Contract for Services (Freelance) (Pakistan)
CONTRACT FOR SERVICES (FREELANCE)
Governed by the Contract Act 1872 | Copyright Ordinance 1962 | Income Tax Ordinance 2001
This Contract for Services is entered into on [Agreement Date] at [City], Pakistan, between:
CLIENT:
[Client Name], address: [Client Address], NTN: [Client NTN].
FREELANCER (INDEPENDENT CONTRACTOR):
[Freelancer Name], CNIC No. [Freelancer CNIC], NTN: [Freelancer NTN], address: [Freelancer Address], profession: [Freelancer Profession].
1. INDEPENDENT CONTRACTOR STATUS
The Freelancer is engaged as an independent contractor and not as an employee of the Client. The Freelancer retains full control over the manner, method, and timing of performing the services; uses their own tools and workspace; is free to accept work from other clients; and is solely responsible for paying their own income tax, social security, and EOBI contributions. No employer-employee relationship is created under the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968 or any other employment statute.
2. SCOPE OF SERVICES
Engagement Type: [Engagement Type]
[Services Description]
Start Date: [Start Date]
Completion / Contract End Date: [End Date]
3. FEE AND PAYMENT
Fee: [Fee Amount]
Payment Schedule: [Payment Schedule]
Tax Treatment: [Withholding Tax]
4. INTELLECTUAL PROPERTY
[IP Ownership]
5. CONFIDENTIALITY
The Freelancer agrees not to disclose the Client's confidential information — business strategy, client data, pricing, proprietary processes — to any third party. Confidentiality obligation: [Confidentiality Term].
6. NON-SOLICITATION
The Freelancer agrees not to directly solicit the Client's employees or key customers during this engagement and for [Non Solicitation Period] after contract end. This is a non-solicitation provision, not a general restraint of trade, and is enforceable under Pakistani law.
7. TERMINATION
Either party may terminate this Contract by giving [Notice Period] to the other party. Payment is due for all services satisfactorily delivered up to the termination date. The Client may terminate immediately for material breach by the Freelancer (failure to deliver, breach of confidentiality, or gross misconduct) after giving written notice and 7 days to cure.
8. GENERAL PROVISIONS
Governing Law: The laws of Pakistan. Disputes: negotiation, then arbitration under the Arbitration Act 1940 at [City]. Entire Agreement: this Contract supersedes all prior agreements. Amendments: in writing, signed by both parties.
Client
________________
Signature
Freelancer (Independent Contractor)
________________
Signature
What Is a Contract for Services (Freelance) (Pakistan)?
A Contract for Services (Freelance) in Pakistan sets out the mutual obligations the parties accept and the terms that govern their dealings.
The distinction between a Contract for Services (freelance or independent contractor) and a Contract of Service (employment) is critically important under Pakistani labour law. A Contract of Service creates an employer-employee relationship, subjecting the employer to obligations under the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968, the Factories Act 1934, the Workmen's Compensation Act 1923, the Employees' Old-Age Benefits Act 1976 (EOBI), the West Pakistan Employees' Social Security Ordinance 1965, and the minimum wage notifications issued by provincial governments. A Contract for Services, by contrast, creates an independent contractor relationship — the client is not subject to these employment law obligations, and the freelancer is responsible for their own taxes, insurance, and social security contributions.
Pakistan's courts — including the Supreme Court of Pakistan and the High Courts — apply a multi-factor test to determine whether a relationship is one of employment or independent contracting. Key factors include: whether the client controls how the work is done (control test); whether the freelancer is integrated into the client's organisation (integration test); whether the freelancer uses their own tools, equipment, and workspace; whether the freelancer can work for multiple clients simultaneously; and whether the freelancer bears the financial risk of profit or loss from the engagement. A well-drafted Contract for Services (Freelance) that clearly establishes independence on all these factors reduces the risk of the relationship being reclassified as employment by the National Industrial Relations Commission (NIRC), provincial Labour Courts, or tax authorities.
Income tax treatment of freelance income in Pakistan is governed by the Income Tax Ordinance 2001 (ITO 2001). Freelance income is generally treated as business income (from a profession or vocation) under Section 18 of the ITO 2001, taxable at individual income tax rates or, where the freelancer is a registered company or AOP (Association of Persons), at the applicable corporate rates. Where a company or firm pays a freelancer for services, Section 153 of the ITO 2001 requires the payer to withhold tax at source — at the rate of 7% for filers and 14% for non-filers as of tax year 2024-2025. Freelancers registered with the Federal Board of Revenue (FBR) and appearing on the Active Taxpayer List (ATL) benefit from lower withholding rates.
