Employee Labor Law in Pakistan



Employment Law in Pakistan

The Constitution of Pakistan provides a federal democratic State, based on Islamic principles of social justice, though Pakistan has often alternated between civilian rule and extended periods of military rule. The Islamic Republic with its federal capital at Islamabad is comprised of four provinces: Punjab, Sindh, North West Frontier, and Baluchistan, in addition to the Federally Administered Tribal Areas. All residual powers fall to the Provincial Governments. The Constitution of Pakistan contains a range of provisions concerning labor rights.

  • The Constitution prohibits all forms of slavery, forced labor, and child labor.
  • The Constitution provides a fundamental right to exercise the freedom of association and the right to form unions.
  • The Constitution proscribes the right of its citizens to enter upon any lawful profession or occupation and to conduct any lawful trade or business
  • The Constitution lays down the right to equality before the law and prohibition discrimination on the grounds of sex.

The Federal Laws of Pakistan are published by the Government in a document called the Gazette of Pakistan. The Ministry of Justice, Law, and Parliamentary Affairs in addition publishes individual Acts through the Official Gazette.

After its independence, Pakistan inherited different legislations from British India which included the Trade Union Act 1926, the Industrial Employment Act 1946, the Industrial Dispute Act 1926, and the Factories Act 1934. These laws provided the basis for labor laws and policies and were progressive as they allowed trade union activities in all sectors. Employees had the right to collective bargaining and even strike.

The Trade Union Ordinance 1960 was circulated and established the principle of compulsory recognition of trade unions by employers. It also included unfair labor practices, both on the part of employers and employees.

The Industrial Dispute Act of 1926 was replaced by the Industrial Dispute Ordinance of 1959, in the Ayub regime, changed the system, more enterprises were included in the public sector. The compulsory adjudication system made employees go from one court to another court for years in the quest for justice. During Yahaya Khan’s Regime, the second military dictator, labor legislation was rewritten with an emphasis on two points: the trade union movement should remain plant-based and be delinked from politics.

Legislation has its basis in the law of contract (the law of “master and servant”) and industrial relations regulations are considered a departure from common law. Since the creation of Pakistan, five labour policies have been announced by the governments in the years 1955, 1959, 1969, 1972, and 2002. Between 2000 to 2002, 20 laws were consolidated into six draft laws.

Sources of employment law

  • Industrial Relations Ordinance.
  • Conditions of Employment Ordinance.
  • Payment of Wages Ordinance.
  • Occupational Safety & Health Ordinance.
  • Labour Welfare & Social Security Ordinance.
  • Human Resources Development & Control of Employment Ordinance.

Sindh is still in the process of making proposals for reforming labor law while Punjab has enacted an industrial relations act, which allegedly has many anti-labor provisions.

The main sources of employment law are as follows.

  • The West Pakistan Shops and Establishments Ordinance 1969 regulates the work hours and other conditions of work and employment of persons employed in shops and commercial, industrial, and other establishments in Pakistan. Applicable to employees.
  • The West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968 applies to all industrial and commercial establishments in Pakistan where 20 or more employees are employed.
  • The West Pakistan Maternity Benefit Ordinance 1958 regulates the employment of women in establishments in Pakistan.
  • The Employers’ Liability Act 1938 provides that certain defenses shall not be raised in suits for damages in Pakistan in respect of injuries sustained by employees.
  • The Employees Old-Age Benefits Act 1976 provides for certain old-age benefits for persons who are employed in industrial, commercial, and other organizations.
  • The Disabled Persons (Employment and Rehabilitation) Ordinance 1981 provides for the employment, rehabilitation, and welfare of disabled persons.
  • The Employment of Children Act 1991 prohibits the employment of children in certain occupations and regulates the conditions of the work of children.
  • The Essential Personnel (Registration) Ordinance 1948 provides compulsory registration of essential personnel at Employment Exchanges in Pakistan.
  • The Companies Profits (Workers Participation) Act 1968 provides the participation of employees in the profits of companies.
  • The Workers’ Welfare Fund Ordinance 1971 provides the establishment of a Workers’ Welfare Fund providing residential accommodation and other facilities for employees
  • The Workmen’s Compensation Act 1923 provides the payment by certain classes of employers of compensation for injury caused to an employee by accident arising out in the course of employment.
  • The Provincial Employees’ Social Security Ordinance 1965 introduces a scheme of social security for providing benefits to certain employees or their dependents in the event of sickness, maternity, employment injury or death.
  • The Employee Cost of Living Act 1973 provides the payment of a cost of living allowance to employees and applies to all “undertakings” in Pakistan.
  • The Workers’ Children 1972 provides the education of employees’ children.

