Fixed-Term Employment Contract (Pakistan)
FIXED-TERM EMPLOYMENT CONTRACT
Under the Industrial and Commercial Employment (Standing Orders) Ordinance 1968
[Province] Labour Laws | Employees' Old-Age Benefits Act 1976
This Fixed-Term Employment Contract ("Contract") is entered into on [Contract Date] between:
EMPLOYER: [Employer Name], NTN: [Employer NTN], EOBI Reg. No.: [EOBI Number], having its registered office at [Employer Address] ("Employer"); AND
EMPLOYEE: [Employee Name], CNIC No.: [Employee CNIC], resident of [Employee Address] ("Employee").
1. ENGAGEMENT AND CONTRACT TERM
1.1 The Employer hereby engages the Employee as [Employee Designation] in the [Department] Department on a fixed-term basis commencing on [Contract Start Date] and ending automatically on [Contract End Date] without any requirement for notice from either party.
1.2 Project / Assignment: [Project Description]
1.3 This Contract shall not be construed as creating permanent employment. Renewal, if any, shall be by separate written agreement signed by both parties before the expiry of this Contract.
1.4 Place of Work: [Employer Address] and such other locations as the Employer may reasonably require.
2. REMUNERATION AND BENEFITS
2.1 Gross Monthly Salary: [Gross Monthly Salary], payable monthly in arrears by bank transfer to the Employee's designated account with a scheduled bank.
2.2 Salary Breakdown: [Salary Breakdown]
2.3 Working Hours: [Working Hours]. Overtime, if required, shall be compensated at rates prescribed under applicable provincial labour law.
2.4 Leave Entitlement: [Leave Entitlement]
3. STATUTORY DEDUCTIONS AND CONTRIBUTIONS
3.1 EOBI: The Employer shall contribute 5% of the Employee's wages to the Employees' Old-Age Benefits Institution (EOBI) under the Employees' Old-Age Benefits Act 1976. The Employee's contribution of 1% shall be deducted monthly from salary.
3.2 Social Security: The Employer shall register the Employee with the relevant provincial Social Security Institution (PESSI / SESSI / KPKESSI / BESSI as applicable for [Province]) and make the required employer contributions. The Employee's contribution shall be deducted from salary.
3.3 Income Tax: The Employer shall deduct income tax at source from the Employee's monthly salary under Section 149 of the Income Tax Ordinance 2001, calculated on the Employee's projected annual taxable income, and remit it to FBR by the 15th of the following month.
4. EARLY TERMINATION
4.1 By Employer for Cause: The Employer may terminate this Contract before [Contract End Date] for misconduct or poor performance after following the disciplinary procedure prescribed by the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 — show-cause notice, opportunity to respond, inquiry, and reasoned order.
4.2 By Employer without Cause: The Employer may terminate this Contract before [Contract End Date] without cause by giving [Notice Period] written notice to the Employee, or payment of salary in lieu of notice.
4.3 By Employee: The Employee may resign before [Contract End Date] by giving [Notice Period] written notice to the Employer.
5. GOVERNING LAW
This Contract shall be governed by the laws of Pakistan applicable in [Province], including the Industrial and Commercial Employment (Standing Orders) Ordinance 1968, the [Province] Industrial Relations Act, the West Pakistan Minimum Wages Ordinance 1961, and the applicable provincial Shops and Establishments Ordinance. Any dispute shall be referred to the Labour Court of the competent jurisdiction.
IN WITNESS WHEREOF, the parties have signed this Contract on [Contract Date].
EMPLOYER: [Employer Name]
Signed: _________________________ Date: _________________________
Name: _________________________ Designation: _________________________
EMPLOYEE: [Employee Name]
CNIC: [Employee CNIC]
Signed: _________________________ Date: _________________________
WITNESS: Name: _________________________ CNIC: _________________________ Signature: _________________________
Employer (Authorized Signatory)
________________
Signature
Employee
________________
Signature
Witness
________________
Signature
What Is a Fixed-Term Employment Contract (Pakistan)?
