Termination Letter (Employee) (Pakistan)
[Employer Name]
[Employer Address]
NTN / SECP Reg: [Employer NTN]
Date: [Letter Date]
To,
[Employee Name]
CNIC: [Employee CNIC] | Employee Code: [Employee Code]
Designation: [Designation] | Department: [Department]
Subject: Termination of Employment
Dear [Employee Name],
This letter serves as formal notice that your employment with [Employer Name] as [Designation] in the [Department] Department, which commenced on [Date Of Joining], is hereby terminated with effect from [Effective Date].
Grounds for Termination: [Termination Grounds].
[Termination Grounds Detail]
Notice Period: [Notice Period Arrangement]. This termination is issued in accordance with the Industrial and Commercial Employment (Standing Orders) Ordinance 1968.
FINAL SETTLEMENT
Your final settlement shall comprise the following components, payable in accordance with the Payment of Wages Act 1936 within the legally prescribed period:
1. Outstanding Salary (up to [Effective Date]): [Outstanding Salary]
2. Annual Leave Encashment: [Leave Encashment]
3. Gratuity (one month's wages per completed year of service): [Gratuity Amount]
4. Wages in Lieu of Notice: [Wages In Lieu Notice]
5. Other Payments: [Other Payments]
Payment of the above amounts shall be made within two working days of the effective date of termination as required under Section 5 of the Payment of Wages Act 1936. The applicable income tax (PAYE) shall be deducted at source.
HANDOVER OBLIGATIONS
You are required to complete handover of all company property — laptop, access cards, keys, company documents, and digital credentials — within [Handover Period]. All non-disclosure and confidentiality obligations under your appointment letter and applicable employment agreements remain in full force following termination.
Experience Certificate: An experience certificate will be issued within [Experience Certificate Timeline] after completion of handover obligations and signing of the final settlement voucher.
EOBI AND SOCIAL SECURITY COMPLIANCE
[Employer Name] confirms that it will notify the Employees Old-Age Benefits Institution (EOBI) of your termination within 30 days as required under Section 20 of the Employees Old-Age Benefits Act 1976 (EOBI deregistration: [EOBI Deregistration]), and that all EOBI and ESSI contributions up to the effective date of termination will be deposited. Your pension entitlements under the EOBI Act 1976 are preserved.
Please acknowledge receipt of this letter by signing and returning the duplicate copy. If you wish to challenge this termination, you may file a grievance petition before the Labour Court of the relevant province within 30 days of this notice under the Industrial Relations Act 2012.
Yours sincerely,
[Authorised Signatory]
For and on behalf of [Employer Name]
Signature: _________________________
Date: [Letter Date]
ACKNOWLEDGEMENT OF RECEIPT
I, [Employee Name] (Employee Code: [Employee Code]), acknowledge receipt of this Termination Letter on _______________.
Signature: _________________________ Date: _________________________
Authorised Signatory (Employer)
________________
Signature
Employee (Acknowledgement)
________________
Signature
What Is a Termination Letter (Employee) (Pakistan)?
A Termination Letter (Employee) in Pakistan is a formal written communication issued by an employer to an employee informing the employee that their employment is being ended, either immediately or upon expiry of the applicable notice period, in accordance with the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 (the "Standing Orders Ordinance"). The Termination Letter (Employee) Pakistan is the primary instrument through which an employer exercises the right to terminate employment while complying with the procedural and substantive requirements imposed by Pakistani labour law.
The Standing Orders Ordinance 1968 applies to every industrial or commercial establishment employing twenty or more workmen and prescribes the mandatory content and procedure for lawful termination of employment. Standing Order 16 of the Ordinance governs termination for reasons of redundancy or surplus, while Standing Order 15 provides for termination on grounds of misconduct following a proper domestic inquiry. Standing Order 12 sets out the notice periods applicable to different categories of workmen: a permanent workman is entitled to one month's notice or one month's wages in lieu of notice; a probationer is entitled to one week's notice or one week's wages in lieu of notice; and a badli (substitute) workman may be terminated without notice.
The Employment of Children Act 1991 and the Factories Act 1934 impose additional restrictions on the employment of persons under eighteen years of age, and a termination letter concerning a minor employee must comply with the additional procedural requirements of those statutes. The Companies Act 2017 (administered by the Securities and Exchange Commission of Pakistan — SECP) requires listed companies and large private companies to maintain employment records, including termination documentation, as part of their human resources governance obligations.
