What is gratuity law in Pakistan?

Under Pakistan Labour Law, every permanent employee is entitled to gratuity after completing 1 year of continuous service. The formula is: Last drawn salary ÷ 26 × 30 × years served. The Standing Orders Ordinance 1968 defines 'wages' as gross salary, though many employers apply basic salary.

What is gratuity formula in Pakistan?

Gratuity = (Last drawn salary ÷ 26) × 30 × Number of years served. The /26 × 30 multiplier is the standard idiom for monthly wage expressed in calendar days.

Is gratuity taxable in Pakistan?

Gratuity received from an approved gratuity fund is exempt from tax up to PKR 300,000. Any amount above PKR 300,000 is taxable under FBR rules.

What if employer does not pay gratuity?

Employees can file a complaint with the Labour Court or NIRC (National Industrial Relations Commission) for non-payment of gratuity in Pakistan.

Gratuity Calculator Pakistan (End-of-Service Benefits)

Calculate your statutory gratuity entitlement under the Standing Orders Ordinance 1968 / Punjab Industrial Relations Act 2010. Choose between last drawn gross or basic salary depending on your appointment letter.

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PakCalc — Free Financial Calculators for Pakistan (Updated 2026)