A Fixed-Term Employment Contract in Pakistan records the particulars of the engagement, fixing salary, working hours, leave entitlement and the grounds for termination.
The Industrial and Commercial Employment (Standing Orders) Ordinance 1968 (the Standing Orders Ordinance) is the primary statute governing the terms of employment in industrial and commercial establishments in Pakistan. The Ordinance applies to every industrial establishment employing 20 or more workers. Schedule II of the Standing Orders Ordinance prescribes the Model Standing Orders that must be adopted by covered establishments, including provisions on classification of workers (permanent, probationers, badli/substitute, temporary, and apprentice), leave entitlements, disciplinary procedure, and termination rules. Fixed-term employees are typically classified as 'temporary workers' under the Model Standing Orders for the duration of the contract term.
Following the 18th Amendment to the Constitution of Pakistan 1973 (enacted in 2010), labour legislation became a concurrent (shared) subject between the Federal Government and the provincial governments. Punjab enacted the Punjab Industrial Relations Act 2010 and the Punjab Shops and Establishments Ordinance 1969 (as amended); Sindh enacted the Sindh Industrial Relations Act 2013 and the Sindh Shops and Establishments Act 2015; KPK enacted the Khyber Pakhtunkhwa Industrial Relations Act 2010; and Balochistan enacted the Balochistan Industrial Relations Act 2010. Each provincial law has specific provisions on employment contracts, working conditions, and end-of-service benefits that must be consulted for fixed-term contracts in the respective province.
The Employees' Old-Age Benefits Institution (EOBI) — established under the Employees' Old-Age Benefits Act 1976 — covers employees in establishments with five or more employees and requires employer contributions of 5 percent and employee contributions of 1 percent of the monthly wage for EOBI pension and invalidity benefits. Fixed-term employees who meet the minimum contribution threshold are entitled to EOBI benefits. The Social Security Institutions — the Sindh Employees' Social Security Institution (SESSI), the Punjab Employees' Social Security Institution (PESSI), the Employees' Social Security Institution Khyber Pakhtunkhwa (KPKESSI), and the Balochistan Employees' Social Security Institution (BESSI) — administer provincial social security schemes providing medical care and sickness benefits to covered employees, including fixed-term employees in covered establishments.
The Gratuity under the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968 requires payment of gratuity at the rate of 30 days' wages per completed year of service to permanent employees on termination — fixed-term employees are generally not entitled to gratuity unless the contract is renewed and results in continuous service qualifying under the gratuity provisions.
When Do You Need a Fixed-Term Employment Contract (Pakistan)?
A Fixed-Term Employment Contract in Pakistan is needed whenever an employer wishes to engage an employee for a defined period rather than on a permanent basis, for reasons of project duration, seasonal demand, financial uncertainty, or skills availability.
A Fixed-Term Employment Contract is needed when a construction company engaged on a specific infrastructure project (road, dam, building, or bridge) in Pakistan needs to hire engineers, skilled tradespeople, or labourers for the project duration. Once the project is complete, the fixed-term contract expires automatically, avoiding the severance obligations that would arise on termination of a permanent employee under the Industrial and Commercial Employment (Standing Orders) Ordinance 1968.
A Fixed-Term Employment Contract is required when a Pakistani company hires a specialist consultant, expatriate expert, or senior executive for a defined engagement — for example, a Chief Financial Officer hired for a three-year restructuring assignment, a foreign IT expert engaged for a two-year systems implementation project, or a marketing director hired for a one-year product launch campaign. The fixed-term contract defines the scope of the engagement, the total remuneration package, and the automatic end date.
A Fixed-Term Employment Contract is needed when a university, school, or educational institution in Pakistan engages visiting faculty, lecturers, or adjunct professors for an academic semester or year. The Higher Education Commission (HEC) and provincial education departments recognize fixed-term academic appointments as a standard employment form.