Employment Law framework:

  • Probationary periods: during which the employer or employee may terminate the employment contract without notice. The duration is three months. Probation Period
  • Appointment letter: An employment contract is defined as an agreement between an employer and an employee, whereby the latter commits to working for, and under the management and supervision of, the former in return for a wage. Employment Contracts
  • Appointment letter rules: All employees must have a standard format written employment contract, containing specified minimum information as per labor law rules.
  • Minimum wage: The minimum wage is PKR 32,000. Minimum Wage with effect from July 1, 2023.
  • Working hours: Employees’ normal working time must not generally exceed 48 hours per week of six days of work, and can be maximized to 58 hours of working five days of working.
  • Off-day days and break time: Employees are generally entitled to a one-hour break after six hours’ work and to a weekly rest day, usually on Sundays. Rest Breaks and Rest Periods
  • Annual Leaves: Employees are entitled to paid annual leave after they have completed one year’s service. Annual Leave
  • Maternity Leaves: Pregnant employees are entitled to maternity leave on full pay. An employer must not dismiss a pregnant employee nor send her any notice during her pregnancy or maternity leave. Maternity Leave
  • Sick Leave: Employees are generally entitled to sick leave 121 days in case of ordinary illness and 365 days in case of chronic disease. Sick Leave
  • Salary discrimination: The employer may not discriminate between working men and women with regard to type of work, amount of wage or salary, employment, promotion, professional qualifications, and apparel. Prohibition of Discrimination
  • Rights equality: There is a general, non-specific ban on any discrimination that prejudices equal opportunity employment, equal access to jobs, equal continuity of employment or equal enjoyment of rights, and discrimination between employees with the same work duties. Disability is the only grounds on which discrimination is specifically prohibited. Discrimination
  • Safety Measurement: Employers must provide employees with adequate means of protection against hazards of occupational injury and disease that may occur during work. They also have a range of specific obligations in this area. Employers’ Obligations and Rights
  • Employment Termination: In principle, an employer may dismiss an employee at any time without notice on certain misconduct-related grounds. Other reasons for termination will lead to unlawful termination and full end-of-service gratuity. Termination of Employment
  • Gratuity of PF:
  • Health Insurance:
  • Life Insurance:

Policy Objectives

Improvement in Occupational Safety and Health through legislation, preventive measures, capacity development, and Awareness Campaigns;

