Gratuity and Severance Pay in Pakistan: How It Is Calculated

Understanding gratuity entitlements under Pakistani law and how to calculate your severance package.

Gratuity is a statutory entitlement under various provincial laws and the Payment of Wages Act 1936. Generally, employees who have completed one year of continuous service are entitled to gratuity upon termination, retirement, or resignation. The standard calculation is one month's last drawn salary for each completed year of service. Some organisations offer more generous terms through their service rules or employment contracts. If the employer refuses to pay, the employee can file a claim before the Labour Court.

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