Pay and Minimum Wage in Pakistan

Wages include all types of remuneration in monetary terms and include house rent, dearness allowance, conveyance allowance, cost of living allowance and any other allowance but do not include value of house accommodation, travelling allowance etc.

What are the laws in Pakistan relating to wages i.e. their payment, rate and time etc?

Pakistan has five different laws relating to the payment and fixation of wages. These are:

  • Payment of Wages Act, 1936
  • The Minimum Wages Ordinance, 1961
  • Pakistan Minimum Wages for Unskilled Workers Ordinance, 1969
  • Coal Mines (Fixation of Rates of Wages) Ordinance, 1960
  • Newspaper Employees (Condition of Service) Act 1973

What are the jurisdictions of these laws?

The Payment of Wages Act, 1936 is applicable to any railway administration, commercial or industrial establishment. This law is applicable to all employees including the executives.

The Minimum Wages Ordinance, 1961 is applicable to all industrial establishments' employees (whether skilled, unskilled or apprentices and even domestic workers) but excludes those of Federal or Provincial governments, coalmine employees or persons employed in agriculture.

Pakistan Minimum Wages for Unskilled Workers Ordinance, 1969 is applicable to every commercial or industrial establishment but excludes persons in service of Pakistan, defense services, ports, railways, telegraph and telephone, postal services, firefighting, electricity, gas, water supply and hospitals. The Coal Mines (Fixation of Rates of Wages) Ordinance 1960 is applicable to any coalmine and the provincial governments issue minimum wage notifications from time to time. The Provincial government can also consult the Mines Welfare Board in fixation of wages.

Moreover, if your are newspaper employee, your wages are determined under the Wage Board Award and wages are fixed by the Wage Board (constituted specifically for that purpose) while taking into consideration the cost of living, the prevalent wage rates in comparable employment, circumstances relevant to the newspaper industry in different regions of the country as well any other reasons that the Boards considers appropriate and relevant. 7th Wage Board Award, which was supposed to be operative from October 25, 2001, could not start because the newspaper employers filed a write petition in the Sindh High Court against it. The Honorable Court, in its verdict on May 31, 2011 had announced its judgment directing the newspaper employers to implement the 7th Wage Board Award for Newspaper Employees. However, these newspaper employers had moved appeal in the Supreme Court, not only against the Sindh High Court decision but had also challenged the constitutionality of Newspaper Employees (Condition of Service) Act 1973. The Supreme Court, in its decision dated 19th October 2011, has decided in the favor of newspaper employees and has upheld the decision of Sindh High Court.

If you are a government employee, your wages are determined by the recommendations of Pay and Pension Committee. This committee revises the pay scales of government employees from time to time. The last revisal in pay (according to the recommendations of Committee) was made in 2005. The Committee has submitted its recommendations to the Ministry of Finance for pay revisions of government employees in 2011. The Government has revised the pay scales for government employees, raising their salaries by a fraction of 60%. In the current budget (2012-13), wages for public sector employees have increased for another 20%.

What are the wages?

Wages include all types of remuneration in monetary terms and include house rent, dearness allowance, conveyance allowance, cost of living allowance and any other allowance but do not include value of house accommodation, travelling allowance, contribution to the pension or provident fund and gratuity.

The minim wage rate as specified by the Labor Policy 2010 and Federal Budget 2010-11 was PKR 7,000. This has been raised to PKR 8,000 on the eve of May Day 2012 in the federal capital territory and all provinces except Punjab where minimum wage is PKR 9,000. These new wages are applicable from July 01, 2012. Provincial Minimum Wage Boards usually present their revised minimum wage recommendations before completion of three years of earlier revision. In fixing minimum wages, the law also requires that principle of gender equality (i.e. equal pay for work of equal value) must be considered. So, if you are a woman worker, your wage rates can't be lower than those of similar male workers.

How long can be the wage periods and what is the time for payment of wages?

Wages can be paid on daily, weekly, fortnightly or monthly basis. However, a wage period can't exceed a month (Section 4). A factory, railway or industrial establishment employing less than 1,000 workers is liable to disburse pay to its employees before the expiry of seventh day from the last day of wage period. However, the establishment employing more than 1000 workers can delay the disbursement of pay up till the 10th day from the last day of wage period. The law also requires that wages are to be paid on a working day and in current coin or currency notes only. This also means that wage payments by organizations through cheque are not permitted under the law.

What is Cost of Living Allowance (COLA)? Am I eligible for it?