  • Rationalization in minimum wages through research and development, improvement in the wage fixation process, and strengthening the role of the Punjab Minimum Wages Board;
  • To work in collaboration with the ILO, international partners, the Federal Government, and the organization of employers and workers to gradually extend the right of freedom of association and to bargain collectively under ILO’s Convention 87 & 98 to the informal sectors and promotion of tri-partyism and social dialogue;
  • Addressing all types of discrimination in remuneration of men and women for equal value of work and in employment resulting on the basis of sex, creed, ethnicity, origin, and religion;
  • To work for “social protection and labor welfare for all” who are eligible to work through removing all the bottlenecks and facilitating the inclusion of all categories of workers under the social protection coverage guaranteed in the Constitution of Pakistan;
  • Special efforts to make the enforcement of labor laws effective through framing subsidiary rules and administrative measures and ensuring that benefits of labor laws are transferred to the workers employed in the informal sector, domestic workers, contract workers, mines workers, home-based
    workers, workers engaged in the agricultural sector, and other categories of vulnerable workers;
  • To ensure decent working conditions for all workers irrespective of the nature of work in compliance with basic International Labour Standards (ILS) on working conditions, working hours, health and safety, rest, holidays and wages;
  • Capacity development of inspection staff and equipping them with modern techniques of inspection, conciliation, social dialogue, and negotiation through regular on-job training; Eliminating child labor, through disengagement, education, social protection, societal collaboration, improvement in law enforcement, integration of the efforts of institutional and stakeholders efforts and direct
  • Addressing bonded labor in a systematic way; through improvement in enforcement of the law, coordination, strengthening DVCs, awareness, and education of the stakeholders, and direct action;
  • Facilitation of workers and employers through the provision of information on demand and supply of jobs in the labor market and research and development under an integrated Labour Market Information System (LMIS);
  • Revisiting existing workers’ health schemes, extending coverage, improvement in service delivery, health insurance for retired workers, and issuance of smart cards;
  • To work for the “Ease of Doing Business Policy” to attract Investment through simplification of rules and procedures under labor laws;
  • To work on simplification and consolidation of labor laws with a focus on bringing these in consonance with the ILO Conventions meaning to improve implementation;
  • Introducing a paradigm shift in the ongoing system of labor inspections by way of incorporating a fully functional computerized transparent system of inspections and reporting where the results shall invariably be shared online.
  • Promoting and facilitating research and development on various aspects of labor, policies, determination of wages, vulnerable employment, child labor, forced labor, labor movement, migration, gender, employment, and labor market trends and role of labor institutions;
  • Improvements in Workers’ Welfare Schemes delivery system and enhancement in the existing number of Workers’ Children Schools and labor Colonies.
  • Focus on skills development for adolescents through concerned departments/ agencies shall remain the predominant objective of this Policy.

Labour Rights in the Constitution

The Constitution of Pakistan contains a range of provisions with regard to labor rights found in Part II: Fundamental Rights and Principles of Policy.

  • Article 11 of the Constitution prohibits all forms of slavery, forced labor, and child labor;
  • Article 17 provides for a fundamental right to exercise the freedom of association and the right to form unions;
  • Article 18 proscribes the right of its citizens to enter upon any lawful profession or occupation and to conduct any lawful trade or business;
  • Article 25 lays down the right to equality before the law and prohibition of discrimination on the grounds of sex alone;
  • Article 37(e) makes provision for securing just and humane conditions of work, ensuring that children and women are not employed in vocations unsuited to their age or sex, and for maternity benefits for women in employment.  

Contract of Employment

While Article 18 of the Constitution affords every citizen with the right to enter upon any lawful profession or occupation, and to conduct any lawful trade or business, the Industrial and Commercial Employment (Standing Orders) Ordinance was enacted in 1968 to address the relationship between employers and employee and the contract of employment. The Ordinance applies to all industrial and commercial establishments throughout the country employing 20 or more workers and provides for security of employment. In the case of workers in other establishments, domestic servants, farm workers, or casual laborers engaged by contractors, their labor contracts are generally unwritten and can be enforced through the courts on the basis of oral evidence or past practice. Every employer in an industrial or commercial establishment is required to issue a formal appointment letter at the time of employment of each worker. The obligatory contents of each labor contract, if written, are confined to the main terms and conditions of employment, namely nature, and tenure of appointment, pay allowances and other fringe benefits admissible, terms and conditions of appointment

Termination of the Contract

The services of a permanent worker cannot be terminated for any reason other than misconduct unless one month’s notice or wages in lieu thereof has been furnished by the employer or by the worker if he or she so chooses to leave his or her service. One month’s wages are calculated on the basis of the average wage earned during the last three months of service. Other categories of workers are not entitled to notice or pay in lieu of notice. All terminations of service in any form must be documented in writing stating the reasons for such an act. If a worker is aggrieved by an order of termination he or she may proceed under Section 46 of the Industrial Relations Ordinance 2002, aimed at regulating the labor-management relations in the country, and bring his or her grievance to the attention of his or her employer, in writing, either him or herself, through the shop steward or through his or her trade union within three months of the occurrence of the cause of action. Forms of termination have been described as removed, retrenched, discharged, or dismissed from service. To safeguard against any colorful exercise of power, victimization, or unfair labor practices, the Labour Courts have been given powers to examine and intervene to find out whether there has been a violation of the principles of natural justice and whether any action by the employer was bonafide or unjust

