Your employees care about compensation and benefits, so you need to prepare a Pakistan benefit management plan that fits your company and employees’ needs. However, you also have to ensure you meet Pakistan compensation laws, provide statutory benefits, and keep your business running. G-P offers Pakistan compensation and benefit outsourcing services that will help you stay compliant and give you peace of mind about providing the right compensation and benefits to employees.
Pakistan Compensation Laws
The minimum wage in Pakistan varies by region. As of 2022, Pakistan raised its monthly minimum wage for unskilled workers to PKR 25,000, which is about $105. These numbers could continue to rise in the years to come, so it’s important to keep an eye on any Pakistan compensation law changes. The country does not have a minimum wage for skilled labor. Instead, it’s between you and the employee to decide during contract negotiation.
Industrial and commercial businesses with 20 or more employees must pay profit bonuses to employees who have worked at least 90 continuous days. The company also has to declare profit in that year to be required to give out bonuses.
One bonus per year, if the company declares profit
- No profit no bonus
- If profit is more than one-month wages, then one bonus may be disbursed.
- If profit is equal to one-month wages, then a 30% bonus may be disbursed.
- If profit is less than one-month wages, then a 15% bonus may be disbursed.
Guaranteed Benefits in Pakistan
Every company must provide guaranteed benefits that include time off for holidays and paid vacation days. Pakistan has 11 national and religious holidays for which employees get the day off. Employees who have worked continuously for at least a year get 14 consecutive days of annual leave during the next year. Those vacation days carry over into the next year if they’re not all used.
Another guaranteed benefit is 10 days of casual leave with full pay and another 16 days of sick or medical leave where employees get 50% of their regular pay. Employers can grant casual leave for situations such as a sudden, fast illness, while taking sick leave requires a medical certificate (more than three consecutive leaves or on demand).
Statutory Maternity Leave is 3 Months and statutory Paternity Leave is 7-10 days (depending upon region).
Pakistan Benefits Management
Companies opt to offer additional medical insurance, life insurance, and tuition reimbursement. Healthcare is commonly known as a corrupt institution in Pakistan. Without a national health insurance system, the majority of the population pays healthcare expenses out of pocket, and private-sector insurance companies control the market.
Restrictions for Benefits and Compensation
The biggest restriction for Pakistan compensation and benefits is that you must establish a subsidiary before you can hire employees and run a Pakistan benefit management plan. However, G-P can change this process through our Pakistan compensation and benefit outsourcing. With us, you won’t have to set up a subsidiary before starting work. We’ll use our established subsidiary to help you start working faster and keep you compliant.
Pakistan Competitive Benefits
When you grow your business in a new region, you want to build your team with leading professionals. Strategic employee benefits planning can help you competitively recruit and show your current employees how much you value them. With a strong benefits scheme, you’ll be able to start hiring sooner and keep your provisions compliant and competitive in the long term.
Pakistan Employee Benefits Plans
As you establish your company internationally, you’ll want to create a benefits program that stands out in the region. A great benefits plan will make your open positions more appealing to job seekers. It will also boost morale among your current employees, leading to better retention rates and less turnover.
Beyond complying with legal responsibilities, you want to demonstrate that your company is genuinely invested in your employees. Some fringe benefits you can provide include:
- Child care and education assistance
- Employer-sponsored retirement accounts
- Critical illness insurance
- Ongoing education resources
- Mental and physical health services and support
Requirements for Employee Benefits in Pakistan
While supplemental benefits will help you stand out, you’ll need to focus on compliance first. Legal regulations stipulate that you must provide these benefits at a minimum for all employees:
- Leave for national and religious holidays
- Vacation leave
- Casual leave
- Sick leave
- Maternity leave
- Paternity Leave
How to Design Your Employee Benefits Program
Creating a compliant benefits program that balances your budget with employee needs can be complex, but the right approach will make the process easier. While each country’s requirements will be unique, you can use this general strategy to meet critical requirements.
1. Choose Your Priorities and Allocate Resources
As you begin the planning process, take the time to evaluate your company’s goals for the program and set priorities. If your goal is to build a large workforce to support your growth, you might choose to provide basic benefits so you can afford to hire more employees. If retention is a higher priority, you can offer more benefits for a smaller team. Identify the resources you have available for your benefits administration plan, and ensure you’re setting a scope that fits your budget.
2. Assess Key Employee Needs
The best benefits are those that offer the most value to employees. Connect with local workers to learn what they’re looking for in a program. Conduct interviews, create questionnaires, and research local economic conditions to identify what offerings employees would most appreciate.
You might also want to research other local companies like yours and explore their benefits offerings during this stage. If you can provide the same coverage or offer a benefit other companies don’t, your open positions will be all the more appealing.
3. Create Your Plan
Once you’ve set your priorities for the program and conducted the necessary research, you can begin designing your plan. Ensure that you’re accounting for factors such as employee contributions, outsourcing expenses, cost containment features, and administration requirements.
Average Cost of Benefits Per Employee
Program expenses can vary widely from one company to another based upon individual benefits offerings. A national average cost may not be the most useful metric in designing your own Pakistan employee benefits plan. Instead, focus on your budget, ensuring that your program prioritizes key benefits.
How to Calculate Employee Benefits
Some benefits calculations are outlined in Pakistan’s labor laws. When employees take annual vacation leave, holiday leave, and casual leave, you must provide full payment for the duration. Employees taking sick leave are entitled to 50 percent of regular wages.
You must also contribute 5 percent of minimum wages for Old Age Benefit and 7 percent for social security benefits.
Calculations for any bonuses or other fringe benefits may vary. To help determine competitive rates for these offerings, research local companies’ provisions.
How Are Employee Benefits Taxed in Pakistan?
Unless a specific offering has an exemption by law, all benefits are considered taxable income, whether monetary or non-monetary. The Pakistani tax scale is progressive based on salary, so withholding taxes will range from no income tax to a 35 percent rate. You’ll need to determine each employee’s income bracket to find the appropriate taxation rates.
Employee Health Benefits Plans
Pakistan provides national health care for employees, but some companies choose to offer additional coverage as a supplemental benefit.
Manage Benefits Planning With G-P
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