No Law for the New Worker: Pakistan’s Legislative Vacuum in the Gig Economy

Abstract

Pakistan finds itself in a paradox; while its digital economy is celebrated as a major contribution of economic growth, the legal framework remains untenable and profoundly ill equipped. The country ranks among the world’s top freelancing markets and is home to more than 2.3 active freelancers who significantly propel to employment, innovation and generating $856 million in foreign exchange through computer and IT services and by the end of the third quarter of FY2025 alone, a 50% increase over the corresponding period of the previous year. Pakistan’s broader IT and IT enabled services exports, which include freelancing, have reached historic highs of over $4.6 billion.

Yet despite this remarkable contribution, mullion of Pakistanis employed in platform-based work such as ride hailing drivers, food delivery riders, software developers, graphic designers, content creators and other on demand professionals, remain entirely outside the ambit of Pakistan’s protection of labors regime. The country retains no gig economy dedicated legislation, there is no legal definition of a “platform worker,” and unsurprisingly there is no institutional mechanism through which these workers can claim minimum wage, social security, injury compensation, or dispute resolution. This article articulates and argues that Pakistan’s legislative silence on gig constitutes a systemic injustice that threatens the sustainability of the very digital economy the state is seeking ot potentially build. [1]

The Scale of the Gap

According to the Pakistan Labor Force Survey 2024–25, online gig work now accounts for 2.9 percent of total employment in the country. Although this proportion may appear relatively modest, it translates into hundreds of thousands of workers captured within statistics alone, which dramatically when informal and unregistered platform participants are included. The survey further reveals the breadth of the gig economy, with workers primarily engaged in teaching (17.8%), taxi services (16.8%), selling goods (16.8%), freelancing (14.3%), and delivery services (12.2%). Far from constituting a peripheral segment of the labor market, this demographical is not marginal; it represents a cross sectoral workforce entrenched into an urban infrastructure and the global digital marketplace. They transport passengers, deliver goods and services, educate students, develop software, and provide digital services to clients across the world. According to the Asian Development Bank, Pakistan is home to more than 2.37 million freelancers, ranking Pakistan among the world’s largest freelancers labor ambit.[2]

The Legal Architecture and Its Exclusions

Pakistan’s existing labor law framework is premised on a on a traditional, binary understanding of employment, to paint a dichotomy; a worker is either an employee or an independent contractor. Within this framework workers are entitled to protections such as minimum wage, social security coverage, health benefits, the right to collective organization and compensation for workplace injury are usually only reserved to workers that are recognized as employees. Gig workers on the other hand, operate as independent contractors; this designation places them outside the protective bubble of most labor legislation. Digital platforms such as Yango, Foodpanda, inDrive, and numerous other freelance marketplaces routinely decipher their workers as self-employed individuals. This classification is not incidental but benefiting the system. The classification enables the platforms to minimize their costs and liabilities, while shifting their operational risks on the workers, leaving the gig workers in a precarious situation.[3]

The legal instruments that do exist are woefully inapplicable to this workforce. Laws such as the Punjab Minimum Wages Act, 2019 (and similar acts in other provinces) sets minimum wage standards, and the Employees’ Old-Age Benefits Act (EOBI), 1976 provides pensions and old-age benefits to employees in industrial and commercial establishments. However, these regimes are premised on conventional employer and employee relationships and are therefore structurally ill-suited for platform-based labor. There is no equivalent mechanism for solo platform workers whose “employer” is an algorithm. Pakistan currently lacks both a legal definition of gig or platform employment and any institutional mechanism for regulating platform-worker relationships. Consequently, a rapidly expanding segment of the labor force is rendered legally unprotected, falling through the gap between employment classification and independent contractor regimes.[4]

Furthermore, cross border freelancers face a parallel and equally sever gap. Pakistan’s legal system lacks a clear definition of what constitutes as gig workers and their designated status and without a clear criterion, workers are not aware of their legal obligation and protection, hindering upon social security contributions, labor rights and even eligibility for benefits. Taxation further compounds this uncertainty.

As Pakistan follows a residence-based taxation system, residents are generally taxed on worldwide income, yet many remote freelancers remain unsure how overseas earnings should be reported, leading some to underreport income for fear of penalties while others overpay out of caution. Leegal uncertainty extends to cross border disputes as well. When conflicts arise over payments, intellectual property, or contractual obligations, Pakistani freelancers have limited to almost no means of enforcing their rights against foreign clients, with no specialized dispute resolution mechanism or legal framework designed for digital work or bilateral legal agreements tailored to digital work, many freelancers can only hope for informal solutions, often at a disadvantage.

The Consequences of Inaction

The absence of legal protection carries direct, material consequences for gig workers. Many employ significantly personal capital at the outset of their work, purchasing motorbikes, cars, all for what? Do be subjected to earn inconsistent fluctuating incomes while bearing high operation costs such as maintenance, fuel and mobile data packages. This vulnerability is compounded by the absence of institutional protections, while the platforms market the flexibility as freedom of gig worker; many workers feel vulnerable and trapped in a perpetuates cycle of low earnings at a high risk. When a delivery rider is injured at work, there is no compensation to claim.