Working Time and Rest Time

Working hours

Under the Factories Act, of 1934 no adult employee, defined as a worker who has completed his or her 18th year of age, can be required or permitted to work in any establishment in excess of nine hours a day and 48 hours a week. Similarly, no young person, under the age of 18, can be required or permitted to work in excess of seven hours a day and 42 hours a week. The Factories Act, which governs the conditions of work of industrial labor, applies to factories, employing ten or more workers. The Provincial Governments are further empowered to extend the provisions of the Act, to even five workers.

Where the factory is a seasonal one, an adult worker shall work no more than fifty hours in any week and no more than ten hours in any day. A seasonal factory, per section 4 of the Factories Act is that which is exclusively engaged in one or more of the following manufacturing processes, namely, cotton ginning, cotton or cotton jute pressing, the manufacture of coffee, indigo, rubber, sugar, or tea. However, if such an adult worker in a factory is engaged in work, which for technical reasons must be continuous throughout the day, the adult worker may work no more than fifty-six hours in any week.

Section 8 of the West Pakistan Shops and Establishments Ordinance, 1969 likewise, restricts weekly work hours to 48 hours. The Shops and Establishments Ordinance regulates persons employed in shops and commercial establishments, who are neither covered by the Factories Act nor by the Mines Act. The Ordinance is exclusive in the whole of Pakistan except for the Federally Administered Tribal Areas. Section 22-B of the Mines Act, 1923 also fixes weekly hours of work for workers at 48 hours or 8 hours each day, with the limitation of spread-over 12 hours and intervals for rest for one hour every six hours. Section 22-C further limits the spread-over to 8 hours for work done below ground level.

In factories, the periods and hours of work for all classes of workers in each shift must be notified and posted in a prominent place in the principal language of the industrial or commercial establishment. The law further provides that no worker shall be required to work continuously for more than six hours unless he or she has had an interval for rest or meals of at least one hour.

During Ramadan (fasting month), special reduced working hours are observed in manufacturing, commercial, and service organizations.

Paid Leave

As provided in the Factories Act, of 1934, every worker who has completed a period of twelve months of continuous service in a factory shall be allowed, during the subsequent period of twelve months, holidays for a period of fourteen consecutive days. If a worker fails in any one such period of twelve months to take the whole of the holidays allowed to him or her, any holidays not taken by him or her shall be added to the holidays allotted to him or her in the succeeding period of twelve months.

A worker shall be deemed to have completed a period of twelve months of continuous service in a factory notwithstanding any interruption in service during those twelve months brought about by sickness, accident, or authorized leave not exceeding ninety days in the aggregate for all three, or by a lock-out, or by a strike which is not an illegal strike, or by intermittent periods of involuntary unemployment not exceeding thirty days in the aggregate; and authorized leave shall be deemed not to include any weekly holiday allowed under section 35 which occurs at beginning or end of an interruption brought about by the leave.  

Maternity Leave and Maternity Protection

While Article 37 of the Constitution makes reference to maternity benefits for women in employment, there are two central enactments, one federal and the other provincial providing maternity benefits to women employed in certain occupations. The Maternity Benefit Ordinance, of 1958 stipulates that upon the completion of four months of employment or a qualifying period, a worker may have up to six weeks of prenatal and postnatal leave during which she is paid a salary drawn on the basis of her last pay. The Ordinance is applicable to all industrial and commercial establishments employing women excluding the tribal areas. It also places restrictions on the dismissal of the woman during her maternity leave. Similarly, the Mines Maternity Benefit Act, of 1941 is applicable to women employed in the mines in Pakistan.  

Other Leave Entitlements

In addition to the 14 days of annual leave with pay, the Factories Act, of 1934 provides that every worker is entitled to 10 days of casual leave with full pay and further 16 days of sick or medical leave on half pay. Casual leave is granted upon contingent situations such as sudden illness or any other urgent purpose. It should be obtained on the prior application unless the urgency prevents the making of such an application. As a customary practice, causal leave is approved in most cases. Sick leave, on the other hand, may be availed of on support of a medical certificate. Management should not refuse the leave asked for if it is supported by a medical certificate.