COLA is granted under the Employees’ Cost of Living (Relief) Act, 1973 and is granted to every employee in the private sector whether he/she is working in a factory as defined under Factories Act, 1934; establishment or factories as defined under Standing Orders 1968; a road transport service, a mine or a newspaper establishment. Broadly speaking, it also includes road transport services, mining project and a newspaper establishment. Under this Act, every employee is entitled to a monthly allowance of PKR 100 per month, irrespective of the amount of his/her pay. This Act is not applicable to the Government employees whose COLA rates can be higher than the above. COLA is treated as part of the wages like other allowances but it has to be shown separately on the pay slip and cannot be merged in basic pay. This COLA is similar to the Dearness Allowance. In case you are a government employee, you will be granted a dearness allowance.

What type of deductions can be made from my pay?

According to the Payment of Wages Act, following deductions can be made from your wages. If there are deductions from your pay other than these heads, you need to talk to your employer.

  • Fines;
  • Deductions for absence from duty; Law considers it a breach of contract when ten or more persons, through concerted action, absent themselves from office without due notice and reasonable cause. The law entitles the employer to make deductions up to eight days of wages when employees take such an action. However, the law exempts women and workers (under the age of 15 years) from such wage deduction for contract breaches.
  • Deductions for damages to or loss of goods expressly entrusted to the employed person for custody, or for loss of money for which he is required to account, where such damage or loss is directly attributable to his neglect or default;
  • Deductions for house accommodation supplied by the employer
  • Deductions for such amenities and services supplied by the employer as the Provincial Government may by general or special order authorize;
  • Deductions for recovery of advances or for adjustment of overpayment of wages;
  • Deductions of income tax payable by the employed person;
  • Deductions required to be made by order of a Court or other authority competent to make such order;
  • Deductions for subscriptions to, and for repayment of advances from, any approved Provident Fund;
  • Deductions for payment to co-operative societies approved by the Provincial Government or to a scheme of insurance maintained by the Pakistan Post Office;
  • Deductions made with the written authorization of the employed person, in furtherance of any war saving scheme approved by the Provincial Government.

What I need to do if I am not being paid my wages in time?

If you are not being paid in time or the employer is deducting from your wages unlawfully or is not making contributions to the provident fund and gratuity; you can apply, either in person or through your union or through a legal practitioner to the government authority appointed under this Act (which most of time is Commissioner for Workmen Compensation) for address your claims. If the authority finds your claims to be valid, it will order the employer to pay you an amount not exceeding ten times the original amount that was deducted, delayed or not paid. If you and your other colleagues are not being paid in time or there are unlawful deductions from your wages, you can apply collectively through a single application.

According to Minimum Wages Ordinance, 1961 and the 1969 Ordinance, an employer who does not make the full payment of wages shall be punishable with either imprisonment for a term, which may extend to six months or with fine or both.

Can an employer deduct fine from the wages of an employee for certain acts (of negligence)?

Yes, fines can be imposed on an employee in respect of certain acts and omissions but these are to be specified and previously approved by the government. A notice of such acts has to be exhibited in the premises at some conspicuous place (like near factory entrance). Fines can be imposed for only that acts contained in the notice and a contravention of this provision would be unauthorized deduction that is a liable offence.

What is the amount of the fine that can be imposed on a worker?

The total amount of fine in a single wage period (which can be maximum 30 days) can’t exceed 3% (precisely 3.13%). The fine imposed has to be recovered in lump sum and has to be recovered within sixty days of the commission of an act or omission.

What is the penalty for an employer for offence under the act?

An employer, which contravenes the provisions of sections 5 and 7-13 of this act, is punishable with fine that may extend to five hundred rupees. While those contravening section 4, 6 and 25 of this act are punishable with a fine that may extend to two hundred rupees. The table below provides list of different offence.

Sections/Provisions of “Payment of Wages Act”

Fine (in case of Violation)

  • Section 5: Time of Payment of Wages
  • Section 7: Deductions which may be made from wages
  • Section 8: Fines
  • Section 9: Deductions for absence from duty
  • Section 10: Deductions for damage or loss
  • Section 11: Deductions for services rendered
  • Section 12: Deductions for recovery of advances
  • Section 13: Deductions for payments to cooperative societies and insurance schemes





PKR 500

  • Section 4: fixation of wage periods
  • Section 6: wages to be paid in current coin or currency notes
  • Section 25: Display by notice of the abstracts of this act


PKR 200

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