PakistanPakistan has one of the largest English-speaking engineering talent pools that most US startups haven't looked at yet, at salary levels well below India's for comparable seniority. The catch isn't talent or timezone (UTC+5 overlaps a US-East morning), it's that employment law is partly devolved to the provinces, so where your hire sits changes which rules and registrations apply.
Here's the whole picture.
Quick facts
| Pakistan | |
|---|---|
| Currency | Pakistani Rupee (PKR) |
| Standard work week | 45 hours, 5 days |
| Payroll frequency | Monthly |
| Employer statutory cost | ~11-14% on top of gross salary |
| Minimum wage | PKR 40,000/month in Punjab, Sindh, and KPK (varies by province) |
| Probation | Up to 3 months |
| Notice period | 30 days |
| 13th month pay | Not mandatory |
| Employees paid in | PKR, required by law |
First decision: contractor or employee?
Most US startups start with contractors in Pakistan, and the market is built for it: senior developers there routinely invoice foreign clients, manage their own tax affairs, and work US-overlapping hours.
The misclassification line is the same as everywhere. Someone working fixed hours, exclusively for you, under your day-to-day management is an employee no matter what the agreement says. In Pakistan that liability compounds through unpaid EOBI and social security contributions, and it surfaces during diligence when you raise. The rough test: if you'd be uncomfortable with them taking a second client, they're probably an employee. When someone crosses that line, you convert them through an employer of record (EOR) or your own Pakistani entity.
Paying contractors in Pakistan
The compliance side is light:
- Collect a W-8BEN before the first payment. It certifies the contractor is a non-US person, so you generally don't issue a 1099. Confirm with your accountant.
- Sign a real contract with scope, rate, IP assignment, and termination terms under sensible governing law.
- Pay in USD or PKR, their choice. Many Pakistani contractors prefer USD. The expensive route is the bank wire: $25-45 per transfer, an FX spread buried in the rate, and multi-day arrival times.
Shor pays Pakistani contractors over local rails at a flat disclosed 2% FX margin, for $19/month per contractor. Contractors invoice in USD or PKR, and contracts, W-8BEN collection, and invoicing are built in.
Hiring full-time employees
Employer-side statutory contributions on top of gross salary:
| Contribution | Rate (employer side) | Notes |
|---|---|---|
| EOBI (old-age benefits) | 5% | Calculated on the government-notified minimum wage, not full salary; employee adds 1% |
| Provincial social security (ESSI) | 6% | Employer-funded; authority differs by province (PESSI, SESSI) |
| Workers Welfare Fund | 2% | Where applicable |
Headline employer load: ~11-14% on top of gross, and because EOBI is computed on the minimum wage rather than actual salary, the effective percentage on a senior engineer's package is lower than the sticker rates suggest.
The provincial wrinkle is real: minimum wage, the social security body, and labour registrations all depend on whether your hire is in Punjab, Sindh, KPK, Islamabad, or Balochistan. An EOR resolves this by registering in the right province before day one.
One 2026 change to have on your radar: Pakistan's Federal Budget 2026-27 raised the federal minimum wage to PKR 40,700/month effective July 1, 2026, superseding the provincial floors (previously PKR 40,000 in Punjab, Sindh, and KPK and PKR 37,000 elsewhere). Since EOBI contributions are calculated on the notified minimum wage, the contribution base shifts with it. Statutory rates change; confirm current figures with your payroll provider.
Employees must be paid in PKR, monthly.
Leave and benefits
- Annual leave: 14 days
- Sick leave: 26 days (10 casual days at full pay plus 16 medical days at half pay)
- Maternity leave: 12 weeks at full pay, employer-funded
- Paternity leave: 30 days, paid (first three children)
- Public holidays: ~16 days
Beyond statute, competitive offers in Pakistan commonly add private medical insurance, transport, meal, and mobile allowances, performance bonuses, and an employer-sponsored provident fund, which is widely expected in white-collar roles.
Ending employment
Pakistan is not at-will. Expect:
- 30 days' notice (or pay in lieu)
- Severance of 30 days' salary per completed year of service, except in documented misconduct cases
- Due process: documentation, and for cause terminations, a proper record of the grounds
- A final settlement covering accrued salary, gratuity, leave encashment, and any provident fund balance
One structural detail: qualifying employees are generally entitled to either gratuity or an employer provident fund scheme, not usually both for the same category. Get the structure right at offer time, not at exit.
Documents we'll collect from your employee at onboarding
CNIC (national ID card), NTN (national tax number, which can be registered during onboarding if the employee lacks one), and a Pakistani bank account for salary. EOR onboarding typically takes one to two weeks once documents are in, driven by provincial and EOBI registration timelines.
What it costs through Shor
- Contractors: $19/month each
- Full-time employees (EOR): $299/month each, with FBR, EOBI, and provincial social security registrations and filings handled
- Your own Pakistani entity: we run payroll on top of it for less than EOR, in the same dashboard
No setup fees, and the FX margin is a flat disclosed 2%. The pricing calculator shows the full Pakistan math.
Next steps, depending on where you are: the EOR pricing comparison puts published provider prices side by side, and EOR vs. your own entity has the breakeven math for when a local entity starts to win. To see Pakistan against the rest of our coverage, the reference tables compare employer costs, notice periods, and public holidays across every country here. Already with another provider? Switching EOR providers covers the traps worth planning around.
Paying Pakistan contractors in dollars instead of local currency is a separate question, and a common one: what that looks like in Pakistan.
FAQ
Can I pay Pakistani employees in USD? No. Salary must be paid in PKR. Contractors, however, can invoice in USD, and many prefer it.
Does the province my hire lives in actually matter? Yes. Minimum wage, the social security institution, and labour registrations are provincial. Punjab and Sindh have different bodies (PESSI and SESSI), and registering with the wrong one is a compliance gap. An EOR sorts this before the first payroll.
How fast can someone start? Contractors: as soon as the contract is signed and the W-8BEN is in. EOR employees: typically one to two weeks, driven by provincial registration and EOBI enrollment.
What does an employer of record in Pakistan cost? With Shor, $299/month per employee, plus the statutory employer contributions (roughly 11-14% of gross) that any employer pays. Deel and Remote charge $599-699/month for the same coverage.