Internship Agreement (Pakistan)

An Internship Agreement in Pakistan sets out the terms of employment between employer and worker, covering pay, hours, leave, notice and the duties of the role.

The distinction between an intern and an employee is legally significant in Pakistan. An employee under the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968 is entitled to statutory protections including minimum notice periods for termination, compensation for wrongful dismissal, and coverage under the Employees' Old Age Benefits Act 1976 (EOBI) and provincial social security schemes. An intern in a genuine educational internship — where the primary purpose is learning and skill development rather than providing a commercial service to the organisation — is typically not classified as an employee and does not attract these statutory benefits. However, if the intern performs work indistinguishable from regular employees, receives salary rather than a nominal stipend, and is subject to the same supervision and control as employees, labour courts in Pakistan may recharacterise the relationship as employment with retrospective entitlement to statutory benefits.

Pakistan has developed several formal internship frameworks. The National Internship Programme (NIP) operated by the Establishment Division of the Government of Pakistan provides paid internships in federal government departments to fresh graduates, regulated by NIP Guidelines. The Prime Minister's Youth Programme (PMYP) under the Ministry of Youth Affairs has operated youth internship programmes offering monthly stipends to graduates. The Higher Education Commission (HEC) of Pakistan encourages universities to require internships as part of degree programmes, with the HEC's National Qualifications Framework specifying work-based learning requirements for various degree levels.

For corporate internships in Pakistan's private sector — particularly in financial institutions regulated by the State Bank of Pakistan (SBP), technology companies registered with the Pakistan Software Export Board (PSEB), manufacturing companies regulated by the Pakistan Standards and Quality Control Authority (PSQCA), and professional services firms — Internship Agreements have become standard practice to document the relationship, protect confidential information, and clarify intellectual property ownership of any work the intern creates during the placement.

The Federal Board of Revenue (FBR) treats internship stipends as taxable income under the Income Tax Ordinance 2001 if they exceed the taxable threshold. Organisations paying stipends above the threshold must withhold income tax under Section 149 (as salary) or Section 153 (as payment for services) depending on the characterisation of the payment, and must issue tax deduction certificates to interns for their annual tax returns.

Universities affiliated with the Higher Education Commission (HEC) — including Lahore University of Management Sciences (LUMS), Institute of Business Administration (IBA) Karachi, National University of Sciences and Technology (NUST), and the University of Engineering and Technology (UET) Lahore — typically require students to provide Internship Agreements or completion certificates as evidence of internship completion for degree credit, making formal documentation essential.

An Internship Agreement in Pakistan is needed whenever an organisation engages a student, recent graduate, or trainee on a time-limited learning placement, and both the organisation and the intern require clarity about the terms and legal boundaries of that placement.

An Internship Agreement is needed when a technology company, software house registered with PSEB, digital agency, or e-commerce platform in Pakistan engages a computer science, software engineering, or IT student from a HEC-affiliated university for a summer internship or semester-long placement. The agreement protects the company's source code, product designs, and client data through confidentiality provisions and clarifies that any software or code developed by the intern belongs to the organisation.

An Internship Agreement is required when a financial institution regulated by the State Bank of Pakistan — a commercial bank, microfinance bank, or insurance company — takes on a student intern from a business school, as SBP's governance expectations for regulated entities require documented arrangements for all persons accessing confidential financial and customer data.

An Internship Agreement is needed when a law firm, accountancy practice, or management consultancy engages an intern who will have access to client confidential information. Professional services firms in Pakistan — regulated by the Pakistan Bar Council (for law firms), Institute of Chartered Accountants of Pakistan (ICAP) (for accountancy firms), or Institute of Cost and Management Accountants of Pakistan (ICMAP) — are bound by professional confidentiality obligations that must extend to interns through formal agreement.

An Internship Agreement is required when a university requires a student to complete a formal internship as a degree requirement under HEC's National Qualifications Framework — the agreement serves as official documentation submitted to the university to validate the placement and earn academic credit.

An Internship Agreement is needed when a multinational company operating in Pakistan through a subsidiary registered with SECP or a branch registered with SECP engages interns as part of a global internship programme — the local Internship Agreement confirms compliance with Pakistani law while aligning with the parent company's global internship standards.

