▷ Note: This EPLex entry reflects only federal labour legislation applicable in the Islamabad Capital Territory and to trans-provincial establishments. Following the 18th Constitutional Amendment (2010), labour became a provincial subject in Pakistan. Provincial labour laws are not covered in this entry.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
▷ The Ordinance generally applies to industrial and commercial establishments employing twenty or more workmen. However, certain provisions — particularly those relating to termination of employment and severance pay — do not apply to smaller establishments (with not more than 49 workers), unless extended by government notification.
→ Section 1(4) ICEO applies to—
(a) every industrial establishment or commercial establishment wherein twenty or more workmen are employed, directly or through any other person, whether on behalf of himself or any other person, or were so employed on any day during the preceding twelve months;
(b) [Omitted by the Industrial & Commercial Employment (Standing Orders) (Amendment) Act, XXIII of 1973, S.2(a).]
(c) such classes of other industrial and commercial establishments as Government may, from time to time, by notification in the official Gazette, specify in this behalf:
▻ Provided that nothing in this Ordinance shall apply to industrial and commercial establishments carried on by or under the authority of the Federal or Provincial Government, where statutory rules of service, conduct or discipline are applicable to the workmen employed therein:
▻ Provided further that the provisions of Standing Orders 10-B and 11, clauses (6) and (8) of Standing Order 12 and Standing Order 15 shall not apply, in the first instance, to any industrial establishment wherein not more than forty-nine persons were employed on any day during the preceding twelve months but Government may, by notification in the Official Gazette, extend all or any of the said provisions to any such industrial establishment or any class of such establishments.
▷ Definitions: Under section 2 of the ICEO:
▻ "Commercial establishment" means an establishment in which the business of advertising, commission or forwarding is conducted, or which is a commercial agency, and includes a clerical department of a factory or of any industrial or commercial undertaking, the office establishment of a person who for the purpose of fulfilling a contract which the owner of any commercial establishment or industrial establishment employs workmen, a unit of a joint stock company, an insurance company, a banking company or a bank, a broker's office or stock exchange, a club, a hotel, a restaurant or an eating house, a cinema or theatre, and such other establishment or class there of, as Government may, by notification in the official Gazette, declare to be a commercial establishment for the purpose of this Ordinance;
▻ "Industrial establishment" means an industrial establishment as defined in the Payment of Wages Act, a factory as defined in Factories Act, 1934; or a railway as defined in the Railways Act, 1890 or the establishment of a contractor who, directly or indirectly, employs workmen in connection with the execution of a contract to which he is a party, and includes the premises in which, or the site at which, any process connected with such execution is carried on.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ The scope of the Ordinance is limited to workers employed in “industrial establishments” or “commercial establishments” as defined in section 2. Workers outside these establishments, as well as certain government employees, are excluded.
→ Section 1(4)(c) ICEO indicates that: Provided that nothing in this Ordinance shall apply to industrial and commercial establishments carried on by or under the authority of the Federal or Provincial Government, where statutory rules of service, conduct or discipline are applicable to the workmen employed therein. As a result, the following categories are generally excluded from the application of the Ordinance:
▻ Civil and public servants, where statutory rules of service, conduct or discipline apply (excluded under Section 1(4)(c));
▻ Agricultural workers, as they are not employed in industrial or commercial establishments covered by the Ordinance;
▻ Domestic workers, as they are equally not employed in industrial or commercial establishments covered by the Ordinance;
▻ Apprentices, who are governed by the Apprenticeship Ordinance, 1962 (LVI of 1962), even though they are classified as workmen in the Schedule of the ICEO.
⫸ SCHEDULE STANDING ORDERS [S.O] of the ICEO
→ S.O. 1 indicates that:
(a) Workmen shall be classified as—
1. permanent
2. probationers
3. badlis
4. temporary
5. apprentices
6. [Contract worker].
(b) A "permanent workman" is a workman who has been engaged on work of permanent nature likely to last more than nine months and has satisfactorily completed a probationary period of three months in the same or an other occupation in the industrial or commercial establishment including breaks due to sickness, accident, leave, lock-out, strike (not being an illegal lockout or strike) or involuntary closure of the establishment; [and includes a badli who has been employed for a continuous period of three months or for one hundred and eighty three days during any period of twelve consecutive months.
(c) A "probationer is a workman who is provisionally employed to fill a permanent vacancy in a post and has not completed three months' service therein. If a permanent employee is employed as a probationer in a higher post, he may, at any time during the probationary period of three months, be reverted to his old permanent post.
(d) A "badli is a workman who is appointed in the post of a permanent workman or probationer, who is temporarily absent.
(e) A "temporary workman is a workman who has been engaged for work which is of an essentially temporary nature likely to be finished within a period not exceeding nine months.
(f) An "apprentice is a person who is an apprentice within the meaning of the Apprenticeship Ordinance,1962 (LVI of 1962).
(g) “Contract Worker” means a workman who works on a contract basis for a specific period of remuneration to be calculated on a piece rate basis.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ The Ordinance does not use the term “fixed-term contract”. However, it regulates temporary employment and contract workers, which function similarly to fixed-term arrangements.
⫸ SCHEDULE STANDING ORDERS [S.O.] of the ICEO
→ S.O. 1, Clause (g) defines a contract worker as: A workman who works on a contract basis for a specific period of remuneration to be calculated on a piece rate basis.

