Leave Entitlements Under Pakistani Labour Law: Annual, Casual, Sick and Maternity (2026)

Leave Entitlements Under Pakistani Labour Law: Annual, Casual, Sick and Maternity (2026)

At a glance

• Four categories of statutory leave exist in Pakistan: annual (earned), casual, sick and maternity, plus paid festival holidays and, in two jurisdictions, paternity leave.

• Which statute applies depends on two things: whether your workplace is a factory or a commercial establishment, and which province you are registered in.

• Labour law was devolved to the provinces by the 18th Amendment in 2010. There has been no single national answer since.

• Sick leave is paid at half rate under the Factories Act, the most misapplied rule in Pakistani payroll VERIFY.

• Maternity leave now ranges from 84 to 180 days depending on jurisdiction and, in Punjab and Islamabad, on how many children the employee has had.

What leave are employees entitled to in Pakistan?

Pakistani employees are entitled to four categories of statutory leave, plus paid festival holidays. Each is governed by a different section of law, accrues differently, and is paid at a different rate.

Statutory leave entitlements in Pakistan: Factories Act 1934 baseline

INFOGRAPHIC 1: Statutory leave at a glance

alt="Table of statutory leave entitlements in Pakistan showing annual, casual, sick, festival, maternity and paternity leave with days and pay rates."

Statutory leave minimums under the Factories Act 1934 baseline. Commercial establishments are governed separately. See the comparison below.

One warning before you use that table: it reflects the Factories Act 1934 baseline. Most Pakistani SMBs are not factories.

Which law applies to your business?

This is the question most employers get wrong, and getting it wrong invalidates everything downstream.

Before 2010, labour law was federal. The 18th Amendment devolved it to the provinces, and Punjab, Sindh, Khyber Pakhtunkhwa and Balochistan have each since amended or replaced the inherited statutes. There is no longer one national answer.

Two questions determine your obligations.

First, is your workplace a factory or a commercial establishment? A factory, broadly a manufacturing premises with ten or more workers VERIFY: threshold, and whether the power-using distinction still applies, falls under the applicable Factories Act. An office, shop, restaurant or service business falls under the Shops and Establishments legislation.

Second, which province are you registered in? Each province administers its own version through its own Labour Department.

Governing statute by business type and province

VERIFY ALL ROWS

There is a third instrument that sits across both categories and is frequently overlooked: the Industrial and Commercial Employment (Standing Orders) Ordinance 1968, provincially adopted, which governs terms of employment, including leave and separation, for establishments above a headcount threshold VERIFY: threshold, and each province's adopting instrument. If you employ more than a handful of people, check whether it applies to you before you finalise any policy.

Factory or office? The comparison that changes your numbers

This is the table that almost no one publishes, and it is the one that matters most to a typical SMB.

Factories Act vs Shops and Establishments legislation: leave entitlements compared

Why this matters more than the headline numbers. If you run a software house, a retail chain, a clinic or a restaurant, the "16 days at half pay" rule that dominates every article on this subject may not be your rule at all. Applying it anyway means you are either underpaying staff against the statute that actually governs you, or building a policy your own auditors cannot defend.

Resolve this row before you write a single line of your leave policy.

Annual leave rules in Pakistan: how the 14 days actually work

Annual leave, also called earned or privilege leave, is paid time off that an employee accrues by working a full year. It is the only statutory leave with a service qualification.

The entitlement is 14 consecutive days after twelve months of continuous service VERIFY, under Section 49-B of the Factories Act 1934 VERIFY SECTION.

Four points employers routinely miss:

• It accrues, it is not granted. The employee earns it by completing service. It is not discretionary.

• Continuous service survives approved absence. Authorised leave, illness and statutory holidays do not break continuity VERIFY.

• It carries forward. Unused annual leave generally carries into the following year, subject to a statutory accumulation ceiling VERIFY CEILING. State the exact number of days.

• It is payable on separation. Accrued unused leave is typically encashable when employment ends VERIFY.

That last point is where most disputes begin.

Leave encashment on resignation: a worked example

VERIFY ENTIRE CALCULATION METHOD. Confirm whether encashment is calculated on gross salary, basic salary, or "average wage" as statutorily defined, and confirm the divisor.

An employee earning PKR 80,000 per month resigns on 30 September with 9 days of accrued, untaken annual leave.

