Under the labour laws of Pakistan, in the event of an outbreak of an epidemic, an employer has the right to reduce wages by 50% for 14 days and eventually retrench the worker. The World Health Organization has declared Coronavirus Disease (COVID-19) as a Pandemic and Global Health Emergency. Ordinarily in the circumstances, the employers should have recourse to options available to an employer in the case of an epidemic under the labour laws. However, the Government of Sindh issued a Special Sindh Notification on Coronavirus (Covid-19) under the Epidemic Disease Act which states that during the on-going epidemic all employees shall be paid salary / wages in full; no employee shall be laid off; and, closure shall be considered as paid leave. The Notification was followed by a draft Ordinance with similar provisions which has yet to be signed by the Governor of Sindh to be become law. The moratorium on reduction of wages and retrenchment has also become the subject of a legal challenge which is currently pending in Court. A similar Moratorium Notification was issued by the Federal Government in the Capital Territory of Islamabad. The issue of retrenchment and reduction in salary is also being litigated in the province of Punjab.
The Federal Government has also issued a scheme for extending loans to businesses at reduced markup rates provided they undertake not to retrench their workmen.