The definitions of permanent, temporary workers and badli imply that temporary workers or badli cannot be hired to undertake permanent work (SO 1 ICEO). They can only be hired to undertake work of a temporary nature:
- "Permanent workers" are those who are engaged in work of a permanent nature likely to last more than nine months and has satisfactorily completed a probationary period of three months [...] and includes a badli who has been employed for a continuous period of three months or for one hundred and eighty-three days during any period of twelve consecutive months.
- "Temporary workers" are those who have been engaged for work of an essentially temporary nature that is likely to be finished within a period not exceeding nine months.
- A "badli" is a woker who is appointed in the post of a permanent worker or probationer, who is temporarily absent.

The ICEO does not expressly refers to the renewals of FTCs.
It only provides that temporary workers cannot be hired for more than 9 months.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ The Ordinance does not prescribe a maximum cumulative duration for temporary or contract employment. However, a worker engaged continuously for more than nine months on work of a permanent nature may be considered for classification as a permanent workman under the Schedule (S.O. 1, Clause (b).

▷ Note: The Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, classifies workers into different categories (permanent, probationer, badli, temporary, apprentice, and contract worker). Protection against arbitrary termination and entitlement to notice and severance pay vary significantly depending on the worker’s classification.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ The three-month probationary period is set out in the Schedule to the Ordinance (S.O. 1, Clause (c)).
⫸ SCHEDULE STANDING ORDERS [S.O.] of the ICEO
→ S.O. 1, Clause (c) provides that: A "probationer" is a workman who is provisionally employed to fill a permanent vacancy in a post and has not completed three months’ service therein. If a permanent employee is employed as a probationer in a higher post, he may, at any time during the probationary period of three months, be reverted to his old permanent post.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
▷ Temporary workmen, probationers, and badlis have limited protection against termination compared to permanent workmen.
⫸ SCHEDULE STANDING ORDERS [S.O.] of the ICEO
→ S.O. 1, Clause (e) defines a temporary workman as: A workman who has been engaged for work which is of an essentially temporary nature likely to be finished within a period not exceeding nine months.
→ S.O. 12(2) provides that no temporary workman, probationer, or badli is entitled to notice if their services are terminated by the employer.

▶ Federal Ombudsperson for Protection against Harassment of Women at the Workplace (FOSPAH)
→ In Zainab Zahrah Awan vs Embrace IT (Final Order dated 20 October 2025), the Federal Ombudsperson held that terminating a woman during approved maternity leave constitutes gender-based discrimination under Section 2(h) of the Protection against Harassment of Women at the Workplace Act, 2010 (as amended).
→ The Ombudsperson further held that such termination violates constitutional protections under Articles 14, 25 and 37 of the Constitution of Pakistan (dignity, equality, and protection of motherhood) and is contrary to the Maternity and Paternity Leave Act, 2023.
→ The termination order was declared null and void.
▶ Industrial Relations Act, 2012 [IRA]
▷ The IRA prohibits employers from engaging in unfair labour practices, including dismissal or other prejudicial treatment on the ground of trade union membership or activities.
→ Section 17 IRA provides that: Save with the prior permission of the Registrar, no officer or member of a trade union of workmen shall be transferred, discharged, dismissed or otherwise punished during the pendency of an application for registration of the trade union with the Registrar, provided that the union has notified the names of its officers and members to the employer in writing.
→ Under section 31(1)(d) IRA, No employer or trade union of employers and no person acting on behalf of either shall, (…), dismiss, discharge, remove from employment or transfer or threaten to dismiss, discharge or remove from employment or transfer a workman or injure or threaten to injure him in respect of his employment by reason that the workman:
(i) is or proposes to become, or seeks to persuade any other person to become, a member or officer of a trade union; or
(ii) participates in the promotion, formation or activities of a trade union.