In addition to the leave entitlements, workers enjoy festival holidays as declared by the Federal Government. The Provincial Government under section 49 of the Factories Act, 1934, states all festival holidays, approximately 13 or as further declared, in the Official Gazette. Additionally, every worker is entitled to enjoy all such holidays with pay on all days declared and notified by the Provincial Government. If however, a worker is required to work on any festival holiday, one day’s additional compensatory holiday with full pay and a substitute holiday shall be awarded.

Under agreements made with the Collective Bargaining Agent, employees who proceed on pilgrimage i.e., Hajj, Umra, Ziarat, are granted special leave up to 60 days.  

Minimum Age and Protection of Young Workers

Article 11(3) of Pakistan’s Constitution expressly prohibits the employment of children below the age of fourteen years in any factory, mine, or other hazardous employment. In addition, the Constitution makes it a Principle of Policy of the State of Pakistan to protect the children, remove illiteracy, and provide free and compulsory education within the minimum possible period and to make provision for securing just and human conditions of work, ensuring that children and women are not employed in vocations unsuited to their age or sex.

The Factories Act, of 1934 allows for the employment of children between the ages of 14 and 18 years provided that each adolescent obtains a certificate of fitness from a certifying surgeon. A certifying surgeon, per section 52 of the Act, shall on the application of any child or adolescent who wishes to work in a factory, or, of the parent or guardian of such person, or of the factory in which such person wishes to work, examine such person and ascertain his or her fitness for such work.

The Act further restricts the employment of a child in a factory to five hours in a day. The hours of work of a child should thus be arranged in such a way that they are not spread over more than seven-and-a-half hours in any day. In addition, no child or adolescent is allowed to work in a factory between 7 p.m. and 6 a.m. The Provincial Government may, by notification in the Official Gazette in respect of any class or classes of factories and for the whole year or any part of it, vary these limits to any span of thirteen hours between 5 a.m. and 7.30 p.m. Moreover, no child is permitted to work in any factory on any day on in which he or she has already been working in another factory.

Factories are further required to display and correctly maintain in every factory a Notice of Periods for Work for Children, indicating clearly the periods within which children may be required to work. The manager of every factory in which children are employed is compelled to maintain a Register of Child Workers identifying the name and age of each child worker in the factory, the nature of his or her work, the group, if any, in which he or she is included, where his or her group works on shifts, the relay to which he or she is allotted, the number of his or her certificate of fitness granted under section 52, and any such other particulars as may be prescribed.

The provisions of the Factories Act, of 1934 are cited in addition to, and not in derogation of the provisions of the Employment of Children Rules, 1995. The Employment of Children Rules extends to the whole of Pakistan with the exception of the State of Azad Jammu and Kashmir and delimits finite labor conditions afforded for the protection of minors. Rule 6 insists on cleanliness in the place of work. No rubbish, filth or debris shall be allowed to accumulate or to remain in any part of the establishment and proper arrangements shall be made for maintaining in a reasonably clean and drained condition for the workers of the establishment. Rule 7 further calls for proper ventilation in workplaces where injurious, poisonous or asphyxiating gases, dust or other impurities are evolved from any process carried on, in such establishment. As long as workers are present in an establishment, the latrines, passages, stairs, hoists, ground, and all other parts of the establishment in so far as the entrance of the said places is not closed, must be lighted in such manner that safety is fully secured. In addition, in every establishment, an arrangement of drinking water for child and adolescent workers is to be provided free of charge. All shafts, couplings, collars, clutches, toothed wheels, pulleys, driving straps, chains projecting set screws, keys, nuts, and belts on revolving parts, employed in the establishment, shall be securely fenced if in motion and within reach of a child worker and further may not be operated by a child worker.

Under the Employment of Children Rules, anyone who employs a child or permits a child to work in contravention of the Constitution is punishable by imprisonment for a term extending up to one year or may be fined up to Rs. 20,000 or subject to both. Repetition of the offense is punishable by imprisonment for a term extending up to two years and shall not be less than six months.  