1. Establish the daily rate. On a 30-day divisor: PKR 80,000 ÷ 30 = PKR 2,667 per day VERIFY DIVISOR. 26 working days is used by some employers and may or may not be correct in law.

2. Multiply by accrued days: PKR 2,667 × 9 = PKR 24,000.

3. This is added to the final settlement alongside salary to the last working day, any gratuity or provident fund entitlement, and notice pay if applicable.

Casual and sick leave are typically not encashable VERIFY.

The arithmetic is trivial. The hard part is proving the balance was 9 days and not 14, which is a records problem, not a legal one.

Casual leave rules in Pakistan: the 10 days most people misunderstand

Casual leave covers short, unforeseen absences: a family emergency, a civic obligation, a personal matter that cannot be scheduled.

The entitlement is 10 days per year at full pay VERIFY, available from the first day of employment with no service qualification.

Two constraints apply. It is intended for short absences, so employers may reasonably limit how many consecutive days can be taken as casual leave VERIFY: statutory cap, or policy discretion?. And it does not usually carry forward. Unused casual leave typically lapses at year end VERIFY.

The common error is treating casual leave and annual leave as one pool. They are separate entitlements with separate rules, and merging them in your policy creates liability.

Sick leave rules in Pakistan: why 16 days does not mean 16 days of pay

Sick leave is paid medical absence, and under the Factories Act it is paid at half rate, not full rate.

The entitlement is 16 days per year at half average pay VERIFY, available from the start of employment. Employers may require a medical certificate, typically for absences beyond two or three consecutive days VERIFY: is the certificate threshold statutory or policy?.

This half-pay provision is the single most misapplied rule in Pakistani payroll. Companies either pay full salary during sick leave, over-paying against their own policy, or pay nothing, under-paying against the statute. Both create exposure, and both are usually the result of payroll and leave records sitting in separate systems that never reconcile.

How social security sickness benefit interacts

Statutory sick leave is not the only mechanism. Employees registered with a provincial Employees' Social Security Institution (PESSI in Punjab, SESSI in Sindh, and equivalents elsewhere) may be entitled to a sickness benefit paid by the institution, separate from the sick leave their employer owes VERIFY: eligibility conditions, wage ceiling for registration, benefit rate, and how it interacts with the employer's half-pay obligation.

Employers below the registration wage ceiling frequently do not realise their staff are eligible, or do not register them, which is itself a compliance exposure distinct from leave. EOBI (Employees' Old-Age Benefits Institution) contributions are a separate federal obligation and do not cover sickness VERIFY.

INFOGRAPHIC 2: How sick leave pay is calculated

alt="Diagram showing sick leave in Pakistan paid at half average wage, and how provincial social security sickness benefit sits alongside it."

Sick leave under the Factories Act is paid at half the employee's average wage. Social security sickness benefit, where the employee is registered, is a separate entitlement.

Maternity leave in Pakistan: what changed recently

Maternity leave entitlement in Pakistan is no longer a single number. It depends on your province and, in Punjab and Islamabad, on how many children the employee has had.

The older Maternity Benefit Ordinance 1958 provided 12 weeks. That baseline has been overtaken in several jurisdictions.

Maternity leave entitlement by jurisdiction, 2026

Maternity leave is paid at full salary, and dismissal during maternity leave is prohibited VERIFY: cite the prohibiting section in each statute.

If you employ people in more than one province, you are running more than one maternity policy. That is not optional and it is not a rounding error. The gap between Punjab and Balochistan is roughly 180 days against 84.

Paternity leave in Pakistan

Paternity leave exists as a statutory entitlement in Punjab and Islamabad only: up to 30 days, generally limited to three occasions during the employee's service VERIFY: confirm whether the three-occasion limit appears in the statute itself or only in commentary.

Most provinces still have no statutory paternity entitlement. Many employers offer it voluntarily, which is permitted and increasingly expected in competitive hiring markets.

IMAGE 3: Leave request on mobile

alt="Employee submitting a maternity leave request through an HR system on a mobile phone."

Festival and public holidays

Employees are entitled to paid festival holidays, generally 13 to 14 days per year VERIFY, announced by federal and provincial governments and including Eid ul-Fitr, Eid ul-Adha, Ashura, Eid Milad un-Nabi, Independence Day, Quaid-e-Azam Day and Kashmir Day.

An employee required to work a festival holiday is entitled to a compensatory holiday, and in some cases overtime VERIFY: compensatory holiday vs overtime. Which applies when?.

