Wrongful Termination Laws in Pakistan — Your Employee Rights 2025

Wrongful termination is one of the most common labour disputes in Pakistan. Whether you work in the private sector, a corporate firm, or an organisation, you have legal rights that protect you from arbitrary dismissal. This guide from our labour law team at Naeem & Associates explains your rights, the law, and what you can do if you have been unfairly dismissed.

Key Employment Laws in Pakistan

Employment termination in Pakistan is governed by several laws depending on your employment category:

• Industrial and Commercial Employment (Standing Orders) Ordinance 1968: Applies to industrial and commercial establishments — covers most private sector workers
• West Pakistan Shops and Establishments Ordinance 1969: Covers employees in shops, offices, and commercial establishments
• Industrial Relations Act 2012: Covers collective bargaining, unions, and labour court procedures
• EOBI Act 1976: Governs pension and social security benefits
• Employees Social Security Ordinance 1965: Health and social security for eligible employees

What Constitutes Wrongful Termination?

Under Pakistani law, termination is wrongful when:

• The employer fails to follow prescribed disciplinary procedures before dismissal
• Termination is made without "reasonable cause" (Standing Orders Ordinance)
• An employee is dismissed for trade union activities (a protected right)
• Due process — show cause notice, inquiry, and opportunity to defend — is not followed
• An employee is terminated in violation of their employment contract
• Retrenchment is done discriminatorily or without following the "last in, first out" rule
• A female employee is terminated on grounds of marriage or pregnancy

The Required Disciplinary Process in Pakistan

Before dismissing an employee for misconduct in Pakistan, the employer is legally required to:

1. Issue a written Show Cause Notice specifying the alleged misconduct
2. Give the employee adequate time to respond (typically 7-14 days)
3. Conduct a proper inquiry before an Inquiry Officer
4. Allow the employee to present their defence and call witnesses
5. Record findings of the inquiry in writing
6. Issue a reasoned termination order if found guilty after inquiry

Skipping any of these steps makes the termination procedurally defective and challengeable in Labour Court.

Your Rights Upon Termination in Pakistan

Notice Period

Employees are entitled to notice before termination: 30 days for workers under Standing Orders Ordinance (or payment in lieu). Employers can terminate immediately by paying one month's salary in lieu of notice.

Gratuity

Employees who have completed one year of continuous service are entitled to gratuity: 30 days' wages for each completed year of service. This is a mandatory payment — it cannot be contractually waived.

EOBI Benefits

Registered employees have EOBI rights including old-age pension, invalidity pension, and survivor's pension. These rights are not forfeited upon termination.

Provident Fund

If your employer maintained a Provident Fund, your contributions (and employer contributions vested to you per the fund rules) must be paid upon termination.

How to Challenge Wrongful Termination in Pakistan

Step 1: File a Complaint with the Labour Court

File an application under Section 33 of the Industrial Relations Act 2012 (or applicable provincial Act) with the Labour Court within 30 days of termination. The court can order reinstatement with back pay if termination is found unlawful.

Step 2: Approach NIRC (Federal Employees)

For employees of federally chartered organisations, the National Industrial Relations Commission (NIRC) has jurisdiction over unfair labour practice complaints.

Step 3: Civil Suit for Breach of Contract

If the employment contract provides additional rights, a civil suit in the Civil Court can be filed for breach of contract and damages.

Frequently Asked Questions