Article 38 of the Constitution imparts the State’s obligations aimed at achieving equality in the form of securing the well-being of the people, irrespective of sex, caste, creed, or race, by raising their standard of living, by preventing the concentration of wealth and means of production and distribution in the hands of a few to the detriment of general interest and by ensuring equitable adjustment of rights between employers and employees, and landlords and tenants. All citizens are bestowed, within the available resources of the country, facilities for work and adequate livelihood with reasonable rest and leisure and the basic necessities of life, such as food, clothing, housing, education, and medical relief, for all such citizens, irrespective of their sex, caste, creed or race, as are permanently or temporarily unable to earn their livelihood on account of infirmity, sickness or unemployment.  

Pay Issues

Wages are construed as the total remuneration payable to an employed person on the fulfillment of his or her contract of employment. It includes bonuses and any sum payable for want of a proper notice of discharge, but excludes the value of accommodations i.e., supply of light, water, medical attendance or other amenities excluded by the Provincial Government; the employer’s contribution to a pension or provident fund, traveling allowance or concession or other special expenses entailed by the nature of his or her employment; and any gratuity payable on discharge.

The Payment of Wages Act, 1936, regulates the payment of wages to certain classes of industrial workers. It applies to those workers whose monthly wages do not exceed Rs. 3,000 (51.68 US$) and are employed in factories, railways, plantations, workshops, and establishments of contractors. The main object is to regulate the payment of wages to certain classes of persons employed in industry. The provisions of the Act can, however, be extended to other classes of workers by the Provincial Governments after giving three months’ notice to the employers of their intention to do so. The Act stipulates that wages to workers employed in factories and on railways are to be paid within seven days of completion of the wages period if the number of workers employed therein is less than 1,000. In other cases, the time limit for payment of wages to the workers is 10 days. No deduction can be made from the wages of the workers except as specified in the Act, such as for fines, breach of contract, and the cost of damage or loss incurred to the factory in any way other than an accident.

The employer is responsible for the payment of all wages required to be paid to persons employed by him or her. Similarly, any contractor employing persons in an industry is responsible for the payment of wages to the persons he or she employs. The persons responsible for the payment of wages must fix wage periods not exceeding one month. Wages should be paid on a working day within seven days of the end of the wage period, or within ten days if 1,000 or more persons are employed. The wages of a person discharged should be paid not later than the second working day after his or her discharge.  

Workers’ Representation in the Enterprise

Until the adoption, on 29 October 2002, of the Industrial Relations Ordinance, 2002  (IRO 2002), which repealed the Industrial Relations Ordinance, 1969, Pakistan had a three-pronged system of participation in management (i.e., the Works Council, the Management Committee and the Joint Management Board), independent of each other and each having its own sphere of activities.

The new text simplifies the system, introducing a single body in place of the three previous ones: the Joint Works Council (Article 24 of the IRO 2002). A Joint Works Council must be set up in any establishment employing fifty persons or more. It consists of no more than ten members, forty percent of which are workers’ representatives. In the previous system, the Management Committee and the Works Council were composed of an equal number of representatives of the employer and workers, whereas the Joint Management Board had a workers’ participation of 30 percent. The Convener of the Joint Works Council is from the management.

The Joint Works Council deals with matters, that were of the competency of the earlier Joint Management Board, such as the improvement in production, productivity, and efficiency, provision of minimum facilities for those of the workers employed through contractors who are not covered by the laws relating to the welfare of workers. It has also taken up tasks of the previous Works Council, i.e. promoting settlement of differences through bilateral negotiations, promoting conditions of safety and health for the workers, encouraging vocational training within the establishment, taking measures for facilitating good and harmonious working conditions in the establishment, provision of educational facilities for children of workers.  

