THE interim government in November 2025 passed the Labour (Amendment) Ordinance 2025, bringing about extensive changes in the Labour Act that impact the labour framework. While the reforms are positioned to strengthen worker rights and align with international standards under the International Labour Organisation, its immediate implications for employers are profound and demanding.
The legislation broadens the law’s scope, mandates new administrative obligations and significantly enhances enforcement mechanisms. Employers, especially those employing a large number of workers, now face a substantially more complex and high-stake compliance environment.
The labour law is only applicable to those falling within the definition of worker set by the law. As such, only those are able to enjoy the rights provided in the law and also exercise those rights in labour courts. One of the most consequential aspects of the amendment is the expansion of the definition of ‘worker’ in Section 2(65) of the law.
The previous definition offered broad exclusions, explicitly stating that a worker ‘does not include a person mainly in a managerial, administrative [or supervisory] capacity,’ meaning that a large category of white-collar employees working in these capacities did not enjoy labour law protection and were governed by employment contracts and company policy. The amendment removes this exclusion from the core definition. The new, more inclusive definition states: ‘“worker” means any individual, including someone who is undergoing training... who is employed in any establishment or industry... to perform skilled, unskilled, manual, technical, business development, or clerical work as an employee or officer, by whatever designation called….’
The inclusion of ‘officer’ and the functional category of ‘business development’ tasks immediately pulls a number of previously exempted white-collar staff into the category of ‘worker.’ This means that, depending on the type of organisation, a significant number of employees previously excluded from labour law protection are entitled to labour law protection and enforcement mechanisms.
The maternity benefit entitlement has been changed to expand welfare support for female workers. The ordinance has replaced the earlier eight weeks’ maternity benefit period with 60 days and extended the total paid leave to 120 days from the date of delivery. The period is the total new paid leave entitlement while the 60 days is the standardised equivalent used to adjust administrative time frame previously specified in weeks. It requires at least six months of service before entitlement and maintains the exclusion where a woman has two or more surviving children although it now refers to the mother as ‘mother/parturient.”
Payment methods for the maternity benefit are modernised as benefits may now be given in cash, bank deposit or electronic fund transfer and the wage calculation method is simplified, using monthly wages divided by 26n instead of a three months’ average.
However, for other core provisions, such as notice requirements, proof of delivery, payment timelines and employer obligations in case of the worker’s death, all time frames are adjusted from eight weeks to 60 days. The restriction on job termination during pregnancy and post-delivery also aligns with this sixty days, reflecting the modernisation and digitalisation of procedures without changing the basic protections.
This change primarily impacts employers by requiring them to update all internal human resource manuals, policy documents and reporting software to replace “eight weeks’ with ‘sixty days’ to ensure a full procedural compliance.
The ordinance shifts the balance of industrial power by making it substantially easier for workers in larger establishments to organise and register a trade union. Under the previous requirement, a trade union could only be registered if at least 20 per cent of the workers in the establishment are its members.
The new structure specifies clear numerical ceilings for membership requirements based on the total worker count. As little as 20 workers in an establishment may now jointly apply to register a trade union. However, the union must meet specific membership thresholds based on the total number of workers in the establishment.
The ordinance converts the establishment of a provident fund from an optional provision to a statutory obligation once a minimum threshold of workers is reached, introducing substantial administrative and financial responsibilities for management. The previous provisions were optional and were not triggered until 75 per cent of the workers united to demand its establishment. The new ordinance makes it mandatory for factories and establishments employing 100 or more permanent workers to establish and maintain a provident fund.
The amendment also introduces an option for workers to participate in the national ‘Pragati’ pension scheme as an alternative to the employer-constituted provident fund. The investment provisions have been simplified, limiting investments to government-approved sectors while the earlier version detailed specific investment categories such as ICB Mutual Fund Certificates or government securities.
A comprehensive framework addressing workplace harassment and discrimination has been introduced, demanding the institutionalisation of internal complaints and compliance committees. The ordinance explicitly mandates equal pay for equal work, prohibiting wage discrimination based on gender or disability.
The responsibilities against violence and harassment at work have been significantly expanded. The previous provision was exclusive to the protection of women. The amendment introduced broad and mandatory duties for the owner, employer and authority to ensure that the workplace environment is not hostile and are required to formulate and implement a workplace policy against violence and harassment which is applicable for everyone.
In addition, the mandatory requirement of the establishment of a ‘committee for disposal of complaints on discrimination, violence, and harassment’ has been added.
Under the ordinance, the requirement of establishing an alternative dispute resolution authority dedicated to the resolution of individual and collective labour disputes has been added. This authority is mandated to operate on the crucial principles of impartiality and fairness, notwithstanding any other existing laws.
While labour courts retain their statutory jurisdiction, the introduction of a dedicated ADR authority reflects a legislative intent to strengthen pre-adjudicatory dispute resolution mechanisms. The framework is designed to operate alongside, rather than in substitution of labour courts.
The Labour Act (Amendment) Ordinance marks a significant transformation in labour landscape, expanding protections for workers while imposing more rigorous compliance obligations on employers. From broadened worker definitions and enhanced maternity benefits to mandatory social security and equality frameworks, the ordinance modernises labour regulation to align with rising international standards. Employers must now proactively adapt their policies, processes and reporting mechanisms to meet the heightened requirements, ensuring both legal compliance and a fair, safe and inclusive workplace.
Saqeb Mahbub, a barrister-at-law, is a partner and Afrin Sadia Nusrat is an associate at law firm Mahbub and Company.
