Minimum Wages Regulations - Pakistan
Minimum Wages Regulations - Pakistan
Minimum Wages Regulations - Pakistan
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(https://wageindicator.org/labour-laws/labour-law-around-the-world/minimum-wages-regulations) / M i n i m u m
MINIMUM WAGE
Minimum Wage is the wage level (set by Government, either after consultation with the
social partners i.e. worker organizations and employer associations or unilaterally) below
which it is illegal for the employer to pay his/her employees.
Wages, as defined under the Minimum Wages Ordinance 1961, mean all remuneration,
expressible in monetary terms, and payable to a person on fulfillment of the express or
implied terms of employment contract but does not include contributions paid by the
employer on behalf of the worker under any scheme of social insurance, pension fund or
provident fund; travelling allowance or value of any travelling concession; amount paid to
defray special expenses incurred by the worker in respect of his employment; any sum paid
as annual bonus; or any gratuity paid on contract termination. Minimum Wages Ordinance,
1961 applies to all industrial establishments’ employees (whether skilled, unskilled or
apprentices and even domestic workers) but it excludes the employees of Federal or
Provincial governments, coalmine employees or persons employed in agriculture.
Minimum wages for semi-skilled, skilled and highly skilled workers are determined by the
Minimum Wage Boards constituted under the Minimum Wages Ordinance, 1961. The
detailed Minimum Wage notifications for different industries based in the provinces are
issued later by the provincial labour departments. One such detailed notification has been
issued by the Punjab Labour & Human Resource Department. The said notification provides
minimum wage rates for ministerial, highly skilled, semi-skilled and skilled workers in the
102 industries based in the province. Similar detailed notifications have yet to be issued by
the other Provincial governments.
For the last couple of years, the trend has been to increase workers' minimum wages while
announcing the federal and provincial budgets instead of announcing a wage increase for
private sector on May Day. In his Federal Budget 2017-18 speech, the Federal Finance
Minister announced the increase of minimum wage for private sector workers from
PKR14,000 to PKR15,000 per month. The Provincial Budgets in all the Provinces except
Sindh followed suit and increased minimum wage for unskilled workers in line with the
increase announced by the Federal Government.
Minimum Wages for Unskilled Workers used to be fixed under the Minimum Wages for
Unskilled Workers Ordinance 1969 however after devolution of Ministry of Labour to
provinces, the wages are announced under section 6 of the Minimum Wages Ordinance,
1961 (the Khyber Pakhtunkhwa Minimum Wages Act, 2013) which applies to all industrial
establishments’ employees (whether skilled, unskilled or apprentices and even domestic
workers) but it excludes the employees of Federal or Provincial governments, coalmine
employees or persons employed in agriculture. The minimum wage rates for coal mine
workers are determined under the Coal Mines (Fixation of Rates of Wages) Ordinance 1960
(in consultation with Mines Welfare Boards).
For newspaper employees, wages are determined under the Wage Board Award and wages
are fixed by the Wage Board (constituted specifically for that purpose) while taking into
consideration the cost of living, the prevalent wage rates in comparable employment,
circumstances relevant to the newspaper industry in different regions of the country as well
any other reasons that the Boards considers appropriate and relevant. 7th Wage Board
Award, announced in 2001, could not be implemented. The 8th Wage Board was constituted
in September 2013 however no award has been announced yet. The Wage Board, having
equal representation of newspaper workers and employers, are constituted under
Newspaper Employees (Conditions of Service) Act 1973.
There is yet another law that provides for minimum wage fixation for coal mine workers i.e.
The Coal Mines (Fixation of Rates of Wages) Ordinance 1960. Provincial Governments issue
minimum wage notifications for these coal miners and they may also consult Mines Welfare
Board in wage fixation (but it is not necessary).
Minimum Wages are determined at the provincial level. Section 4 of Minimum Wage
Ordinance, 1961 allows Minimum Wage Boards, for each province, to recommend minimum
wage rates for adult unskilled workers and juvenile workers employed in industrial
undertakings. Section 5 of MW Ordinance gives the power to each province's MW Board to
fix MW rate even for workers in industries where there is no effective regulation of wages.
The list of industries covered also varies from province to province. The Government can fix
the wage rate for skilled workers because Section 2(9) defines worker as "skilled or
unskilled, intellectual, technical, clerical, manual, or other work including domestic work for
hire or reward". So, it has the authorisation to do that.
According to section 5 (3) of minimum wages Ordinance, 1961, minimum wages Board can
fix minimum wages for time work, piece work, overtime work and work on weekly rest day
and paid holidays. The time rates recommended by the Board may be on hourly, daily,
weekly or monthly basis.
As per section 7 of the MW Ordinance, 1961, MW Board can review its minimum wage
recommendations if there are any changes in economic conditions or the cost of living and
further recommend it to Provincial Government. However, in norm, it is a political decision
and in the recent past, provinces have tried to increase minimum wages just to outdo the
other provinces or the federal government.