Pakistan's freelance economy has grown substantially, with Pakistani freelancers earning significant foreign exchange income through platforms such as Fiverr, Upwork, Freelancer.com, Toptal, and direct client arrangements. The State Bank of Pakistan (SBP) has efficient foreign exchange remittance procedures for freelance income under the Freelancer Account scheme, allowing freelancers to receive foreign currency payments directly. The Pakistan Software Export Board (PSEB) — under the Ministry of Information Technology and Telecommunication — offers freelancer registration and support services, and PSEB-registered freelancers benefit from certain regulatory facilitations.
When Do You Need a Contract for Services (Freelance) (Pakistan)?
A Contract for Services (Freelance) in Pakistan is required whenever a business, organisation, or individual engages a freelance professional to provide services on a project or retainer basis, to establish clear expectations, protect both parties' rights, and document the independent contractor relationship.
A Contract for Services is needed when a technology company engages a freelance software developer, web developer, UI/UX designer, or mobile app developer for a specific project — building a website, developing an application, or providing IT consultancy. The contract specifies the technical deliverables, project milestones, acceptance criteria, fee, and intellectual property ownership of the software code developed under the Copyright Ordinance 1962.
A Contract for Services is required when a business engages a freelance accountant, chartered accountant (CA) registered with the Institute of Chartered Accountants of Pakistan (ICAP), tax consultant, or financial advisor to provide services on a project or monthly retainer basis — preparing financial statements, filing income tax returns with FBR, or conducting internal audits — as an alternative to employing a full-time finance professional.
A Contract for Services is needed when a media company, advertising agency, or publisher engages a freelance journalist, copywriter, graphic designer, photographer, or video editor to contribute content or creative work. The contract must address copyright ownership under the Copyright Ordinance 1962 and the terms of content usage.
A Contract for Services is required when a construction company, engineering firm, or real estate developer engages a freelance architect registered with the Pakistan Council of Architects and Town Planners (PCATP) or a consulting engineer registered with the Pakistan Engineering Council (PEC) for design or supervisory services on a specific project.
A Contract for Services is needed when a law firm or legal department engages a freelance lawyer, legal researcher, or paralegal for specific legal research, document drafting, or case support — clearly establishing the engagement as project-based professional services rather than employment, with specific deliverables and a defined fee.
A Contract for Services is required when an educational institution, training company, or corporate HR department engages a freelance trainer, coach, or subject matter expert to deliver training sessions, workshops, or online courses — specifying the training content, delivery format, dates, venue, and fee.
What to Include in Your Contract for Services (Freelance) (Pakistan)
A thorough Contract for Services (Freelance) in Pakistan under the Contract Act 1872 must contain the following essential elements to establish a clear independent contractor relationship and protect both the client and the freelancer.
Party Identification: Full legal name, CNIC number (for individuals) or SECP registration number (for companies/firms), address, and NTN (National Tax Number from FBR) of both the client and the freelancer. The NTN is needed for withholding tax purposes under Section 153 of the Income Tax Ordinance 2001.
Independent Contractor Status: An express clause stating that the freelancer is engaged as an independent contractor and not as an employee of the client — that the freelancer retains control over the manner, method, and timing of performing the services; uses their own tools, equipment, and workspace; is free to accept work from other clients; and is solely responsible for paying their own income tax, social security, and EOBI contributions. This clause should also state that the client is not obligated to withhold employment taxes (as distinct from the Section 153 ITO 2001 withholding tax on services).
Scope of Services: A precise description of the services the freelancer agrees to provide — the nature of the work, the specific deliverables (reports, code, designs, articles, training sessions), the quality standards required, and any tools, platforms, or methodologies specified by the client.
Project Timeline and Milestones: The commencement date, key milestone dates with associated deliverables, and the final completion date. For ongoing retainer engagements, the retainer period, monthly deliverables, and review frequency should be specified.
Fee and Payment Schedule: The agreed fee in Pakistani Rupees — whether a fixed project fee, an hourly rate, or a monthly retainer — and the payment schedule (advance on signing, milestone-based payments, or monthly payment). The agreement must state whether the fee is inclusive or exclusive of the Section 153 ITO 2001 withholding tax that the client is obligated to deduct at source.