When a freelance is frauded by a foreign client, there is no safety blanket. Work allocation, remuneration, and account status are frequently governed by opaque algorithmic systems, yet in the absence of regulatory oversight, workers have limited or no meaningful recourse against sudden deactivations, unilateral policy changes, or arbitrary reductions in pay.[5] this apparent vulnerability extends beyond labor rights into the realm of speech and digital expression. The 2025 amendments to the Prevention of Electronic Crimes Act (PECA) have further layered risk onto an already precarious workforce. Restrictive internet policies and the prospect of platform bans threaten the livelihoods of freelancers, content creators, and digital entrepreneurs whose income depends on uninterrupted online access.

The amendments inculcated penalties of up to three years imprisonment and fines of up to Rs 2 million for disseminating information deemed “false” or “fake” that may cause dear, panic or unrest a vague standard that content creators, journalists-turned-freelancers, and digital marketers must navigate without clarity. Civil society has drawn sharp criticism: the amendment introduces a criminal offence against those perpetrating so-called “false and fake information,” and the vague and ambiguous framing of some elements of the offense raises concerns that this new offence will chill what little is left of the right to online expression in the country. For gig workers whose livelihoods rely on digital platforms, this regulatory environment compounds their insecurity by exposing them not only to economic precarity but also subject them to uncertain legal risks.

Beyond individual vulnerability, the legal vacuum also carries broader structural implications for the economy. Pakistan’s informal sector employs around 70% of the total workforce, with gig and platform-based work expanding rapidly but remaining largely unregulated, creating legal gaps in worker protections and employment classification. The rise of the gig economy has fabricated a new class of workers who are not clearly classified as employees or independent contractors, thus falling into a legal grey area with no access to traditional labor protections, necessitating new legislative thinking.[6] As one recent commentary analyzed, the State bank and policy documents now track digital; expose incomes, but again there remain on coherent legal pathway in order to observe freelancers’ earnings, obtain social security, access credit or protect their data. The same analysis warns starkly that without laws that protect digital labor, robust date rights that recognize individuals’ ownership of their personal data, and regulatory oversight enduring platform transparency, Pakistani workers will continue to capture only a fraction of the value they create. Their labor will fuel the digital economy, their data will strengthen foreign platforms, yet the legal system will persists foreign platforms, yet the legal system will continue to deny them adequate recognition and protection.

The international comparative landscape offers instructive- if imperfects- models for reform. The European Union’s Platform Work Directive (2024), which entered into force on 1 December 2024, obligates EU countries to establish a rebuttal legal presumption of employment at a national level, aiming to correct the imbalance of power between the digital labor platform and the person platform performing platform work. Under this framework, a platform worker relationship is presumed to be employment where indicators of control and direction exist, effectively shifting the burden of proof onto the platform. The directive also sets a transparency requisites in algorithm management that restricts processing of sensitive personal data, mandates data protection impact assessments, and prohibits termination based soley on automated decision making. Member states transpose this protection into national law by December 2026[7].

Additionally, California’s Assembly Bill 5[8] attempted to reclassify gig workers as employees. India has introduced a Code on Social Security (2020) that extends portable social security benefits to platform and gig workers for the first time. Pakistan has no analogous legislation under development. Only a small portion of Pakistan’s gig workforce is formalized through banking channels, contracts or legal protections, rendering a deeper pattern of structural vulnerability. While simultaneously the state promotes freelancing as a key export sector, offering a 0.2% reduction of tax rate under the Pakistan Software Export Board (PSEB) and enabling freelancers to retain substantial foreign exchange earnings, these are incentives no way near matched by corresponding labor protection. This generates an asymmetrical arrangement in which the states benefit from gig labor gig labor’s contribution to foreign exchange and revenue while withholding the basic legal protection attributed with formal employment including those guaranteed under legislation such as the Factories Act 1934. The result is a persistent regulatory imbalance between economic inclusion and legal exclusion.[9]

Conclusion

Pakistan’s gig economy legislation gap is not a minor administrative oversight. It is a structural failure that strips millions of workers of minimum wage guarantees, social security, occupational health protection, collective bargaining rights, and access to dispute resolution, at the precise moment when their labor is most economically consequential. As Pakistan continues to embrace digitalisation, addressing the regulatory vacuum around gig work is crucial. A future where both platforms and workers thrive will require policymakers to bridge the gap between innovation and labor rights, ensuring that the digital economy grows not just rapidly, but responsibly. Enacting a dedicated Gig and Platform Workers Protection Act, ne that introduces a third employment classification, mandates portable social protection contributions, establishes a platform transparency code, and creates accessible digital dispute resolution, is no longer a policy aspiration. It is a constitutional obligation.