In accordance with section 2(g) of the Minimum Wages for Unskilled Workers Ordinance
1969, wages have both the fixed and variable components. These include dearness
allowance, house rent, conveyance allowance, cost of living allowance and special
allowance. All of these are variable components. Above these variable allowances, MW
includes also the fixed allowances.
According to section 7 of the minimum wages Ordinance, 1961 minimum wage rates are
reviewed if there is any change in the economic conditions or cost of living or other
relevant factors. Cost of living here can be interpreted as consumer prices because
whenever there was a change in level of consumer prices, minimum wage rates were
revised (raised). Economic conditions can be interpreted as decent living standards.
National Poverty line in Pakistan is PKR 3,030.32. Click here to know the national poverty
line in context with Minimum Wage, living wages and actual wages. Select the currency
(Euro or national currency) to know national poverty line. (http://www.wageindicator.org
/main/salary/wages-in-context) Poverty line was updated in 2016.
As per section 21 and 22 of West Pakistan minimum wage Rules, 1962 government may
appoint labour inspectors to regulate and inspect the compliance of minimum wages by
making as many visits to industries. Governmental Body/Authority - As per section 9-A of
MW Ordinance, 1961 the provincial government may appoint any person as the Authority
for the area to hear and decide on all the claims (complaints) regarding non-payments or
delay in the payment of wages. Provincial Industrial Relations laws require every industry to
have a collective bargaining agent who deals with matters relating to employment, work
conditions or enforcement of any right. According to section 9(3) of minimum wages
Ordinance, 1961, the following penalties are specified - either up to 6 months’
imprisonment or a fine or even both along with the payment of arrears made to the
employee. According to the National & Provincial Industrial Relations Acts, Collective
Bargaining Agent (registered trade unions) is responsible for dealing with matters relating
to workers’ rights guaranteed by law.
As per section 9-A(2) of MW ordinance 1961, if no action has been taken by the employer (in
case of delay of payment) within 6 months of the complaint, the worker can appeal to the
Authority appointed by the provincial government. As per the section 23 of the West
Pakistan Minimum Wage Rules 1962, a worker can send his complaint regarding
noncompliance of minimum wages to the government through Inspectors or any authorized
official. As provided under the National & Provincial Industrial Relations Acts, a worker can
bring his complaint relating to any right guaranteed to him by law, to the Collective
bargaining agent. Collective Bargaining Agent is a registered trade union and is elected
representative of the workers in an enterprise. Similar provisions are found are Khyber
Pakhtunkhwa 2013 Act, Punjab 2012 Minimum Wages Act and Sindh Minimum Wage Act
2015, enacted in 2016.
Sources: §4-6 of the Minimum Wages Ordinance, 1961; §4-6 of the Khyber Pakhtunkhwa
Minimum Wages Act, 2013; §10-12 of the Newspaper Employees (Condition of Service) Act,
1973; §3-5 of the Coal Mines (Fixation of Rates of Wages) Ordinance, 1960
The Federal Finance Minister (Mr. Ishaq Dar) while announcing the Federal Budget (2017-18)
on 26 May 2017 has raised the minimum wage rate for unskilled workers from Rs. 14,000 to
Rs. 15,000 per month with effect from July 2017 (applicable to Islamabad Capital
Territory). Dr. Ayesha Ghaus Pasha, Finance Minister in Punjab, announced to raise the
minimum wage from current Rs. 14,000 to Rs. 15,000 while presenting the budget on 2 June
2017. The Sindh Chief Minister (Syed Murad Ali Shah) presented the budget on 5 June 2017
however no wage increase for the private sector was proposed. The Khyber Pakhtunkhwa
Finance Minister (Mr. Muzaffar Said) while announcing the KPK Budget (2017-18) on 7 June
2017 has raised the minimum wage rate for unskilled workers from Rs. 14,000 to Rs. 15,000
per month with effect from July 2017. The Adviser to the Chief Minister Balochistan for
Finance announced the Balochistan budget 2017-18 on 15 June 2017. The minimum wage
for unskilled private sector workers was raised from Rs. 14,000 to Rs. 15,000 with effect
from July 2017. AJK Finance Minister, Dr Najeeb Naqi, presented Azad Jammu and Kashmir
Budget 2017-18 on 15 June and proposed to raise the minimum wage to Rs. 15,000 per
month.
The Punjab Chief Minister, Mr. Shahbaz Sharif, announced on the May Day to raise the
minimum wage rate for unskilled workers from Rs. 13,000 to Rs. 14,000 per month with
effect from July 2016 (The same was reiterated by the Finance Minister - Dr. Ayesha
Ghaus Pasha- while presenting the budget on 13 June 2016). The Finance Minister (Mr.
