Employment Contracts in Pakistan

An employment contract is an agreement between an employer and employee and is the basis of further employment relationship. A contract of employment regulates the terms and conditions of employment between employer and employees.

After completion of your (undergrad or grad) studies, you must be looking for employment. While you may have already received advice on interviewing, during your studies, you must also know how to examine your employment contract or appointment letter.

Do labour laws in Pakistan require an employer to provide employment contract at the start of employment?

After you have applied for a job and in response to written test, interview, whatever the case may be, you may be offered employment in an organization. You must know that Constitution of Pakistan affords every one of us with the right to enter upon any lawful profession or occupation (Article 18). The relevant legislation on employment contracts is as follows: 

1. Industrial and Commercial Employment (Standing Orders) Ordinance 1968 (applicable in Balochistan, ICT and Punjab)

2. Khyber Pakhtunkhwa Industrial and Commercial Employment (Standing Orders) Act, 2013

3. Sindh Terms of Employment (Standing Orders) Act, 2015

The Standing Orders Ordinance1968 requires every employer to provide every worker an employment contract, showing terms and conditions of his/her service. Your employer is responsible to provide this contract at the time of your appointment, transfer or promotion. Similar provisions are found in the above referred provincial legislation of Khyber Pakhtunkhwa and Sindh. 

Your appointment letter (employment contract) must state the nature of your employment (permanent or temporary, nature of duties i.e. job description, terms and conditions of service etc.

What are different types of employment contract, as specified under the labor laws?

If you are working in an establishment, you will be classified in one of the following six categories.

  1. Permanent
  2. Probationers
  3. Badlis (Alternate)
  4. Temporary
  5. Apprentices
  6. Contract worker

You become permanent worker if you have been on work of permanent nature for the last 9 months and have satisfactorily completed the probationary period of three months.

You will be a probationer for the first three months of service, after provisionally employed for a permanent position.

You will be considered a “Badli” if you are appointed in the post of a permanent or probationer employee who is temporarily absent.

You should consider yourself a temporary employee if you are hired for a project ending within 9 months. 

An apprentice is a person undergoing training through the system of apprenticeship.

Lastly, you will be a contract worker if you are employed to work on piece rate basis for a specific period of time. You will not be given overtime for hours worked above the normal working hours.

Sindh legislation however defines a contract worker as "a worker who works on contract basis for a specific period mentioned in the contract, in any establishment but does not include the third party employment".

Khyber Pakhtunkhwa legislation also defines a contract worker as " a worker who works on contract basis for a specific period mentioned in the Letter of Contract". The legislation requires an employer to obtain a No Objection Certificate (NOC) from the Labour Department to contract out jobs of peripheral nature and not those which are related to core activity of the organization. Such NOC is issued only for a period of 6 months at a time and contains  certain conditions related to the job and employment of contract workers. 

What should I look for in my employment contract?

 While examining your appointment letter, you must consider following factors. 

  1. Job Description/ responsibilities - are these the same as were advertised and talked about during the interviews or job description has been expanded to include some other responsibilities
  2. Salary- what is your basic and gross salary? Your consolidated or gross salary must be equal or greater than Rs. 15,000 per month (in Punjab, KPK and Balochistan) or Rs. 14,000 ( in Sindh province). Your gross salary will include certain allowances like house rent allowance, conveyance/utility allowance.
  3. Probationary Period - what is the required probation period before your service is confirmed. In private sector, this probationary period is usually three to six months. While in public sector, the probationary period is one to two years. Another things to look for is that whether the probationary period is extendable or not. You must know that your services can be terminated during this time without any notice or without giving any reason. The probationary period under the above referred laws is only 3 months. 
  4. Termination of service - after confirmation of your service, on expiry of probation period, your services can be terminated by your employer at any time by giving you a 30-day notice or providing 30-day pay in lieu of that notice. You also have the right to resign from your service after giving 30-day notice or surrendering 30-day pay to your company.
  5. Transferability of services - whether your services can be transferred to other sections/departments of your organization. This can be both good and bad depending on your experience. Transferability of your services will give you diversified experience however you may not be able to specialize in your desired field.
  6. Confidentiality agreement - Your employer may require you not to associate, directly or indirectly, with a similar business during the course of your employment with the organization and that you would not divulge any information relating to the organization to its competitors (even after termination of your employment)
  7. Leaves, retirement benefits, medical facilities - you must check whether these provisions are in accordance with labor laws or company policy.

Other than the above mentioned factors, your employment contract/appointment letter must also clearly indicate whether your employment will be governed by general or some specific labor laws like mining labor code, newspaper employees act or road transport employees act. Moreover, if your employment contract is negotiated on terms different than those provided in labor laws, this will take precedence over the labor law. So, you must examine whether your employment contract is in accordance with the provisions in the labor laws or is different.

Last updated: 18 June 2017

Next update: September 2017
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