Endnotes: 

1. Arab News, “Pakistan’s Freelance Economy Could Top $1 Billion,” September 2025, https://www.arabnews.com/node/2616787/pakistan; Profit by Pakistan Today, “Pakistan Freelancers’ Earnings Rise 50% to $856 Million in 9MFY26,” April 21, 2026, https://profit.pakistantoday.com.pk/2026/04/21/pakistan-freelancers-earnings-rise-50-to-856-million-in-9mfy26; The Friday Times, “Pakistan’s Digital Economy: Freelancers Create Value But Lack Rights and Protections,” December 14, 2025, https://www.thefridaytimes.com/14-Dec-2025/pakistan-s-digital-economy-freelancers-create-value-lack-rights-protections.
2. The News, “Pakistan’s Gig Gamble,” April 2026, https://www.thenews.pk/tns/detail/1408138-pakistans-gig-gamble; Pakistan Today, “Small in Size, Big in Survival,” April 1, 2026, https://www.pakistantoday.com.pk/2026/04/01/small-in-size-big-in-survival; The Express Tribune, “Freelancers Fetch $856m in 9 Months,” April 2026, https://tribune.com.pk/story/2604077/freelancers-fetch-856m-in-9-months.
3. Mondaq, “Pakistan’s Thriving Gig Economy: Growth Without Legal Protection,” January 2026, https://www.mondaq.com/employee-benefits-compensation/1730122/pakistans-thriving-gig-economy-growth-without-legal-protection.
4. PK Laws, “Labour Laws in Pakistan: Rights, Regulations and Compliance,” 2026, https://pklaws.com/labour-laws-in-pakistan-rights-regulations-and-compliance/; Skuad, “Employment Laws in Pakistan,” https://www.skuad.io/employment-laws/pakistan.
5. Mondaq, “Pakistan’s Thriving Gig Economy: Growth Without Legal Protection,” January 2026, https://www.mondaq.com/employee-benefits-compensation/1730122/pakistans-thriving-gig-economy-growth-without-legal-protection.
6. WebHR, “Labour Laws in Pakistan,” 2025, https://web.hr/blog/labour-laws-in-pakistan; PK Laws, “Labour Laws in Pakistan: Rights, Regulations and Compliance,” 2026, https://pklaws.com/labour-laws-in-pakistan-rights-regulations-and-compliance/.
7. European Parliament and Council of the European Union, Directive (EU) 2024/2831 of 23 October 2024 on improving working conditions in platform work, Official Journal of the European Union, published November 11, 2024, https://eur-lex.europa.eu/eli/dir/2024/2831/oj/eng.
8. California Legislature, Assembly Bill No. 5 (AB 5), Chapter 296, 2019, codifying the “ABC test” for worker classification.
9. The Friday Times, “Pakistan’s Digital Economy: Freelancers Create Value But Lack Rights and Protections,” December 14, 2025, https://www.thefridaytimes.com/14-Dec-2025/pakistan-s-digital-economy-freelancers-create-value-lack-rights-protections; The Nation, “Pakistani Freelancers Earn Half Billion Dollars in 1HFY26,” February 22, 2026, https://www.nation.com.pk/22-Feb-2026/pakistani-freelancers-earn-half-billion-dollars-1hfy26.

Bibliography:

Primary Legal Materials

California Legislature, Assembly Bill No 5, ch 296 (2019)

Directive (EU) 2024/2831 of the European Parliament and of the Council of 23 October 2024 on improving working conditions in platform work [2024] OJ L 2024/2831

Secondary Sources

Arab News, ‘Pakistan’s Freelance Economy Could Top $1 Billion’ (Arab News, September 2025) https://www.arabnews.com/node/2616787/pakistan accessed 30 June 2026

Asian Development Bank, Report on Pakistan Freelancers (Asian Development Bank, n.d.)

Mondaq, ‘Pakistan’s Thriving Gig Economy: Growth Without Legal Protection’ (Mondaq, January 2026) https://www.mondaq.com/employee-benefits-compensation/1730122/pakistans-thriving-gig-economy-growth-without-legal-protection accessed 30 June 2026

Pakistan Bureau of Statistics, Pakistan Labour Force Survey 2024–25 (PBS, 2025)

PK Laws, ‘Labour Laws in Pakistan: Rights, Regulations and Compliance’ (PK Laws, 2026) https://pklaws.com/labour-laws-in-pakistan-rights-regulations-and-compliance/ accessed 30 June 2026

State Bank of Pakistan, Export Receipts Data, FY2025–26 (SBP, 2026)

The Express Tribune, ‘Freelancers Fetch $856m in 9 Months’ (The Express Tribune, April 2026) https://tribune.com.pk/story/2604077/freelancers-fetch-856m-in-9-months accessed 30 June 2026

The Friday Times, ‘Pakistan’s Digital Economy: Freelancers Create Value But Lack Rights and Protections’ (The Friday Times, December 2025) https://www.thefridaytimes.com/14-Dec-2025/pakistan-s-digital-economy-freelancers-create-value-lack-rights-protections accessed 30 June 2026

The News, ‘Pakistan’s Gig Gamble’ (The News, April 2026) https://www.thenews.pk/tns/detail/1408138-pakistans-gig-gamble accessed 30 June 2026

WebHR, ‘Labour Laws in Pakistan’ (WebHR, 2025) https://web.hr/blog/labour-laws-in-pakistan accessed 30 June 2026