Ishaq Dar) while announcing the Federal Budget (2016-17) on 03 June 2016 has raised
the minimum wage rate for unskilled workers from Rs. 13,000 to Rs. 14,000 per month with
effect from July 2016 (applicable to Islamabad Capital Territory). The Sindh Finance Minister
(Syed Murad Ali Shah) while announcing the Sindh Budget (2016-17) on 11 June 2016 has
raised the minimum wage rate for unskilled workers from Rs. 13,000 to Rs. 14,000 per
month with effect from July 2016. The Khyber Pakhtunkhwa Finance Minister (Mr. Muzaffar
Said) while announcing the KPK Budget (2016-17) on 14 June 2016 has raised the minimum
wage rate for unskilled workers from Rs. 13,000 to Rs. 14,000 per month with effect from
July 2016. TThe Balochistan Chief Minister (Nawab Sanaullah Khan Zehri) while announcing
the Budget (2016-17) on 19 June 2016 has raised the minimum wage rate for unskilled
workers from Rs. 13,000 to Rs. 14,000 per month with effect from July 2016.
In June 2015, the Federal Government has raised the minimum wage from Rs. 12,000 to Rs.
13,000 per month for unskilled workers. This decision was also repeated in the budgets
presented by the Provincial Governments of Punjab, Sindh & Balchistan. The Khyber
Pakhtunkhwa province has also notified its minimum wage as Rs. 12,000. The minimum
wage rate for unskilled & juvenile (14 years to 17 years) workers is Rs.13,000 per month in
the provinces of Punjab, Sindh, and Balochistan as well as the Islamabad Capital Territory.
These minimum wage rates are applicable from 01 July 2015. The daily minimum wage for
an 8 hour work day is Rs. 500 (and Rs.13,000 for 26 working days). Minimum wage for
unskilled & juvenile workers (14 years to 18 years) is notified as Rs.12,000 per month in
Khyber Pakhtunkhwa with effect from 01 July 2014. The daily minimum wage in Khyber
Pakhtunkhwa is Rs.461.54 (and Rs.12,000 for 26 working days).The Khyber Pakhtunkhwa
Government had fixed a higher minimum wage in 2014 (Rs. 15,000 per month) however it
was fixed unilaterally by the Government without forming and consulting the Minimum
Wage Board. This notification was suspended in March 2015 by the Peshawar High Court.
The new notification, declaring Rs. 12,000 as minimum wage for unskilled workers has been
issued in September 2015 and is effective from back date. Khyber Pakhtunkhwa again
issued a minimum wage notification in January 2016 declaring the minimum wage as Rs.
13,000 with effect from July 2015.
Do you want to register non-payment of minimum wage by your employer? If yes, please
anonymously submit the violation information through the Whistlers. Here is the link
(http://www.ilr.org.pk/whistlers/add-report)
REGULAR PAY
Wages can be paid on daily, weekly, fortnightly or monthly basis. However, a wage period
can't exceed one month. The detailed instructions on payment of wages are found in
Payment of Wages Act, 1936 and Khyber Pakhtunkhwa Payment of Wages Act, 2013. A
factory, railway or industrial or commercial establishment employing less than 1,000
workers is liable to disburse pay to its employees before the expiry of seventh day from the
last day of wage period. However, the establishment employing more than 1000 workers
can delay the disbursement of pay up till the 10th day from the last day of wage period. The
law also requires that wages are to be paid on a working day and in current coin or
currency notes only. This also means that wage payments by organizations through cheque
are not permitted under the law. In order to ensure that workers are paid their wages as
specified under the law or employment contract or memorandum of settlement (referred to
generally as collective bargaining agreement), necessary amendment in Payment of Wages
Acts is needed. It must however be specified that the Khyber Pakhtunkhwa Payment of
Wages Act requires payment of wages in current currency through scheduled banks the
manner of which is yet to be prescribed under the Rules. Employer is required to display, in
a conspicuous place at or near the main entrance of the factory, a notice, in English and in
the language of majority of the persons employed therein, showing for at least two months
in advance, the day on which wages are to be paid.
Sources: §3-6 of the Payment of Wages Act 1936; §3-6 of the Payment of Wages Act 1936,
adapted by Punjab in 2014; §3-6 of the Khyber Pakhtunkhwa Payment of Wages Act, 2013;
Rule 8 of the Payment of Wages Rules 1960
According to the Payment of Wages Act, following deductions can be made from a worker's
wages.
⁃ Fines;
⁃ Deductions for absence from duty; Law considers it a breach of contract when ten or
more persons, through concerted action, absent themselves from office without due
notice and reasonable cause. The law entitles the employer to make deductions up to
eight days of wages when employees take such an action. However, the law exempts
women and workers (under the age of 15 years) from such wage deduction for contract
breaches.
