Payroll Compliance in Pakistan: The Complete Employer Checklist

Payroll in Pakistan is not just "salary minus deductions." A compliant payroll touches at least five different laws and institutions — and each one has its own registration, calculation, deadline, and paper trail. This checklist covers what every employer needs to handle, whether you have five employees or five hundred.

1. EOBI (Old-Age Benefits)

The federal pension scheme. Employer contributes 5% and the employee 1% of the applicable minimum wage, monthly, for every registered employee.

Checklist: employer registered · every employee registered · amounts match current minimum wage · paid monthly on time.

We cover this one in depth in our EOBI guide for employers.

2. Provincial Social Security (SESSI / PESSI)

Each province runs an employees' social security institution — PESSI in Punjab, SESSI in Sindh, and equivalents in KP and Balochistan — funding medical care and benefits for covered workers. Employers contribute a percentage of wages for employees earning up to the coverage ceiling.

Checklist: registered with the institution for each province where you have staff · covered employees identified correctly · contributions calculated on the right wage base · paid by the monthly deadline.

Multi-province employers take note: an office in Lahore and another in Karachi means two separate registrations, rates, and portals.

3. Income Tax Withholding on Salaries

Employers are withholding agents. You must deduct income tax from salaries per the current year's salary tax slabs, deposit it with FBR, and file withholding statements. Slabs change with the annual Finance Act — a payroll that is not updated in July can be wrong for the entire fiscal year.

Checklist: current-year slabs applied · tax deducted each month and deposited on time · withholding statements filed · annual salary certificates issued to employees.

4. Provident Fund and Gratuity

End-of-service benefits come in two common forms:

• Provident Fund (PF): employer and employee each contribute monthly (commonly a percentage of basic salary) into a fund the employee receives on leaving. Recognized funds have their own trust and approval requirements.
• Gratuity: a lump sum on separation, typically based on last drawn salary and years of service, where applicable by law or company policy.

Checklist: PF contributions posted monthly with running balances per employee · gratuity liability tracked per employee, not discovered at resignation time.

5. Minimum Wage and Payslips

Every employee must earn at least the applicable minimum wage (federal or provincial, whichever applies), and provinces have been tightening documentation requirements — written contracts, payslips, and bank-paid salaries are increasingly expected in inspections.

Checklist: no one below current minimum wage · payslips issued every cycle · salaries traceable through bank transfer where required.

The real problem: five systems, one spreadsheet

Each item above is manageable alone. The compliance risk comes from managing all of them together, every month, in spreadsheets — where a slab update gets missed, a new hire skips EOBI registration, or a PF balance formula silently breaks.

This is the exact problem we built Payrolio to solve for Pakistani businesses: one system that runs attendance, salaries, EOBI, SESSI/PESSI, provident fund, gratuity, and FBR salary tax together — with statutory updates applied for you and every calculation traceable per employee, from hire to retire. It even posts payroll to your general ledger automatically.

If your month-end payroll takes days, or compliance depends on one person's spreadsheet knowledge, see what Payrolio automates or book a demo.

The one-page version

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