Overtime calculation in Pakistan catches out a lot of businesses because the rate is not a single number. It depends on what day the overtime was worked. The Factories Act 1934 and the Provincial Shops and Establishments Ordinances together define three tiers: working-day overtime, non-working-day (weekly off) overtime, and gazetted-holiday overtime. Here is how each one works in 2026, with examples.

The three tiers, plainly

1. Working-day overtime

Hours worked beyond the standard 8-hour working day (or whatever your contract specifies, often 9 hours including lunch) are paid at double the ordinary hourly rate. So if an employee's basic hourly rate is PKR 200, their overtime hour on a working day is PKR 400.

2. Weekly off / rest-day overtime

If an employee works on their weekly off day (typically Sunday), the entire day's work is paid at double the ordinary rate, with a guaranteed compensatory rest day in the following week. If the compensatory day is not given, the rate effectively becomes triple.

3. Gazetted-holiday overtime

Work on a gazetted holiday (Eid, Independence Day, etc.) is paid at triple the ordinary rate: the holiday pay plus double-rate overtime. This is the most expensive overtime category and the one most often miscalculated.

A worked example

Take an employee with a basic salary of PKR 60,000 per month, working a standard 26-day month (8 hours per day = 208 hours). Ordinary hourly rate is PKR 60,000 / 208 = roughly PKR 288/hour.

Working day overtime (8 hours extra one week): 8 × (288 × 2) = PKR 4,608
Sunday work (8 hours, no comp day): 8 × (288 × 3) = PKR 6,912
Eid day work (8 hours): 8 × (288 × 3) = PKR 6,912

Total monthly overtime for this employee: PKR 18,432 on top of the PKR 60,000 basic. Get a tier wrong and the payslip is wrong, and the employee will dispute it.

Where it gets complicated

Shift-based work: night-shift premiums are often added on top of overtime rates
Sectoral exemptions: some industries (security, hospitality) have different rules under their provincial ordinances
Salaried vs hourly: overtime applies mainly to workmen; managerial/supervisory roles are usually exempt
Caps: most provinces cap overtime at 50 hours per quarter; beyond that, you need labour-department approval

Why a payroll calculator with hard-coded "1.5x" is wrong for Pakistan

A lot of imported HR software assumes the US/UK pattern of "time-and-a-half" overtime. That is simply wrong for Pakistan. You need three configurable tiers (working day, weekly off, gazetted holiday) per company, each with its own multiplier, and the system needs to know which dates in the year fall into which tier (working/off/holiday).

Zaffre HRM's payroll engine comes with the three-tier model already set up and a Pakistan calendar that already has the 2026 gazetted holidays. You can also set overtime eligibility per employee, so managers and exempt staff don't get overtime calculated by mistake.

What to do today

Check your last three months of payroll: did you apply the correct tier to each overtime hour?
If you're using a "1.5x" or single-rate overtime setup, fix it
Make sure your 2026 calendar has the correct gazetted holidays marked
Write down overtime approval workflows so weekend work gets sign-off in advance (otherwise it turns into a dispute later)

If your current payroll tool cannot handle tiered overtime, book a Zaffre HRM demo and we will show you the setup on a sandbox in 10 minutes.

How to Calculate Overtime in Pakistan Payroll: Complete Guide