▶ Federal Ombudsperson for Protection against Harassment of Women at the Workplace (FOSPAH)
→ In Zainab Zahrah Awan vs Embrace IT (Final Order dated 20 October 2025), the Federal Ombudsperson ruled that women on maternity leave enjoy special protection against dismissal.
→ Termination of employment during the period of approved maternity leave was held to constitute gender-based discrimination and was declared null and void.
→ The decision reinforces that pregnant women and women on maternity leave are entitled to protection against dismissal under the Protection against Harassment of Women at the Workplace Act, 2010, the Maternity and Paternity Leave Act, 2023, and the Constitution of Pakistan.
▶ Industrial Relations Act, 2012 [IRA]
→ Sections 17 and 31(1)(d) IRA protect workers against dismissal or other adverse action on the grounds of trade union membership or participation in trade union activities. This protection extends to trade union office bearers and representatives.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ Standing Order 12 requires that termination of employment must be effected through a written order that explicitly states the reason for the action taken.
→ S.O. 12(3) provides that: The services of a workman shall not be terminated, nor shall a workman be removed, retrenched, discharged or dismissed from service, except by an order in writing which shall explicitly state the reason for the action taken.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ Standing Order 12 requires one month’s notice (or pay in lieu) for the termination of a permanent workman for any reason other than misconduct.
→ S.O. 12(1) provides that: For terminating employment of a permanent workman, for any reason other than misconduct, one month’s notice shall be given either by the employer or the workman. One month’s wages, calculated on the basis of average wages earned by the workman during the last three months, shall be paid in lieu of notice.
▷ Exception
→ According to S.O. 12(2), no notice period applies in the case of termination of a probationer, badli, or temporary workman (whether monthly-rated, weekly-rated, daily-rated, or piece-rated).

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ The Ordinance does not provide a general definition of collective dismissal. However, Standing Order 11-A imposes specific procedural requirements when an employer intends to terminate the employment of more than 50% of the workmen or close down the whole establishment.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ There is no statutory requirement for prior consultation with trade unions before retrenchment or closure.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ There is no general requirement to notify the public administration. However, under Standing Order 11-A, prior permission of the Labour Court is required in cases of large-scale termination or closure (see below).

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ There is no statutory requirement to notify workers’ representatives before implementing retrenchment or closure.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ Under S.O. 11-A, an employer cannot terminate the employment of more than 50% of the workmen or close down the whole establishment without obtaining prior permission from the Labour Court, except in cases of fire, catastrophe, stoppage of power supply, epidemics, or civil commotion.
→ Standing Order 11-A provides that: Notwithstanding anything contained in Standing Order 11, no employer shall terminate employment of more than fifty per cent of the workmen or close down the whole of the establishment without prior permission of the Labour Court in this behalf, except in the event of fire, catastrophe, stoppage of power supply, epidemics or civil commotion.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ No approval from workers’ representatives is required.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ Standing Order requires the employer to follow the “last come, first go” principle when retrenching workers.
→ S.O. 13 indicates that: Where any workman is to be retrenched, and he belongs to a particular category of workmen, the employer shall retrench the workman who is the last person employed in that category.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
▷ Standing Order grants retrenched workers priority for re-employment for one year.
→ S.O. 14 states that: Where any number of workmen are retrenched and the employer proposes to take into his employ any person within a period of one year from the date of such retrenchment, he shall give an opportunity to the retrenched workmen belonging to the category concerned, by sending a notice by registered post to their last known addresses to offer themselves for re-employment, and they shall have preference over other persons each having priority according to the length of his service under the employer.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ There is no statutory requirement to consider alternatives to retrenchment.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ Under Standing Order 12, a worker whose employment is terminated for any reason other than misconduct is entitled to gratuity (treated as severance pay) equivalent to 30 days’ wages for every completed year of service or any part thereof in excess of six months.
→ S.O. 12(6) provides that: Where a workman resigns from service or his services are terminated by the employer, for any reason other than misconduct, he shall … be paid gratuity equivalent to thirty days’ wages … for every completed year of service or any part thereof in excess of six months.
▻ However, if the employer has established a "Provident Fund" to which the worker is a contributor and the employer’s contribution is not less than that of the worker, no gratuity is payable for the period during which such a "Provident Fund" has existed.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ There is no separate provision for redundancy pay. Termination for economic reasons (retrenchment) is covered under the general rules of Standing Order 12(6), and the same gratuity applies.

▶ Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 [ICEO]
→ The provisions relating to gratuity (severance pay) under Standing Order 12(6) do not apply to establishments employing not more than 49 persons during the preceding twelve months, unless extended by government notification (Section 1(4) ICEO).