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Punjab Labour Code 2026 Calculator: Gratuity, Final Settlement, Leave and Overtime

How is gratuity calculated under the Punjab Labour Code 2026?

Under section 159, an employee of an establishment with 20 or more workers gets 30 days' remuneration for every year of service after one full year, with any part year over six months counted as a full year, on any termination except gross misconduct. Section 160 adds caps: someone earning more than five times the minimum wage gets gratuity only on redundancy or retrenchment, capped at 12 months' pay (6 months above ten times). All dues must be paid within two working days.

The Punjab Labour Code 2026 replaced the 1968 Standing Orders and five other laws, and it changed what is owed when a job ends: gratuity now waits a full year, is capped for better-paid staff, and everything is due within two working days.

Enter the job and how it ended; the calculator works out gratuity, notice pay, unused leave and overtime from the sections of the Code, and lists the leave entitlements.

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Built by Muhammad Shahzeb Anwar, MSc Industrial and Organizational Psychology. Built from the text of the Code as gazetted; each line cites its section.

The calculator

Work out the final settlement

Runs in your browser. Nothing you type is stored or sent anywhere.

The job

Gratuity needs 20 or more. Under 10 (counting anyone employed on any day in the last 12 months) is a micro-enterprise, with 14 days' notice.
Gross pay and allowances, but not house, medical or other amenities, travel allowance or special-expense payments. Piece-rated: the highest month in the last 12.
Used for the gratuity caps. Change it if a new figure has been notified.

How the job ended

Including this year's pro-rata share: 18 days x the part of the year worked. Capped at 30.

Overtime this month (optional)

The Code does not define the hourly rate; both are assumptions.

What changed from the Standing Orders

Under the 1968 Standing Orders, gratuity was one month's wages per completed year from the first year, with no cap. The Code keeps 30 days' remuneration per year but pays nothing before one full year, uses remuneration (gross pay and allowances, without amenities and travel allowances) rather than basic wages, and caps it by pay: up to five times the minimum wage, no cap and any termination except gross misconduct; above five times, only on redundancy or retrenchment and at most 12 months' pay; above ten times, at most 6 months. Rights already earned under the old law are saved. Notice is 30 days on either side (14 in a micro-enterprise of under 10 employees), with a paid day off each week during notice to look for work. Annual leave rises to 18 calendar days, and unused leave is paid on leaving.

Overtime

Overtime needs the employee's consent and is limited to 2 hours a day and 8 a week. It is paid at twice the normal hourly remuneration on working days and the weekly rest day (or a substitute rest day within three days), and three times on a public holiday (or a substitute day off plus a compensatory rest day). The Code does not define how to turn a monthly salary into an hourly rate; 208 hours a month (48 hours x 52 weeks / 12) is the usual choice, and 240 gives a lower rate.

Before you rely on this

What this will not tell you

This applies the Code as gazetted to the figures you enter; it does not apply any rules the Punjab Government has made under the Code, a collective agreement or a more generous contract, which can only add to these amounts. Years served before the Code started may carry gratuity rights under the old law (s.160(3)); work those out with the gratuity calculator's Standing Orders option. Income tax on gratuity is not shown here. Nothing you type leaves your browser.

Questions

Questions people actually ask

Is the Punjab Labour Code 2026 in force?

Reportedly yes. The Code says it starts on a date the Punjab Government notifies; news reports on 29 May 2026 said it had been enforced, and the Chief Minister described it as enforced on 9 October 2026. We could not find the notification's number or date on 17 October 2026, so check with the Labour and Human Resource Department if the date matters to your case.

Is gratuity payable after less than one year under the Punjab Labour Code?

No. Section 159 pays gratuity only after a year of continuous service; after that, any part year over six months counts as a full year.

Is there a cap on gratuity under the Punjab Labour Code?

Yes. Up to five times the minimum wage there is no cap. Above that, gratuity is paid only on redundancy or retrenchment, capped at 12 months' remuneration, or 6 months above ten times the minimum wage.

How much notice is required under the Punjab Labour Code?

30 days, or 30 days' remuneration in lieu, from either side; 14 days in a micro-enterprise with fewer than 10 employees. None is due for gross misconduct.

When must the final settlement be paid in Punjab?

Within two working days of the end of employment, for any reason (s.165(12)).

How many annual leave days are there under the Punjab Labour Code?

18 calendar days after 12 months' continuous service, pro rata before that, plus 8 days' sick leave and 10 days' casual leave a year.

Where every rule comes from

Sources

The sections were read on 17 October 2026 from the Gazette text of the Code. If the Punjab Government has made rules or notified a new minimum wage since, those apply on top of this page.

  1. Punjab Labour Code 2026 (Act IX of 2026), Gazette copy (Centre for Labour Research): https://clr.org.pk/Labour-Laws/Punjab/Punjab%20Labour%20Code%202026..pdf
  2. Punjab Labour Code, Punjab Code portal: https://punjabcode.punjab.gov.pk/uploads/articles/85-of-2025-the-punjab-labour-code-2025_with_contents-pdf.pdf
  3. The Nation, 29 May 2026: Punjab enforces Labour Code 2026 across sectors: https://www.nation.com.pk/29-May-2026/punjab-enforces-labour-code-2026-across-sectors
  4. Dunya News: Punjab notifies Labour Code 2026: https://dunyanews.tv/en/Pakistan/954213-punjab-notifies-labour-code-2026-extends-legal-protection-to-all-work
  5. Punjab minimum wage notification, Rs 40,000 (8 September 2025): https://labour.punjab.gov.pk/system/files/Notification%20of%20Unskilled%20Workers%20Rs.%2040%2C000.pdf
Citation

Cite this tool

Free to use and free to quote. If a figure here is useful in something you are writing, a link back is all that is asked.

Muhammad Shahzeb Anwar, MSc Industrial and Organizational Psychology. Punjab Labour Code 2026 Calculator. Shahzeb Speaks. https://www.shahzebspeaks.com/punjab-labour-code-calculator/

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A job ended in another province?

The free final settlement calculator covers Islamabad, Sindh, Khyber Pakhtunkhwa and Balochistan, and Punjab under the old Standing Orders.

Open the final settlement calculator