Intellectual Property Ownership: Where the freelancer creates intellectual property — software code, written content, designs, photographs, reports — the agreement must specify ownership under the Copyright Ordinance 1962 and the Patents Ordinance 2000. For client-commissioned work, an express written assignment of copyright to the client under Section 57 of the Copyright Ordinance 1962 is required. Where the freelancer uses pre-existing materials (background IP), the agreement must specify that the client receives a licence to use the pre-existing IP as embedded in the deliverables, but ownership remains with the freelancer.
Confidentiality: An obligation on the freelancer not to disclose or use the client's confidential information — business strategy, client lists, proprietary processes, pricing — received during the engagement, both during and after the engagement. The confidentiality obligation should survive termination of the contract.
Non-Solicitation: A clause prohibiting the freelancer from directly soliciting the client's employees or key customers during the engagement and for a specified period after — typically six to twelve months. An express non-compete clause (restricting the freelancer from working for direct competitors) must be reasonable in scope, geography, and duration to be enforceable under Section 27 of the Contract Act 1872, which voids agreements in restraint of trade except in limited circumstances.
Termination: The notice period required for either party to terminate the contract without cause (typically two to four weeks), the procedure for termination with cause (material breach, persistent underperformance), and the consequences of termination — payment for work completed, return of client materials, and surviving obligations (confidentiality, IP assignment).
Dispute Resolution: A clause providing for negotiation first, followed by mediation or arbitration under the Arbitration Act 1940 before the relevant city's arbitral forum, as an alternative to litigation in the Civil Court.
Forms-legal.com provides this Contract for Services (Freelance) Pakistan template for businesses, startups, and freelancers operating in Pakistan's growing independent contractor economy. The template reflects requirements under the Contract Act 1872, the Income Tax Ordinance 2001, the Copyright Ordinance 1962, the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968, and the Employees' Old-Age Benefits Act 1976. Complex engagements — particularly those involving significant IP transfer or sector-specific regulatory compliance — should be reviewed by an advocate enrolled at a provincial Bar Council.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Contract for Services (Freelance) (Pakistan) (Pakistan) [Legal document template]. Forms Legal. https://forms-legal.com/pakistan/business/contracts/contract-for-services-freelance-pakistan
"Contract for Services (Freelance) (Pakistan) (Pakistan)." Forms Legal, 2026, https://forms-legal.com/pakistan/business/contracts/contract-for-services-freelance-pakistan.
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howpublished = {\url{https://forms-legal.com/pakistan/business/contracts/contract-for-services-freelance-pakistan}},
note = {Free legal document template}
}Also available for these jurisdictions:
Frequently Asked Questions
Under Pakistani labour law, the distinction between a freelancer (independent contractor) and an employee is determined by the substance of the working relationship rather than the label attached to it. Courts and labour authorities — including the National Industrial Relations Commission (NIRC) and provincial Labour Courts — apply a multi-factor test. Key factors indicating an employment relationship include: the client exercises control over how and when the work is done (control test); the worker is integrated into the client's organisational structure; the client provides tools, equipment, and workspace; the worker works exclusively for one client; and the worker receives a fixed periodic salary regardless of project completion. Key factors indicating an independent contractor relationship include: the contractor controls the manner of performance; the contractor uses their own tools and workspace; the contractor works for multiple clients; the contractor bears financial risk of the engagement; and the relationship is project-based with defined deliverables. Where a court finds that a self-described 'freelancer' is in substance an employee, the employer becomes liable for all employment obligations under the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968, the Workmen's Compensation Act 1923, the Employees' Old-Age Benefits Act 1976 (EOBI), the West Pakistan Employees' Social Security Ordinance 1965, and minimum wage requirements.
Pakistani freelancers earning income from domestic clients (Pakistani companies or individuals) are subject to income tax under the Income Tax Ordinance 2001 (ITO 2001). Freelance income is generally classified as business income under Section 18 of the ITO 2001. Individual freelancers pay income tax at the rates applicable to individual taxpayers under the First Schedule of the ITO 2001 — ranging from 0% on income up to PKR 600,000 to 35% on income above PKR 6 million for tax year 2024-2025. When a company or registered firm pays a freelancer for services, it must withhold tax at source under Section 153 of the ITO 2001 at 7% (for filers on the FBR Active Taxpayer List) or 14% (for non-filers). The withheld amount is a tax credit that the freelancer claims in their annual tax return. Freelancers earning income from foreign clients — via Upwork, Fiverr, Freelancer.com, or direct arrangements — must also declare this foreign income in their FBR annual return. The SBP's Freelancer Account scheme facilitates receipt of foreign currency. PSEB-registered freelancers may benefit from certain facilitations. Freelancers should register with FBR, obtain an NTN from the IRIS portal (iris.fbr.gov.pk), and file annual income tax returns by the statutory deadline (September 30 each year for individuals) to remain on the Active Taxpayer List and benefit from lower withholding rates.
