private establishments currently providing paternity leave to male employees may continue to do so in accordance with their internal policies and the employment contract.
KEY DEVELOPMENTS FOR 2023
Protection against Harassment of Women at the Workplace Act, 2010
The law protecting women against workplace harassment, namely the Protection against Harassment of Women at the Workplace Act, 2010, had left certain important issues unaddressed, particularly in light of the definition of key terms like (“harassment”) and (“workplace”).
The Parliament has enacted the Protection against Harassment of Women at the Workplace (Amendment) Act, 2022, in order to address the critique around the definition of “harassment,” which was previously limited to victims of sexual harassment and made no reference to victims of other types of verbal or physical abuse. This has been rectified by the Parliament through the inclusion of “discrimination on basis of gender, which may or may not be sexual in nature” in the said definition. The amendment further clarifies that harassment can also take the form of a prejudicial mind-set or notion resulting in discriminatory behaviour. The definition of a “workplace” has also been expanded to include any situation that is linked to work or activity outside the office.
The broadening of these definitions will have a significant impact on the protection of women within workplaces and is a major step in the right direction when it comes to creating a safe working environment which actively promotes gender-equality.
Employers must increase vigilance when it comes to introducing measures to prevent workplace harassment in order to maintain compliance with the applicable laws and avoid claims under the revised definitions.
Prevention of exploitation and the employment of under-aged workers
There was a significant gap in the law, in terms of the regulation of employment of domestic workers, particularly in relation to measures to prevent exploitation and the employment of under-aged workers. The Parliament enacted the Islamabad Capital Territory Domestic Workers Act, 2022 which addresses the issues mentioned heretofore. The Act provides protection to domestic workers from discrimination in areas such as recruitment and deciding of wages, on the grounds of religion, race, caste or creed etc. Furthermore, every employment which falls under the Act, hereafter, shall be subject to the issuance of a letter of employment which shall be provided after the required form has been submitted by the potential employer. The letter will contain details of the scope of the domestic employees work, and no employee can be legally required to perform any acts which fall outside such scope.
Employers must take particular care not to let outside factors, such as religion and creed, affect their decisions in respect of aspects like salary and recruitment. The tasks expected to be performed by an employee must also be mutually decided between the employer and employee prior to the submission of the form so that the letter of employment reflects this.
Employee stock option plans are recruitment and retention incentives
Employee stock option plans are recruitment and retention incentives that are offered by companies to their employees worldwide. However, in Pakistan, the law limited its applicability to public companies. Amendments have been made to the Companies Act, 2017 to allow private limited companies in Pakistan to offer employee stock option plans to their employees.
As per the new amendments, regulations specifying the procedures and conditions in accordance with which employee stock option plans may be offered will be introduced. The introduction of employee stock option plans for private limited companies will bring private companies within Pakistan up to par with international companies.
Employers will not only have the added benefit of stock options to offer potential employees they wish to recruit, but they can also increase employee loyalty by instilling a sense of ownership in their workers for the company that employs them. Employers must continue to monitor any changes in the existing regulations or new regulations which specify the procedures and conditions for employee stock option plans.
Discrimination against deaf persons
Members representing deaf persons registered their complaints regarding discrimination regarding accessibility to media. The Access to the Media (Deaf) Persons Bill, 2022 has been passed by the National Assembly. After the commencement of the corresponding Act, changes will be made to media within Pakistan which will significantly improve access to media for deaf persons. The new law provides that after a specified period of time subsequent to its commencement, the Government will no longer allow the broadcast of any news bulletin, program, film etc. on any broadcast media without Pakistan sign language interpreters. Employees having expertise in sign language will need to be recruited by broadcast media.
KEY DEVELOPMENTS FOR 2022
Boom in digital services/businesses
Pakistan’s economy has badly suffered as a result of the COVID-19 pandemic. However, a boom has been seen in the digital business industry, particularly e-commerce, which has immense potential to boost the economy. The Parliament has enacted the Special Technology Zones Authority Act, 2021, in order to ensure the development of a scientific and technological ecosystem through the development of zones. This is aimed at accelerating technology developments and create job opportunities in the country.
The developers would be exempted from all customs duties and taxes on capital goods imported into Pakistan for a period of 10 years from the date of signing a development agreement. This applies to goods for consumption within zones by the authority and zone developers.
Investors and employers in the digital marketing, e-commerce and IT industry, especially start-ups, can avail themselves of these benefits for ten years. This should provide the initial boost needed to set-up and expand, leading to the promotion of these industries in Pakistan and internationally.
Expansion of benefits available to home based workers
The tertiary industries and home-based workers were previously not provided with any employment benefits or incentives available to other blue-collar workers employed in industrial and commercial settings. This is set to change as a result of new legislative developments.