A Fixed-Term Employment Contract is required when an NGO (non-governmental organization) registered under the Societies Registration Act 1860 or the Voluntary Social Welfare Agencies (Registration and Control) Ordinance 1961 engages project staff funded by a donor grant for the grant period. Donor-funded NGO positions in Pakistan are inherently time-limited and are best structured as fixed-term contracts tied to the project funding cycle.
A Fixed-Term Employment Contract is needed when a retail business or food service establishment in Pakistan needs additional staff during peak seasons — such as Ramadan, Eid, or back-to-school periods — and wishes to avoid converting seasonal hires into permanent employees with attendant long-term obligations.
A Fixed-Term Employment Contract is required by multinational companies operating in Pakistan to engage local national employees under group-wide policies that distinguish between permanent local hires and fixed-term project or training assignments, confirming alignment with the parent company's global workforce management framework while complying with Pakistani labour law.
What to Include in Your Fixed-Term Employment Contract (Pakistan)
A valid Fixed-Term Employment Contract in Pakistan under the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 and applicable provincial labour laws must contain the following essential elements to be legally effective and to clearly define the rights and obligations of both employer and employee.
Parties and Identification: Full legal names of the employer (company name as registered with SECP under the Companies Act 2017, or firm name as registered under the Partnership Act 1932) and the employee (name as per NADRA CNIC), the employer's NTN, EOBI registration number, and provincial Social Security Institution (PESSI/SESSI/KPKESSI/BESSI) registration number, the employee's CNIC number, and both parties' addresses. Including the employer's registration details demonstrates compliance with labour law mandatory registrations.
Position and Duties: The employee's job title, department, reporting line, and a clear description of the principal duties and responsibilities. The place of work (city and office address) must be specified, along with any requirement for the employee to travel or work at other locations. For fixed-term contracts covering project-based work, the name and description of the specific project must be stated.
Contract Term: The precise start date and end date of the employment, stated explicitly in DD/MM/YYYY format. If the contract is project-based rather than calendar-based, the end event must be defined with sufficient certainty (e.g. 'upon issuance of the project completion certificate by [client]'). The contract must state that employment ends automatically on the end date without any requirement for notice from either party, unless otherwise renewed in writing. Repeated renewal of fixed-term contracts covering the same employee in the same role may lead a Labour Court to treat the arrangement as permanent employment under the doctrine of continuous service — employers should be aware of this risk.
Remuneration: The monthly gross salary in Pakistani Rupees (PKR), the breakdown of salary components (basic pay, house rent allowance (HRA) typically 45 percent of basic in Punjab under provincial rules, medical allowance, conveyance allowance, and any other allowances), the payment date (monthly in arrears on a specified date), the method of payment (bank transfer to the employee's designated account in a scheduled bank), and any performance bonus or target-linked incentive provisions.
Statutory Deductions and Contributions: The contract must specify the employer's and employee's respective EOBI contributions under the Employees' Old-Age Benefits Act 1976 (employer: 5 percent, employee: 1 percent of wages), provincial Social Security contributions (employer: 6 percent of wages up to the insurable wage ceiling, employee: 1 percent — rates vary by province), and income tax withholding under Section 149 of the Income Tax Ordinance 2001 based on the employee's annual taxable income calculated per the tax slabs applicable for the relevant tax year.
Leave Entitlements: Annual leave entitlement under the relevant provincial Shops and Establishments law or the Standing Orders Ordinance 1968 (typically 14 to 21 days per year of service), sick leave (10 days per year under many provincial statutes), casual leave (10 days per year), and public holidays as notified by the Federal Government and the relevant provincial government. For fixed-term contracts shorter than one year, leave should be pro-rated based on the contract duration.