Non-compete clauses in freelance contracts in Pakistan are enforceable only within narrow limits under Section 27 of the Contract Act 1872, which provides that every agreement by which any person is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void. Pakistani courts have interpreted Section 27 of the Contract Act 1872 broadly — most broadly worded non-compete clauses restricting a freelancer from working in an entire industry or with any competitor are void as agreements in restraint of trade. Enforceable exceptions under Section 27 of the Contract Act 1872 include: agreements ancillary to a sale of business (where the seller agrees not to compete with the buyer); and partnership agreements where a partner agrees not to compete with the firm during the partnership. For freelance contracts, Pakistani courts are unlikely to enforce a sweeping non-compete that prohibits the freelancer from working in their profession at all. However, courts do enforce narrower restraints — non-solicitation clauses (preventing the freelancer from approaching the client's specific customers or employees) and client-specific exclusivity clauses (preventing the freelancer from simultaneously working for a named direct competitor during the term of the engagement) are generally upheld as reasonable commercial restrictions rather than trade restraints.
If a freelancer delivers work that does not meet the specifications or quality standards agreed in the Contract for Services in Pakistan, the client has several remedies under the Contract Act 1872. First, the client can reject the deliverable and require the freelancer to rework or revise it at the freelancer's own cost, within the revision provisions of the contract. Second, where the substandard delivery constitutes a breach of contract — because the work fails to meet clearly defined acceptance criteria — the client can withhold payment for the deficient deliverable under Section 51 of the Contract Act 1872 (reciprocal obligations), until the freelancer performs to the required standard. Third, the client can claim damages under Section 73 of the Contract Act 1872 for the loss caused by the deficient work — such as the cost of engaging a replacement contractor to rework the deliverable, revenue lost because of a delayed project, or reputational damage from publishing substandard content. Fourth, where the deficiency is so fundamental as to go to the root of the contract, the client can terminate the agreement and claim a refund of any advance paid. To claim these remedies effectively, the contract must contain clear, objective quality standards and acceptance criteria — vague requirements such as 'high quality' or 'professional standard' are difficult to enforce.
A Pakistani freelancer invoicing a client correctly should include the following information on each invoice. Freelancer's details: full name or business name, address, NTN (National Tax Number from FBR), and CNIC number for individual freelancers. Client's details: company or individual name, address, and NTN. Invoice number and date: a unique sequential invoice number and the invoice date. Description of services: a clear description of the services provided — the project name, deliverables completed, period covered (for retainer invoices), and any milestones achieved. Fee amount: the total fee in Pakistani Rupees for the services described. If the freelancer is registered for sales tax under the Sales Tax Act 1990 or is providing IT services subject to provincial sales tax (Punjab Revenue Authority or Sindh Revenue Board), the applicable sales tax must be separately stated on the invoice. Withholding tax note: where the client is a company or registered firm obligated to withhold Section 153 ITO 2001 tax at source, the invoice should note the applicable withholding rate (7% for filers) and the net amount payable after withholding. Payment details: bank account number, bank name, IBAN, and any reference codes required for payment. Freelancers who regularly invoice foreign clients in foreign currency should maintain a separate Foreign Currency Account or use the SBP Freelancer Account to receive payments and properly document the foreign income for FBR purposes.
Yes. Under the Contract Act 1872, oral contracts for the provision of services are generally enforceable in Pakistan — there is no general statutory requirement that a contract for services must be in writing to be valid. An oral agreement between a client and a freelancer with clear terms — agreed scope, fee, and timeline — is a valid and enforceable contract under Section 2(h) of the Contract Act 1872. However, proving the existence and terms of an oral contract in Pakistani courts is extremely difficult compared to proving a written contract. The Qanun-e-Shahadat Order 1984 governs evidence in Pakistani courts — under Article 73, oral evidence of a written document's contents is generally inadmissible, and where the parties have reduced their agreement to writing, oral evidence cannot be used to contradict the written terms (the parol evidence rule under Article 101-103). For oral contracts, the aggrieved party must prove the agreement's existence and its terms entirely through oral testimony, which courts weigh critically and which is subject to the witness requirements of the Qanun-e-Shahadat Order 1984. Email chains, WhatsApp conversations, and other electronic communications are admissible as electronic documents under the Electronic Transactions Ordinance 2002 and can help establish the terms of an oral or informal agreement.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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