The Payment of Wages Act 1936, administered by provincial labour departments, requires that all wages due to a workman must be paid within two working days of the date of termination. The Employees Old-Age Benefits Act 1976 (EOBI Act) requires the employer to notify the Employees Old-Age Benefits Institution (EOBI) within thirty days of termination so that the employee's pension contributions record is updated. Failure to notify EOBI may affect the employee's future pension entitlements under the EOBI Act 1976.
The Employees' Social Security Ordinance 1969, administered by the provincial Employees' Social Security Institution (ESSI) in Punjab, Sindh, KPK, and Balochistan, requires the employer to deregister the terminated employee from social security rolls within thirty days, and to confirm all social security contributions up to the date of termination are deposited with ESSI. Non-compliance attracts penalties under Section 66 of the Employees' Social Security Ordinance 1969.
The Workmen's Compensation Act 1923 (as applicable in Pakistan) governs compensation for employees injured during employment, and the termination letter must not waive any workers' compensation rights accrued during employment. The Minimum Wages Ordinance 1961 confirms that any wages in lieu of notice paid upon termination must not be below the applicable minimum wage. The Industrial Relations Act 2012 (federal) and provincial industrial relations legislation protect workers from termination in retaliation for trade union activities or collective bargaining, and a termination letter that violates these protections is voidable before the National Industrial Relations Commission (NIRC) or the provincial Labour Court.
Termination without following the prescribed procedure — including issuing a charge sheet, conducting a domestic inquiry under Standing Order 15, and giving the employee an opportunity to be heard — constitutes wrongful dismissal in Pakistan and entitles the employee to reinstatement with back wages or compensation under the Industrial Relations Act 2012. The Termination Letter (Employee) Pakistan from forms-legal.com provides a compliant framework for documenting this important employment action.
When Do You Need a Termination Letter (Employee) (Pakistan)?
A Termination Letter (Employee) in Pakistan is required whenever an employer decides to end an employment relationship and must document that decision in written form to comply with Pakistani labour law and protect both parties' legal rights.
A Termination Letter is needed when an employer decides to terminate a permanent workman for misconduct after conducting a domestic inquiry under Standing Order 15 of the Industrial and Commercial Employment (Standing Orders) Ordinance 1968. The Standing Orders Ordinance requires a written charge sheet, an opportunity for the employee to respond, a domestic inquiry by a departmental officer or an independent inquiry officer, a written finding, and then a written order of dismissal — the Termination Letter forms the final written order in this process.
A Termination Letter is required when an employer reduces its workforce due to economic reasons, reorganisation, or closure of a department — termination on grounds of redundancy or retrenchment under Standing Order 16 of the Standing Orders Ordinance 1968. The employer must issue a Termination Letter giving one month's notice or one month's wages in lieu of notice to permanent workmen, and must pay retrenchment compensation under the applicable provincial or federal law.
A Termination Letter is needed when an employee's fixed-term contract expires and the employer does not intend to renew the contract. Even where the contract contains an end date, a formal Termination Letter confirms the non-renewal decision and enables the employer to process final settlement, EOBI deregistration, and experience certificate issuance in a timely manner.
A Termination Letter is required when an employer decides not to retain a probationary employee at the end of the probation period specified in the appointment letter. Under Standing Order 5 of the Standing Orders Ordinance 1968, the probation period may be three to six months, and the employer must issue a written notice if the probationer is not to be confirmed. Failure to issue the notice may result in the probationer being deemed confirmed by operation of law.
A Termination Letter is needed when an employee has been absent without leave (AWOL) or has abandoned employment, and the employer wishes to terminate the employment on grounds of deemed resignation or misconduct. Pakistani labour courts require documentary evidence — including the Termination Letter, attendance records, and prior warning notices — before accepting that a termination for abandonment was lawful.
A Termination Letter is required when a company is winding up under the Companies Act 2017 or when a business is sold, merged, or transferred under the Industrial Relations Act 2012, and all employees must be formally terminated before the transaction closes to allow the acquiring entity to issue fresh appointment letters on new terms.
What to Include in Your Termination Letter (Employee) (Pakistan)
A valid Termination Letter (Employee) in Pakistan under the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 must contain the following essential elements to protect the employer from wrongful dismissal claims and to enable the employee to claim all statutory entitlements.
Employer and Employee Identification: The letter must identify the employer (company name, registered address, SECP registration or NTN number) and the employee (full name as per CNIC, employee code, designation, department, date of joining) with precision. Misidentification of the employee or employer may invalidate the termination and expose the employer to liability under the Industrial Relations Act 2012.