These days sit outside annual, casual and sick leave and cannot be deducted from them.

Do contract, probationary and daily-wage workers get leave?

Everything above assumes a permanent employee. A large share of the Pakistani SMB workforce is not permanent, so this section matters more than its length suggests.

VERIFY THIS ENTIRE SECTION. Worker classification is the area where provincial practice diverges most from statutory text.

• Probationers. Casual and sick leave generally apply from the first day of employment, including during probation. Annual leave accrues during probation but is usually taken after confirmation, since it requires twelve months of continuous service VERIFY.

• Contract employees. Whether statutory leave applies typically depends on the substance of the relationship rather than the label on the contract. A fixed-term employee performing the work of a permanent employee is frequently treated as one VERIFY.

• Daily-wage and piece-rate workers. VERIFY: do casual and sick leave entitlements attach, and how is "average wage" computed for a worker without a fixed monthly salary?

• Third-party and outsourced staff. The contractor is usually the employer of record, but the principal employer may carry residual liability VERIFY.

Misclassifying a permanent employee as a contractor to avoid leave liability does not work, and is a common trigger for Labour Department action.

What happens if an employer does not comply?

This is the question nobody publishing on this topic wants to answer directly, so here it is.

Enforcement in Pakistan is real but reactive. Labour inspectors do conduct workplace inspections, and provincial Labour Departments do act on complaints, but in practice enforcement is usually triggered by an employee complaint rather than by routine audit. That leads many employers to treat leave compliance as low-risk.

That calculation is wrong for three reasons.

1. Separation is when it surfaces. Most claims arise when employment ends and an employee disputes their final settlement, precisely when your records are least likely to be complete.

2. The burden of proof is on the employer. If you cannot demonstrate what leave was taken and what was paid, the dispute tends not to resolve in your favour VERIFY: confirm the burden of proof position.

3. Consequences extend past penalties. Labour Department proceedings, National Industrial Relations Commission claims, and the reputational effect on hiring all cost more than the leave did.

The practical defence is not better intentions. It is a defensible record: an auditable trail showing every leave request, approval, balance and payroll consequence, kept for every employee for the full period of their service.

This is the part that is genuinely hard on spreadsheets. A leave register in Excel cannot show you who approved a request in March, what the balance was before and after, whether sick leave was paid at half rate, or what an employee is owed on their last day. Crew AI's leave management module keeps that trail automatically and applies the right accrual and pay rules per province, so the record exists before anyone asks for it.

That is a smaller claim than it sounds: the software does not make you compliant, it makes you able to prove you were.

Building a compliant leave policy

A defensible policy needs eight elements.

• State the governing statute by name and province, and whether you are a factory or a commercial establishment.

• Separate the leave types: annual, casual, sick, maternity, paternity and festival, each with distinct balances.

• State the pay rate for each, including the half-pay rule for sick leave where it applies.

• Define the leave year, calendar or fiscal, and apply it consistently.

• Set out carry-forward and lapse rules, within statutory limits.

• Document the approval workflow, including who approves and the expected response time.

• State the encashment rule on separation, and the calculation method.

• Address probation explicitly, and classify contract and daily-wage staff.

Write it once, per province, and apply it identically. Discretionary exceptions are how compliant policies become non-compliant practice.

Related reading: how to structure an employment contract in Pakistan · minimum wage by province, 2026 · payroll compliance checklist for Pakistani SMBs

INFOGRAPHIC 3: Eight-element policy checklist

alt="Checklist infographic showing the eight elements of a compliant leave policy under Pakistani labour law."

A leave policy that survives a Labour Department inquiry states its governing statute, separates every leave type, and documents the approval trail.

Frequently asked questions

How many casual leaves are allowed in a year in Pakistan?

Ten days of casual leave per year at full pay VERIFY. Casual leave is available from the first day of employment, requires no service qualification, and generally does not carry forward to the next year. Commercial establishments may be governed by a different figure. Check which statute applies to you.

Is sick leave paid in Pakistan?

Yes, but under the Factories Act it is paid at half rate. Employees are entitled to 16 days of sick leave per year paid at half their average wage VERIFY. Employers may require a medical certificate for longer absences. Paying full salary during sick leave is more generous than the statute requires and is permitted. Employees registered with a provincial social security institution may also be entitled to a separate sickness benefit.