⁃ Deductions for damages to or loss of goods expressly entrusted to the employed person
for custody, or for loss of money for which he is required to account, where such damage
or loss is directly attributable to his neglect or default;
⁃ Deductions for house accommodation supplied by the employer
⁃ Deductions for such amenities and services supplied by the employer as the Provincial
Government may by general or special order authorize;
⁃ Deductions for recovery of advances or for adjustment of overpayment of wages;
⁃ Deductions of income tax payable by the employed person;
⁃ Deductions required to be made by order of a Court or other authority competent to
make such order;
⁃ Deductions for subscriptions to, and for repayment of advances from, any approved
Provident Fund;
⁃ Deductions for payment to co-operative societies approved by the Provincial Government
or to a scheme of insurance maintained by the Pakistan Post Office;
⁃ Deductions made with the written authorization of the employed person, in furtherance
of any war saving scheme approved by the Provincial Government.
Under the minimum wage notification issued by the Government of Punjab, the deductions
for providing housing accommodation (Rs.162 per month) and transport facility (Rs.33 per
month) are allowed subject to the agreement between the worker and employer. However,
in other Provinces especially in Khyber Pakhtunkhwa, no variable or incentive allowance
(non-statutory) or value of welfare facilities including house rent allowance or free house
and conveyance can be adjusted against the minimum wage rates.
Fines can be imposed on employees in respect of certain acts and omissions but these are
to be specified and previously approved by the Government. A notice of such acts has to be
exhibited in the premises at some conspicuous place (like near factory entrance). Fines can
be imposed for only those acts contained in the notice and a contravention of this provision
is deemed to be an unauthorized deduction which is a liable offence. The total amount of
fine in a single wage period (which can be maximum 30 days) can’t exceed 3% of the wages
payable to the worker. The fine imposed has to be recovered in lump sum and has to be
recovered within sixty days of the commission of an act or omission. Fines cannot be
imposed on workers under the age of 15 years.
Sources: §7-13 of the Payment of Wages Act 1936; §3-6 of the Payment of Wages Act 1936,
adapted by Punjab in 2014; §7-13 of the Khyber Pakhtunkhwa Payment of Wages Act, 2013;
Rule 10-16 of the Payment of Wages Rules 1962; Minimum Wage Notifications 2015
In the event of non-payment of minimum wage or at a rate lower than the rate announced
by the Government, the following penalties are provided under the relevant laws.
Acts Applicability (Area) Penalties
(section 9) Up to Rs.50,000 or
(on Up to 6 months or
subsequent both
contravention)
(section 9)
Other than above fines, employer is also required to pay the difference in wages actually
paid to the worker and the wages which should have been paid had there no such
contravention.
Penalties are also provided under the Payment of Wages Acts for different offences by the
employer as follows:
Acts Applicability Offences Penalties
(Area)
Fines Imprisonment
(monetary)
⁃ Section 5: Time of
Payment of Islamabad Up to Rs.500
Payment of Wages
Wages Act, Capital
1936 Territory, ⁃ Section 7:
Deductions which
Sindh,
(section 20) may be made from
Balochistan
wages
⁃ Section 8: Fines
⁃ Section 9:
Deductions for
Payment of Punjab Up to
absence from duty
Wages Act, Rs.10,000
1936 ⁃ Section 10:
Deductions for
(adapted in damage or loss
2014) ⁃ Section 11:
Deductions for
(section 20) services rendered
⁃ Section 12:
Deductions for
The Khyber Khyber Up to Up to one
recovery of
Pakhtunkhwa Pakhtunkhwa Rs.10,000 or month or both
advances
Payment of
⁃ Section 13:
Wages Act,
Deductions for
2013
payments to
cooperative
societies and Up to two
(adapted in
2014)
(section 20)
2013
Up to Up to two
Government has to ensure that minimum wage rates fixed under the law are publicized
widely to all workers and employers. Government may also require thee employers, to
display the minimum wage rates in prominent places in a factory, workshop or other
workplace, notices in Urdu, English or any other language specified in the order.
Employers, under the West Pakistan Minimum Wage Rules 1962, are required to maintain a
Wage Register, issue wage slips in authorized format and a Muster Roll as prescribed under
the law. A worker, within 6 months of non-payment of minimum wage on rates specified,
may submit a claim to the concerned authority for payment of arrears.
The West Pakistan Payment of Wages Rules 1962 also requires to maintain certain registers
including register of fines, register of deductions for damages or loss, register of wages,
and register of advances in prescribed formats. Employers are also required to submit an
Annual Return to the Chief Inspector of Factories before 12th of February each year with
details of fines imposed
or any deductions made from wages for breach of contract or for damage or loss.
RELATED ITEMS
Minimum wage in Pakistan (https://wageindicator.org/salary/minimum-wage/pakistan)