Overtime rules in Pakistan
The Factories Act 1934 limits adult working time to 9 hours a day and 48 hours a week, and requires overtime to be paid at twice the ordinary rate of wages. The West Pakistan Shops and Establishments Ordinance 1969, which covers shops, offices and commercial establishments, has the same double-rate rule. Provinces have since passed their own versions (for example the Sindh and Punjab shops laws), but the double-rate principle remains. Overtime is also capped: total working hours including overtime may not exceed the limits in the relevant law, with daily and yearly ceilings that the employer must respect.
How overtime pay is calculated
- Ordinary hourly rate = monthly wages ÷ (working days × normal daily hours).
- Overtime rate = ordinary hourly rate × 2.
- Overtime pay = overtime rate × overtime hours.
Example: Rs 52,000 a month, 26 days, 8 hours. Ordinary rate = 52,000 ÷ 208 = Rs 250 an hour. Overtime rate = Rs 500. Twenty hours of overtime = Rs 10,000.
Quick reference (26 days, 8 hours, double rate)
| Monthly wages | Ordinary hourly | OT hourly | 20 hours OT |
|---|---|---|---|
| Rs 40,000 | Rs 192 | Rs 385 | Rs 7,692 |
| Rs 50,000 | Rs 240 | Rs 481 | Rs 9,615 |
| Rs 75,000 | Rs 361 | Rs 721 | Rs 14,423 |
| Rs 100,000 | Rs 481 | Rs 962 | Rs 19,231 |
What counts as "wages" for overtime?
Labour laws define wages broadly as remuneration payable for work, including basic pay and regular allowances such as cost-of-living or dearness allowance, but usually excluding bonuses, travel reimbursements, the employer's provident fund share and gratuity. If your payslip splits pay into basic and allowances, check your contract or standing orders: some employers calculate overtime on basic only, which reduces the rate. The legal minimum is based on ordinary wages, not basic alone.
Who is entitled to overtime?
- Workers in factories, shops and commercial establishments covered by the labour laws.
- Usually not managers and supervisors in positions of management or confidential employment, who are often excluded by the laws.
- Many white-collar contracts state a fixed salary "inclusive of extra hours". Whether such clauses are valid for workers covered by the law is a legal question; the legal minimum cannot be contracted away for covered workers.
Tax on overtime
Overtime is part of salary and is taxed under the salaried slabs in the month it is paid. Use the salary tax calculator with your total pay for that month to see the effect. For deductions on absence or part months, see the per day salary calculator.
Frequently asked questions
What is the overtime rate in Pakistan?
Twice the ordinary rate of wages for workers covered by the Factories Act and the shops and establishments laws.
How do I calculate overtime per hour?
Divide monthly wages by working days and daily hours to get the ordinary hourly rate, then multiply by 2.
How many hours of overtime are allowed?
Limits depend on the law that covers you; factories generally cap total work at 12 hours a day including overtime, with an annual overtime ceiling.
Is overtime taxable?
Yes, it is part of salary and taxed under the salaried slabs.
Do managers get overtime?
Usually not. Persons employed in management or confidential capacities are commonly excluded.