Date of Termination and Notice Period: The letter must state the effective date of termination and confirm whether the employee is required to serve the notice period or whether wages in lieu of notice are being paid. Under Standing Order 12 of the Standing Orders Ordinance 1968, a permanent workman is entitled to one month's notice or one month's wages in lieu of notice. The notice period for managerial staff not covered by the Standing Orders Ordinance is typically governed by the appointment letter and the Contract Act 1872.
Grounds of Termination: The letter must state the grounds for termination with sufficient clarity: misconduct (following domestic inquiry under Standing Order 15), redundancy (under Standing Order 16), expiry of fixed-term contract, non-confirmation of probationer, or closure of establishment. Vague or unspecified grounds expose the employer to wrongful dismissal claims before the Labour Court or the National Industrial Relations Commission (NIRC).
Final Settlement Details: The Termination Letter should confirm the components of the final settlement payable to the employee: outstanding salary up to the termination date; leave encashment for accumulated annual leave under the Factories Act 1934 or the Shops and Establishments Act of the relevant province; gratuity under the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968 (one month's wages for each completed year of service for permanent workmen); and any other contractual benefits specified in the appointment letter.
EOBI and Social Security Compliance: The letter should confirm that the employer will notify the Employees Old-Age Benefits Institution (EOBI) within thirty days of termination as required by the Employees Old-Age Benefits Act 1976, and that all EOBI and ESSI contributions up to the date of termination will be deposited. This confirmation protects the employee's long-term pension rights.
Handover Requirements: The letter must specify the handover obligations — return of company property, access cards, laptops, confidential documents, and credentials — and the timeline for completing the handover. Non-disclosure obligations under the employee's NDA or the Contract Act 1872 and the post-termination restrictions in the appointment letter should be referenced to put the employee on notice of continuing obligations.
Experience Certificate: A compliant Termination Letter should confirm that an experience certificate will be issued within a specified period (typically seven to fourteen working days) after all handover obligations are fulfilled and the final settlement is signed. The right to an experience certificate is implied under the service relationship and is expected by subsequent employers.
Provincial Labour Department Notification: For establishments covered by the Standing Orders Ordinance 1968, the employer must notify the relevant provincial labour authority of the termination. In Punjab, this is the Department of Labour and Human Resources; in Sindh, the Directorate of Labour Welfare; in KPK, the Directorate of Labour; and in Balochistan, the Labour Department. The Termination Letter should be accompanied by a copy filed with the establishment's Standing Orders records.
Forms-legal.com provides this Termination Letter (Employee) Pakistan template to help employers document employment termination in compliance with the Industrial and Commercial Employment (Standing Orders) Ordinance 1968, the Payment of Wages Act 1936, the Employees Old-Age Benefits Act 1976, and the Industrial Relations Act 2012. Employers dealing with contested terminations or senior managerial employees should seek advice from a qualified labour law practitioner enrolled with a provincial Bar Council — Punjab Bar Council, Sindh Bar Council, KPK Bar Council, or Balochistan Bar Council.
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year = {2026},
howpublished = {\url{https://forms-legal.com/pakistan/employment/letters/termination-letter-employee-pakistan}},
note = {Free legal document template}
}Also available for these jurisdictions:
Frequently Asked Questions
Under Standing Order 12 of the Industrial and Commercial Employment (Standing Orders) Ordinance 1968, a permanent workman in Pakistan is entitled to one month's written notice before termination, or one month's wages in lieu of notice. A probationer is entitled to one week's notice or one week's wages in lieu of notice. A badli (temporary/substitute) workman may be terminated without notice. These are minimum statutory requirements — the appointment letter or collective bargaining agreement may provide longer notice periods, and the longer period prevails. Termination without giving the required notice or paying wages in lieu of notice is a violation of the Standing Orders Ordinance 1968 and entitles the workman to file a grievance before the Labour Court of the relevant province. The one-month notice requirement applies to establishments employing twenty or more workmen that are required to have certified Standing Orders under the Ordinance.
Yes. Under Standing Order 15 of the Industrial and Commercial Employment (Standing Orders) Ordinance 1968, termination for misconduct requires a domestic inquiry procedure: the employer must issue a written charge sheet specifying the act of misconduct; the employee must be given a reasonable opportunity (at least forty-eight hours) to respond to the charge sheet; a domestic inquiry must be conducted by a departmental inquiry officer or a senior employee with authority to conduct the inquiry; the inquiry officer must record findings in writing; and a written order of termination based on the inquiry findings must be issued. Termination for misconduct without a domestic inquiry is wrongful dismissal under the Industrial Relations Act 2012, and the Labour Court may order reinstatement with back wages or award compensation of up to twenty-four months' wages. The Supreme Court of Pakistan in multiple judgments — including those reported in PLD 2010 SC 1032 — has consistently held that procedural fairness in domestic inquiries is a fundamental requirement of lawful termination.