An Internship Agreement is required when a government department, public sector organisation, or statutory body under the federal or provincial government engages interns under a programme such as the National Internship Programme (NIP) of the Establishment Division, confirming the intern's role is clearly defined as a learning placement distinct from government employment under the Civil Servants Act 1973.

A thorough Internship Agreement in Pakistan under the Contract Act 1872 must include the following essential elements to clearly define the intern's status, protect the organisation, and confirm the intern understands the terms of the placement.

Party Identification: Full legal name, address, and contact information of the host organisation (with SECP registration number if a company); the intern's full name, CNIC number (if over 18), university enrolment number, degree programme, and institution name. For interns under 18 years, the signature and consent of a parent or guardian should be obtained.

Internship Purpose and Learning Objectives: A description of the educational purpose of the internship — the skills, knowledge, and experience the intern is expected to gain. This section establishes the learning character of the arrangement and helps distinguish it from employment under the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968.

Duties and Responsibilities: A description of the tasks the intern will perform, the department they will work in, and the supervisor to whom they will report. The duties should be described as learning activities rather than commercial work obligations — interns should not replace regular employees or be assigned tasks that a qualified employee would normally perform on a standalone basis.

Duration: The commencement date and end date of the internship. Most Pakistani university internships run for 6 to 8 weeks in summer or one semester. Government internship programmes typically run for 12 months. The agreement should state whether the internship can be extended by mutual written agreement.

Working Hours and Location: The working days, hours per day, and location of the internship (office, remote, or hybrid). The Punjab Restriction of Employment of Children Act 2016 and the Employment of Children Act 1991 prohibit the employment of persons under 14 years in certain sectors — though university interns are typically 18 or above, organisations should confirm the intern's age.

Stipend or Allowance: Whether the intern will receive a stipend and the amount per month in Pakistani Rupees (PKR). A stipend is a nominal payment reflecting cost reimbursement rather than wages — it is not a salary. If the stipend exceeds FBR's taxable threshold, the organisation must withhold income tax under the Income Tax Ordinance 2001. The agreement should state whether the stipend is subject to withholding tax and that the intern is responsible for their own annual tax return.

Confidentiality: A binding obligation on the intern to keep confidential all proprietary information, client data, business strategies, technical information, and trade secrets of the organisation and its clients, both during the internship and for a specified period after its conclusion. Interns in financial institutions must be made aware of SBP's data protection requirements; interns in technology companies must understand their obligations under the Prevention of Electronic Crimes Act 2016.

Intellectual Property Ownership: An express clause stating that all work product, code, designs, reports, analyses, and creative works produced by the intern in the course of the internship belong to the host organisation. Without this clause, the intern may argue that they retain copyright in their work product under the Copyright Ordinance 1962, as copyright in a work vests in the author and the employer-employee rule under Section 14 of the Copyright Ordinance 1962 does not automatically apply to interns who are not employees.

Non-Employment Status: An express statement that the internship does not create an employment relationship, that the intern is not entitled to employee benefits (provident fund, gratuity, leave encashment, EOBI contributions, or social security), and that the intern is not covered by the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968 or the Factories Act 1934.

Termination: Either party's right to terminate the internship with a short notice period (typically one to two weeks) without cause; grounds for immediate termination (serious breach of confidentiality, misconduct, dishonesty, or failure to attend); and the consequences of termination (cessation of stipend, return of organisation property, and survival of confidentiality obligations).

Forms-legal.com provides this Internship Agreement (Pakistan) template as a practical tool for organisations and interns across all sectors. Organisations engaging interns in regulated sectors — banking (SBP), insurance (SECP's Insurance Division), telecommunications (PTA), or healthcare (PMDC) — should have the agreement reviewed by an Advocate enrolled at the relevant provincial Bar Council to confirm sector-specific compliance.

Under the Industrial and Commercial Employment (Standing Orders) Ordinance 1968, employers in Pakistan must issue appointment letters with terms of service. The Industrial Relations Act 2012 governs collective bargaining and the National Industrial Relations Commission (NIRC). The Employees Old-Age Benefits Institution (EOBI) administers pensions under the EOBI Act 1976. The Federal Board of Revenue (FBR) administers PAYE under the Income Tax Ordinance 2001. Labour Courts adjudicate employment disputes.