Termination Before Expiry: The grounds and notice requirements for early termination of the fixed-term contract before the end date — by the employer (for cause, with show-cause notice, inquiry, and order as required by the Standing Orders Ordinance 1968 and applicable provincial industrial relations law) or by the employee (by giving notice of a specified number of days). Early termination without cause by the employer may entitle the employee to compensation equal to the remaining contract salary, which is an important financial consideration for employers.
Confidentiality and Non-Compete: Where appropriate, provisions restricting the employee from disclosing confidential information of the employer during and after employment, and (carefully drafted) restrictions on working for competitors during the contract term. Post-employment non-compete clauses are treated with caution by Pakistani courts under Section 27 of the Contract Act 1872 (which restricts agreements in restraint of trade) and should be limited in duration and geographic scope to have any prospect of enforcement.
Forms-legal.com provides this Fixed-Term Employment Contract template as a practical guide for Pakistani employers and employees. Labour law in Pakistan has devolved significantly to the provinces since 2010 — employers should verify compliance with the specific provincial labour statute applicable to their establishment's location and industry before finalizing the contract.
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Forms Legal. (2026). Fixed-Term Employment Contract (Pakistan) (Pakistan) [Legal document template]. Forms Legal. https://forms-legal.com/pakistan/employment/contracts/fixed-term-employment-contract-pakistan
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year = {2026},
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Frequently Asked Questions
Yes. A fixed-term employee in Pakistan who is terminated before the contract end date without lawful justification can claim wrongful or unfair termination before the Labour Court under the relevant provincial industrial relations law — the Punjab Industrial Relations Act 2010, Sindh Industrial Relations Act 2013, KPK Industrial Relations Act 2010, or Balochistan Industrial Relations Act 2010. The Industrial and Commercial Employment (Standing Orders) Ordinance 1968 prescribes a disciplinary procedure — show-cause notice, opportunity to respond, inquiry, and reasoned order — that must be followed even for temporary or fixed-term workers covered by the Ordinance before termination for cause. Early termination without following the prescribed procedure may be declared illegal by the Labour Court, which can award reinstatement or compensation in lieu. The employee is also entitled to wages for the unexpired portion of the contract as damages for breach. The key distinction is between termination AT the contract end date (which is automatic and not subject to termination requirements) and termination BEFORE the end date (which requires either a contractual early termination clause with notice, or a disciplinary process for termination for cause). Employers should clearly draft the early termination provisions of fixed-term contracts to avoid dispute.
Fixed-term employees in Pakistan are entitled to Employees' Old-Age Benefits Institution (EOBI) benefits if they are employed in an establishment covered by the Employees' Old-Age Benefits Act 1976 (establishments with five or more employees) and if their employer is registered with EOBI and making the required contributions. Under the EOBI Act 1976, both the employer (5 percent of the insurable wage, currently capped at PKR 500 per month per employee as of 2024) and the employee (1 percent) contribute to EOBI. For fixed-term employees to qualify for an old-age pension from EOBI, they must have completed a minimum of 15 years of insurable employment (with EOBI contributions paid) in the aggregate — not necessarily with a single employer. Shorter fixed-term contracts may not allow an employee to accumulate sufficient EOBI contribution years to qualify for the pension, but EOBI contributions made during each fixed-term engagement count toward the aggregate total. Upon the end of a fixed-term contract, the employee's EOBI contribution history is preserved in EOBI's records linked to their CNIC, and they continue to accumulate contribution years with each subsequent registered employer. EOBI also provides invalidity pension and survivors' grant benefits for which the contribution thresholds are lower than the old-age pension.