As employment laws in Pakistan are a provincial subject following the 18th Amendment to the Constitution of Pakistan, the Provinces are enacting laws that strengthen the ability of blue-collar employees to work from home. This in turn is resulting in an expansion of benefits available to home based workers.
The Government of Sindh has recently initiated the registration of home-based workers under the Sindh Home-Based Workers Act, 2018. This now allows home based workers to receive social, medical and maternity benefits, compensations and marriages and death grants available to worker/workman under the labour laws applicable in the province of Sindh. Likewise, the Government of Khyber Pakhtunkhwa has also enacted the Khyber Pakhtunkhwa Home Based Workers (Welfare and Protection) Act, 2021, which provides benefits similar to those in the Sindh Act. Similar laws are pending before the Provincial Assemblies of Punjab and Balochistan.
Employers should continue to monitor developments in this area of law and must maintain records of home-based workers and provide the benefits to such workers in accordance with the applicable provincial laws.
Increased accessibility and protection for disabled persons
Members representing differently-abled persons have registered complaints regarding discrimination. These complaints included not being permitted to board aircraft without attendants, being denied ATM cards, lack of employment opportunities due to there not being any specialized facilities and various accessibility issues (such as absence of ramps into banks and other public and private buildings/offices).
In line with national and international commitments, the ICT Rights of Persons with Disability Act, 2020 has been promulgated by the Parliament. The new law covers areas like the political participation of persons living with disabilities, equity in education and employment, equality before the law, ease of access and mobility, and protection from violent, abusive, intolerant and discriminatory behaviour.
The Government has started implementation of the Act by instituting the Council on the Rights of Persons with Disabilities to ensure and promote the full realisation of rights and freedoms for persons with disabilities. It is envisaged that this will be achieved through the formation of rules and establishment of institutional mechanisms to remove discrimination and ensure equity in employment. Employers should continue to monitor developments in this area of law.
KEY DEVELOPMENTS FOR 2021
New Act to protect the rights of persons with disabilities
The National Assembly has enacted ICT Rights of Persons with Disability Act, 2020, which safeguards the rights of persons with disabilities and prohibits discrimination against a person on the ground of disability in the matters of employment, promotion, and career development.
Child domestic labour banned
The National Assembly has made amendments to the Employment of Children Act, 1991 in order to ban child domestic labour.
Protection of workers' rights during COVID‑19
The Sindh Assembly has passed the Sindh Covid‑19 Emergency Relief Act, 2020, which directs that, during the notified lockdown period due to COVID‑19, no employee or worker will be laid off, terminated or removed and that the employee must be paid a prescribed minimum salary during the closure of an establishment.
Protection of the rights of home‑based workers
The Government of Sindh has initiated registration of home‑based workers under the Sindh Home‑Based Workers Act, 2018, which now allows home based workers to receive social, medical, and maternity benefits, compensations, and marriages and death grants available to worker/workman under the labour laws applicable in the province of Sindh. This makes Pakistan the only country in South Asia where home workers were recognised as official labourers.
KEY DEVELOPMENTS FOR 2020
Amendments to Companies Act 2017
The Companies Act 2017 has been amended to cater to the specific needs of start-ups. The amendments include the removal of the time limit for payment of subscription money, the introduction of employees' stock options and share buy-backs, and the issuance of 'sweat' equity for private limited companies. The new provisions also provide powers to the corporate regulator in Pakistan to enact rules and regulations for promoting ease of doing business and the smooth running of companies.
Relief for Employers during the COVID-19 Pandemic
The Federal Government and State Bank of Pakistan have announced a special refinance scheme, which is expected to ease cash flow constraints of employers by providing low interest loans to finance wages and salaries.
Protection of workers' rights during the COVID-19 Pandemic
The Islamabad Capital Territory and Sindh Governments have passed notifications directing that, during the notified lockdown period due to COVID-19, no worker will be laid off and all workers shall be paid wages in full by their respective employers.
KEY DEVELOPMENTS FOR 2019
Greater protections for transgender people
Since 2018, transgender people have been afforded the same protections to dignity and security as other members of the public. Transgender people are now formally recognised by law, as “any person whose gender identity and/or gender expression differs from the society norms and cultural expectations based on the sex they were assigned at the time of their birth”. There is no legal requirement for a transgender person to obtain consent from a medical board to be recognised as their desired gender.
Criminalising failure to pay minimum wage
From December 2018, it is a criminal offence for employers to pay their labourers less than the minimum wage of Rs 15,000 per month.
Greater support for women in the workplace
In 2019, the government is expected to implement measures aimed at facilitating women labourers in the workplace. Such measures are expected to include the establishment of day-care centres and female-only bathrooms and canteens.
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