Trade Union and Employers Association Regulation

Freedom of association

The right to association is guaranteed by Article 17 of the Pakistani Constitution imparting on every citizen the right to form associations or unions, subject to any reasonable restrictions imposed by law in the interest of sovereignty or integrity of Pakistan, public order or morality. Under Article 3 of the IRO 2002, workers as well as employers in any establishment or industry have the right to establish and to join associations of their own choosing, subject to respect of the law. Both workers’ and employers’ organizations have the right to establish and join federations and confederations and any such organization, federation or confederation shall have the right to affiliate with international organizations and confederations of workers’ and employers’ organizations.

Registration of trade unions

Registration of a trade union is to be made under the Industrial Relations Ordinance. Workers’ trade unions are registered with the Registrar of Trade Unions in the Province, and if the industry or establishment is nationwide with the National Industrial Relations Commission, after fulfilling a number of requirements, listed in Article 6 of the IRO 2002. Through its registration, the trade union obtains certain benefits: registration confers a legal existence as an entity separate from its members. Trade unions in Pakistan generally function on a plant-wide basis, with their membership contingent on the size of the industry/trade to which they belong. Once established, the trade unions and employers’ associations have the right to draw up their constitutions and rules, to elect their representatives in full freedom, to organize their administration and activities, and to formulate their programs.  

Collective Bargaining and Agreements

To determine the representative character of the trade union in industrial disputes and to obtain representation on committees, boards and commissions, the Industrial Relations Ordinance makes provision for the appointment of a Collective Bargaining Agent (CBA).

The CBA is a registered trade union elected by secret ballot. The CBA is entitled to undertake collective bargaining with the employer or employers on matters connected with employment, non-employment, the terms of employment or any right guaranteed or secured to it or any worker by or under any law, or any award or settlement.

Collective agreements are thus formulated by the CBA. The agreements may contain matters such as the facilities in the establishment for trade union activities and procedures for settling collective disputes including grievances and disciplinary procedures. Substantive provisions settle terms and conditions of employment, wages and salaries, hours of work, holiday entitlement and pay, level of performance, job grading, lay-offs, retrenchment, sick pay, pension and retirement schemes. Such agreements once duly executed by both parties become the source of law. The agreements should invariably be in writing and should be drafted with care, for they are meant to settle disputes rather than raise them.

In addition to statutory benefits under the labour laws, the adjustment of rights takes place through collective bargaining including adjudication in Labour Courts. The IRO 2002 has changed the appellate procedure on the provincial level, which used to be brought before a Labour Appellate Tribunal. This institution was abolished by the IRO 2002. Appeals of Labour Court decisions now lie directly with provincial High Courts. Office bearers of trade unions are given protection against arbitrary transfer, discharge and dismissal. Any ill-intentioned action on the part of the employer against an office-bearer of a trade union or against a worker for trade union activities is construed as an unfair practice and the National Industrial Relations Commission is entrusted with the task of preventing such offenses. Security of service is ensured to the workers. Similarly, unfair labor practices on the part of workers and trade unions is elaborated and incorporated in law.  

Collective Labour Disputes

Commencement of a dispute

Under the IRO 2002, if an employer or a Collective Bargaining Agent finds that an industrial dispute has arisen or is likely to arise, they may communicate their views in writing to the other party. Upon receipt of the communication, the other party has fifteen days (or more if agreed) to try and settle the dispute by bilateral negotiations.


If the parties do not manage to reach a settlement, the employer or the CBA may, within fifteen further days, serve a notice of conciliation on the other party, with a copy to the Conciliator and to the Labour Court.

If the dispute is settled before the Conciliator, or a tripartite Board of Conciliators, a report is sent to the Provincial or Federal Government, with the memorandum of settlement.


If the conciliation fails, the Conciliator tries to persuade the parties to refer their dispute to an arbitrator. If they agree, the parties make a join request in writing to the arbitrator they have agreed upon.

The arbitrator gives his or her award within a period of 30 days or a period agreed upon by the parties. The award of the arbitrator is final and valid for a period not exceeding two years. A copy of the award is sent to the provincial or Federal Government, for publication in the official Gazette.  