Can an employer refuse annual leave in Pakistan?

An employer can decline a specific requested date for operational reasons, but cannot deny the entitlement itself. Annual leave is earned through service, not granted at discretion. Repeatedly refusing requests so that leave cannot be taken exposes the employer to a complaint.

Do employees get leave during probation in Pakistan?

Casual and sick leave generally apply from the first day, including during probation. Annual leave accrues during probation but is usually taken after confirmation, since it requires twelve months of continuous service VERIFY.

What happens to unused leave when an employee resigns?

Accrued and unused annual leave is generally encashable in the final settlement, calculated at the employee's last drawn salary VERIFY. Casual and sick leave are typically not encashable. The employer must be able to evidence the balance, which is why leave records matter at separation.

How is leave encashment calculated in Pakistan?

Divide monthly salary by the applicable divisor to get a daily rate, then multiply by accrued unused annual leave days VERIFY: gross or basic salary, and the correct divisor. On PKR 80,000 per month with 9 accrued days and a 30-day divisor, the encashment is approximately PKR 24,000.

How much maternity leave is given in Pakistan?

It depends on jurisdiction. In Punjab and Islamabad, 180 days for a first child, 120 for a second and 90 for a third. In Sindh, 16 weeks. In provinces still under the Maternity Benefit Ordinance 1958, 12 weeks. All are paid at full salary VERIFY.

Is paternity leave mandatory in Pakistan?

In Punjab and Islamabad, yes, up to 30 days, generally limited to three occasions during service VERIFY. Other provinces have no statutory paternity entitlement, though many employers offer it voluntarily.

Can annual leave be carried forward in Pakistan?

Yes, unused annual leave generally carries into the following year subject to a statutory accumulation ceiling VERIFY CEILING. Casual leave normally lapses at year end. Your policy should state both rules explicitly.

How many public holidays are there in Pakistan?

Between 13 and 14 paid festival holidays per year VERIFY, announced by federal and provincial governments. They are separate from annual, casual and sick leave and cannot be deducted from those balances.

What is the difference between casual leave and earned leave?

Casual leave covers short unforeseen absences, is available immediately, and usually lapses annually. Earned leave, or annual leave, accrues through twelve months of service, is taken in longer blocks, carries forward, and is encashable on separation. They are separate entitlements and should never share a balance.

Do leave rules differ between a factory and an office in Pakistan?

Yes. Factories are governed by the applicable Factories Act; offices, shops and service businesses are governed by provincial Shops and Establishments legislation. The entitlements differ VERIFY: specify which, so identifying your correct statute is the first step in any leave policy.

Getting this right without the spreadsheet

Pakistani leave law is not complicated in principle. It becomes complicated in practice for one reason: the rules vary by province and by statute, and manual records cannot apply varying rules consistently across a growing headcount.

If you employ people in more than one province, or you have crossed roughly fifty employees, the spreadsheet has probably already stopped being reliable. You simply have not had the dispute that proves it yet.

Crew AI handles leave, attendance and payroll as one system, so a half-pay sick day reaches payroll correctly without anyone remembering to make it happen. If you want to see how the leave rules work for your province, book a demo.

This article is general information, not legal advice. Labour legislation is devolved to the provinces and amended regularly. Confirm your obligations with your provincial Labour Department or a qualified labour lawyer before acting.

Sources

LINK EVERY SOURCE TO ITS PRIMARY TEXT: pakistancode.gov.pk, punjablaws.gov.pk, the relevant provincial assembly site, or ILO NATLEX.

1. Factories Act 1934, as amended, retrieved September 2026

2. Industrial and Commercial Employment (Standing Orders) Ordinance 1968, retrieved September 2026

3. Punjab Shops and Establishments Ordinance 1969, as amended, retrieved September 2026

4. Sindh Shops and Commercial Establishments Act, retrieved September 2026

5. Sindh Factories Act 2015, retrieved September 2026

6. Khyber Pakhtunkhwa Factories Act 2013, retrieved September 2026

7. Maternity Benefit Ordinance 1958, retrieved September 2026

8. Punjab Maternity and Paternity Leave Act 2022, retrieved September 2026

9. Maternity and Paternity Leave Act 2023 (Federal / ICT), retrieved September 2026

10. Sindh Maternity Benefits Act 2018, retrieved September 2026

11. Provincial Employees' Social Security Ordinance 1965, as provincially adopted, retrieved September 2026