EOBI: the national pension
The Employees' Old-Age Benefits Institution runs Pakistan's contributory pension for private-sector workers. The employer registers and pays a monthly contribution calculated on a statutory minimum wage rather than on the actual salary; a smaller employee share is deducted from pay. Because the base is capped, the cost is a few thousand rupees a month whether the employee earns PKR 60,000 or PKR 600,000. The employee becomes eligible for an old-age pension at 60 (55 for women) after the minimum contribution period, and for invalidity and survivors' benefits. For a foreign employer the key point is that enrolment is not optional once you employ someone, and an unenrolled employee is a liability.
Provincial social security: medical and injury cover
Each province runs an Employees' Social Security Institution: PESSI in Punjab, SESSI in Sindh, KPESSI in Khyber Pakhtunkhwa, BESSI in Balochistan. The employer pays a contribution, again on a capped wage, and the employee receives treatment at the institution's hospitals, sickness benefit, injury benefit and maternity benefit. In practice white-collar employees use private insurance for day-to-day care, but the statutory registration still has to exist, and it is the first thing a labour inspector asks for.
Gratuity: Pakistan's end-of-service benefit
Gratuity is the closest equivalent to the Gulf end-of-service gratuity, with two important differences. First, the rate: thirty days' wages for every completed year of service, with six months or more counting as a full year, calculated on the last drawn salary. Second, eligibility: it is payable on termination for any reason other than proven misconduct, including resignation, once a year of service is complete. There is no reduction for resignation as there is in some Gulf systems.
On a salary of PKR 670,000, gratuity accrues at PKR 55,833 a month. An employee who leaves after two years and seven months is owed three years: PKR 2,010,000. Employers who do not accrue it monthly meet that number for the first time at exit.
How they appear on a Crown invoice
| Benefit | Invoice line | Timing |
|---|---|---|
| EOBI | Employer contribution at statutory rate, pass-through | Monthly |
| Social security | Employer contribution at statutory rate, pass-through | Monthly |
| Gratuity | Provision of one twelfth of a month's gross salary, held by Crown, reconciled at exit | Monthly |
| Leave encashment | Unused annual leave at exit, daily rate = gross ÷ 30 | Final invoice |
Why a provision rather than a bill at the end. Accruing gratuity monthly keeps your cost even and makes the final settlement a reconciliation rather than a surprise. Any surplus is refunded with the deposit; any shortfall is on the closing invoice.
Related
Pakistan payroll compliance checklist · EOR & payroll desk · country pages for UK, US, Canadian and Australian businesses.
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Crown Enterprises Overseas Employment Promoters · OEP 2868/RWP · ISO 9001:2015 · Islamabad · since 2010.