Under the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 and provincial gratuity rules, a permanent workman who has completed at least one year of continuous service is entitled to gratuity upon termination. The standard rate is one month's last drawn wages for each completed year of service. Gratuity is payable on termination for redundancy, non-renewal of fixed-term contract, and voluntary resignation after five or more years of service in many establishments. Gratuity is not payable in all provinces upon dismissal for proved misconduct — this depends on the certified Standing Orders of the establishment and provincial rules. The Payment of Wages Act 1936 requires gratuity to be paid within two working days of the date of termination. For establishments with more than twenty workers in Punjab, the West Pakistan Gratuity Fund Rules may require gratuity to be funded separately from operating funds. EOBI pension contributions are separate from gratuity — the employee retains EOBI pension rights regardless of the reason for termination.
Yes. Under the Industrial Relations Act 2012 (federal, applicable to establishments in the Islamabad Capital Territory and inter-provincial establishments) and the corresponding provincial industrial relations acts, a workman who believes their termination was unlawful may file a grievance petition before the Labour Court within thirty days of the date of termination. The Labour Court has jurisdiction to examine whether the termination complied with the procedural requirements of the Standing Orders Ordinance 1968, whether the domestic inquiry (if any) was conducted fairly, and whether the grounds for termination are sustainable. If the Labour Court finds the termination unlawful, it may order reinstatement with or without back wages, or award compensation of up to twenty-four months' wages in lieu of reinstatement. Appeals from the Labour Court lie to the Labour Appellate Tribunal, and further to the High Court of the relevant province by way of constitutional petition under Article 199 of the Constitution of Pakistan 1973. Managerial and supervisory employees not covered by the Standing Orders Ordinance may have claims under the Contract Act 1872.
Under Section 20 of the Employees Old-Age Benefits Act 1976, an employer registered with the Employees Old-Age Benefits Institution (EOBI) must notify EOBI within thirty days of any change in the employment status of a covered insured person, including termination. The notification must be submitted to the relevant EOBI regional office — EOBI has offices in Karachi, Lahore, Islamabad, Peshawar, Quetta, and other major cities — using the prescribed EOBI Form A-2 (deregistration of insured person). All EOBI contributions (currently 5% employer contribution on minimum wages) must be fully deposited up to the date of termination before the deregistration is processed. Failure to notify EOBI within the thirty-day period or to deposit outstanding contributions attracts penalties under Sections 33 and 34 of the Employees Old-Age Benefits Act 1976. The employee's EOBI pension entitlement is calculated on the basis of the total contributions credited to their EOBI account, and late or missing contributions can reduce the pension amount.
The Industrial and Commercial Employment (Standing Orders) Ordinance 1968 does not mandate a specific language for termination letters in Pakistan. Termination letters are commonly issued in English in the private sector, particularly in Karachi and Islamabad where English is the working language of most commercial establishments. In establishments where the workforce primarily communicates in Urdu, issuing the termination letter in Urdu (or bilingual English-Urdu) is good practice to ensure the employee understands the contents and cannot later claim they were unaware of the grounds for termination. In proceedings before Labour Courts in Punjab, Sindh, KPK, and Balochistan, documentary evidence may be required to be accompanied by an Urdu translation if originally in English. For establishments in Khyber Pakhtunkhwa where Pashto is the dominant language, an Urdu or Pashto version of the termination letter helps avoid disputes about the employee's understanding of the termination grounds.
Under Section 5 of the Payment of Wages Act 1936 (as applicable in Pakistan), wages of a terminated workman must be paid within two working days of the last day of employment. This includes outstanding salary, wages in lieu of notice, leave encashment, and any other contractual payments due. Failure to pay final wages within this period is an offence under Section 20 of the Payment of Wages Act 1936, punishable by a fine of PKR 7,500 to PKR 22,500 and a direction to pay the delayed wages. The employee may file a claim before the Payment of Wages Authority (designated by the provincial labour department) and the Authority may award the outstanding wages plus compensation of up to ten times the amount wrongfully withheld. Provincial labour departments in Punjab (Labour and Human Resources Department), Sindh (Directorate of Labour Welfare), KPK (Directorate of Labour), and Balochistan (Labour Department) have inspectors with authority to investigate non-payment of wages. Persistent non-payment may also be raised before the Labour Court under the Industrial Relations Act 2012 as an unfair labour practice.
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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