Pakistan's minimum wage applies to all employees — including fixed-term employees — in establishments covered by the applicable minimum wage legislation. The West Pakistan Minimum Wages Ordinance 1961 empowers the Minimum Wages Board (now provincial Minimum Wages Boards after the 18th Amendment) to fix minimum wages for unskilled workers. Each provincial government announces its own minimum wage annually: Punjab, Sindh, KPK, and Balochistan each set provincial minimum wages that apply to all workers in establishments in that province. As of 2024, Pakistan's national minimum wage (used as a reference by all provinces) is PKR 37,000 per month for unskilled workers — though some provinces have set higher rates. A Fixed-Term Employment Contract that pays less than the applicable provincial minimum wage is void to the extent of the shortfall under the principle that contracting out of statutory labour protections is not permitted. Employers of fixed-term workers at or near the minimum wage must also comply with the annual minimum wage revision — if the minimum wage is increased during the contract term, the employee's salary must be revised accordingly, even for fixed-term contracts that did not anticipate such increases. EOBI insurable wages are also linked to the applicable minimum wage.
Under the Industrial and Commercial Employment (Standing Orders) Ordinance 1968, gratuity (at the rate of 30 days' wages for each completed year of service) is payable to permanent workmen on termination, resignation after five years, or retirement. Fixed-term employees classified as temporary workers under the Model Standing Orders are generally not entitled to statutory gratuity under the Ordinance at the end of their fixed term, because the statutory gratuity provision applies to 'workmen' who have completed five or more years of continuous service as permanent employees. However, if a fixed-term contract is renewed repeatedly so that the employee effectively accumulates five or more years of continuous service — without any genuine break — a Labour Court may treat the employee as a permanent employee entitled to gratuity, applying the doctrine of continuous service under Section 2(b) of the Industrial and Commercial Employment (Standing Orders) Ordinance 1968. The West Pakistan Shops and Establishments Ordinance 1969 (as adapted provincially) similarly provides gratuity to permanent employees in commercial establishments. Employers who wish to provide contractual gratuity to fixed-term employees may do so by including an express gratuity clause in the Fixed-Term Employment Contract — calculated, for example, on a pro-rata basis for each month of service.
A fixed-term employment contract in Pakistan ends automatically on the expiry of the agreed term — no notice from either party is required at the end date, because both parties knew the end date from the outset of the contract. This is a fundamental characteristic of fixed-term employment that distinguishes it from indefinite-term (permanent) employment, where notice of termination must be given under the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 (one month's notice for workers covered by the Ordinance) or under the contract. However, if the employer wishes to terminate the fixed-term contract BEFORE the agreed end date, notice must be given in accordance with the contract's early termination clause — typically 30 to 60 days' notice, or payment of salary in lieu. If the employee wishes to leave before the end date, they must give the notice specified in the contract (typically 30 days or as agreed). If the employer wishes to offer RENEWAL of the fixed-term contract after expiry, this should be communicated before the expiry date so the employee has time to decide — if the employee continues working after the end date without a new contract being signed, their employment may be construed as having converted to indefinite-term employment under Pakistani labour law, with consequential increase in termination obligations for the employer.
Yes. Salaries paid under a Fixed-Term Employment Contract in Pakistan are subject to income tax under Section 12 of the Income Tax Ordinance 2001, which defines salary income broadly to include wages, allowances, benefits in kind, and any other remuneration received from an employer. The employer is required to withhold income tax from the employee's monthly salary payment under Section 149 of the Income Tax Ordinance 2001, based on the employee's projected annual taxable income calculated at the applicable income tax rates in the Income Tax Ordinance 2001 (as amended annually by the Finance Act). For the tax year 2024–25, the income tax slabs for salaried individuals in Pakistan range from 0 percent (for annual income up to PKR 600,000) to 35 percent (for annual income above PKR 4,100,000). The employer must deduct withholding tax monthly, deposit it to FBR by the 15th of the following month through the PNFMS (Pakistan Non-Financial Management System) portal, and issue the employee a Tax Deduction Certificate (Form IT-2) at year-end. The employee must file an annual income tax return with FBR under Section 114 of the Income Tax Ordinance 2001. Allowances such as HRA, medical allowance, and conveyance allowance provided in the fixed-term contract may have specific tax treatment — some allowances are exempt up to prescribed limits under the Second Schedule to the Income Tax Ordinance 2001.
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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