Strikes and Lock-outs

Proceedings of strikes and lock-outs

If dispute settlement proceedings before the Conciliator fail and no settlement is reached, and if the parties have not agreed to refer their dispute to an arbitrator, the workers retain the right under section 31 of the Industrial Relations Ordinance 2002, to go on strike providing due notice to their employer within seven days, and the employer has the right declare a lock-out after the delay of notice of conciliation has expired. The party raising a dispute retains the option, at any time, either before or after the commencement of a strike or lockout, to make an application to the Labour Court for adjudication of the dispute.

Where a strike or lock-out lasts for more than fifteen days, if it relates to a dispute which the Commission is competent to adjudicate and determine, the Federal and/or the Provincial Government may, by order in writing, prohibit the strike or lock-out at any time before the expiry of thirty days, provided that the continuance of such a strike or lock-out causes serious hardship to the community or is prejudicial to the national interest. In such case the Federal Government or the Provincial Government shall forthwith refer the dispute to the Commission or the Labour Court. After hearing both parties, the Commission, or the Labour Court shall make such award as it deems fit, as expeditiously as possible but not exceeding thirty days from the date on which the dispute was referred to it.

Under section 32 of the IRO 2002, if a strike or lockout occurs within the public utility services sector the Federal Government and the Provincial Government may, by order in writing, also prohibit its occurrence at any time before or after the commencement of the strike or lockout.

No party to an industrial dispute may go on strike or declare a lockout during the course of conciliation or arbitration proceedings, or while proceedings are pending before the Labour Court.

In addition, the National Industrial Relations Commission (the Commission), adjudicates and determines industrial disputes to which an industry-wise trade union or federation of such trade unions is a party , as well as disputes which are of national importance.

The Commission also deals with cases of unfair labor practices.

Illegal strikes and lock-outs

A strike or lockout is declared illegal if it is commenced without giving notice of conciliation to the other party of the dispute, or if it is commenced or continued in a manner other than that provided by the IRO 2002 or in contravention of this text.

In case of an illegal strike or lockout, an Officer from the Labour Department may make a report to the Labour Court, and require the employer or CBA or the registered trade union concerned, to appear before the Court. The Court may, within 10 days, order the strike or lockout to be stopped.

In case of contravention of the order of the Court by the employer, and if the Court is satisfied that the pursuance of the lock-out is causing serious hardship to the community or is prejudicial to the national interest, it may order the attachment of the factory and the appointment of an official receiver, who will exercise the powers of management and may do all such acts as are necessary for conducting business.

In case of contravention of the order of the Court by the workers, the Labour Court may pass orders of dismissal against the striking workers, or cancel the registration of the trade union that committed such contravention.  

Settlement of Individual Labour Disputes

Pursuant to Article 46 of the IRO 2002, a worker may bring his or her grievance in respect of any right guaranteed or secured by or under any law or any award or settlement to the notice of the employer in writing, either him or herself or through the shop steward or Collective Bargaining Agent, within one month of the day on which cause of such grievance arises. The IRO 2002 reduces the delay from three months to one month. Where a worker brings his or her grievance to the notice of the employer, the employer must within fifteen days of the grievance, communicate his or her decision in writing to the worker.

If the employer fails to communicate a decision within the specified period or if the worker is dissatisfied with such decision, the worker or shop steward may take the matter to the Labour Court within a period of two months.  

Labour Courts

Section 33 of the Industrial Relations Ordinance, 2002 permits any CBA or any employer to apply to the Labour Court for the enforcement of any right guaranteed or secured by law or any award or settlement. The Provincial Government derives its authority to establish as many Labour Courts as it considers necessary under section 44 of the Ordinance. Each Labour Court is subject to jurisdictional limitations derived from its geographical parameters or with respect to the industry or the classes of cases allocated. Each Labour Court consists of one Presiding Officer appointed by the Provincial Government.

The Labour Court adjudicates industrial disputes which have been referred to or brought before it; inquires into or adjudicates any matter relating to the implementation or violation of a settlement which is referred to it by the Provincial Government; tries offenses under the Industrial Relations Ordinance; and exercises and performs such other powers and functions conferred upon or assigned to it. NIRC – National Industrial Relations Commission is a court working on employment issues.

Related documents

  • Government of Pakistan Labor Law 2010.
  • Punjab labor law 2018.
  • KKP labor law 2018
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