The PESCO Contractual Employees Compensation Policy 2026 introduces a formal compensation and employment framework for contractual employees working against sanctioned posts in the Peshawar Electric Supply Company (PESCO). The policy covers contractual pay scales, annual increments, performance-based increases, leave, medical facilities, gratuity, career progression, performance evaluation, training, transfer, discipline and retirement.
According to the PESCO Office Memorandum dated 17 June 2026, the Board of Directors approved the policy in its 224th meeting held on 4 June 2026 under Agenda Item No. 7, Resolution 224-BOD-R13. The revised scale-wise and stage-wise pay packages are to be implemented with effect from 1 July 2026.
PESCO has also published the PESCO Contractual Employees Compensation Policy in its official Employee Policies section, dated 17 June 2026.
What Is PESCO Contractual Employees Compensation Policy 2026?
The PESCO Contractual Employees Compensation Policy 2026 is a framework designed to regulate the employment and compensation of contractual employees working against sanctioned posts.
The policy explains the appointment structure, contractual pay scales, annual increments, performance evaluation, benefits, career progression and other employment conditions for eligible contractual employees.
According to the policy, PESCO has introduced separate Contractual Pay Scales (CPS) for contractual employees. These scales broadly correspond with the existing Basic Pay Scales (BPS) of regular employees for matters such as qualifications, postings, appraisals, promotions, disciplinary matters and career progression. For example, CPS-1 corresponds to BPS-1 and so on.
PESCO Contractual Policy 2026 Effective Date
The policy was approved by the PESCO Board of Directors on 4 June 2026.
PESCO issued the implementation memorandum on 17 June 2026, and the revised policy and approved pay packages are effective from 1 July 2026.
The policy will remain effective until it is amended or replaced through subsequent approval of the PESCO Board of Directors.
Who Is Covered Under the PESCO Contractual Employees Policy?
The policy applies to contractual employees working on contractual compensation packages from CPS-1 to CPS-19 against sanctioned posts across PESCO’s cadres and departments.
It covers both:
- Existing contractual employees
- Future contractual appointments
- Officers and officials working under the applicable contractual compensation structure
However, employees hired for C-Level positions are excluded because they continue to be governed under the separate C-Level policy approved by the PESCO Board of Directors.
Who Is Not Covered?
The policy specifically states that it does not apply to personnel working on:
- Daily wages
- Casual labour
- Part-time employment arrangements
- Third-party deployment
- Outsourcing agencies
- Other external service providers
Therefore, being associated with PESCO does not automatically mean that every worker is covered by the CPS contractual policy.
PESCO Contractual Employees Will Remain Contractual
One of the important points in the policy is that employees covered by this framework remain contractual employees.
Future appointments under the policy will be made purely on a contractual basis. The policy does not provide pensionary benefits or automatic regularization unless specifically provided under the policy.
The policy also states that contractual employees will have an open-ended tenure, with their contracts remaining valid up to the age of 60 years, unless terminated earlier according to the applicable provisions.
Importantly, length of service under the contractual arrangement does not by itself create a right to regular employment.
Similarly, if an employee is given an additional charge, current charge or acting charge of a higher position, that assignment does not automatically create a right to career progression to that higher position.
PESCO Contractual Pay Scales 2026
The policy introduces CPS-1 to CPS-19.
The pay package consists of:
- Basic Pay
- Utilities Allowance
- House Rent
- Medical Allowance
The policy also states that free electricity units are not admissible to employees covered under this policy.
PESCO CPS Salary Package 2026
The approved scale-wise pay package for lump-sum employees is as follows:
| CPS | Basic Pay | Utilities | House Rent | Medical | Total Package |
|---|---|---|---|---|---|
| CPS-1 | Rs. 30,195 | Rs. 10,980 | Rs. 8,235 | Rs. 5,490 | Rs. 54,900 |
| CPS-2 | Rs. 30,750 | Rs. 11,182 | Rs. 8,386 | Rs. 5,591 | Rs. 55,910 |
| CPS-3 | Rs. 31,680 | Rs. 11,520 | Rs. 8,640 | Rs. 5,760 | Rs. 57,601 |
| CPS-4 | Rs. 32,565 | Rs. 11,842 | Rs. 8,881 | Rs. 5,921 | Rs. 59,210 |
| CPS-5 | Rs. 33,766 | Rs. 12,279 | Rs. 9,209 | Rs. 6,139 | Rs. 61,394 |
| CPS-6 | Rs. 33,882 | Rs. 12,321 | Rs. 9,241 | Rs. 6,160 | Rs. 61,604 |
| CPS-7 | Rs. 34,991 | Rs. 12,724 | Rs. 9,543 | Rs. 6,362 | Rs. 63,620 |
| CPS-8 | Rs. 36,183 | Rs. 13,158 | Rs. 9,868 | Rs. 6,579 | Rs. 65,788 |
| CPS-9 | Rs. 37,394 | Rs. 13,598 | Rs. 10,198 | Rs. 6,799 | Rs. 67,988 |
| CPS-10 | Rs. 38,587 | Rs. 14,032 | Rs. 10,524 | Rs. 7,016 | Rs. 70,158 |
| CPS-11 | Rs. 40,554 | Rs. 14,747 | Rs. 11,060 | Rs. 7,373 | Rs. 73,734 |
| CPS-12 | Rs. 42,839 | Rs. 15,578 | Rs. 11,683 | Rs. 7,789 | Rs. 77,888 |
| CPS-13 | Rs. 45,673 | Rs. 16,608 | Rs. 12,456 | Rs. 8,304 | Rs. 83,042 |
| CPS-14 | Rs. 48,455 | Rs. 17,620 | Rs. 13,215 | Rs. 8,810 | Rs. 88,100 |
| CPS-15 | Rs. 51,299 | Rs. 18,654 | Rs. 13,991 | Rs. 9,327 | Rs. 93,271 |
| CPS-16 | Rs. 61,383 | Rs. 22,321 | Rs. 16,741 | Rs. 11,161 | Rs. 111,605 |
| CPS-17 | Rs. 110,847 | Rs. 40,308 | Rs. 30,231 | Rs. 20,154 | Rs. 201,540 |
| CPS-18 | Rs. 137,104 | Rs. 49,856 | Rs. 37,392 | Rs. 24,928 | Rs. 249,279 |
| CPS-19 | Rs. 197,468 | Rs. 71,807 | Rs. 53,855 | Rs. 35,903 | Rs. 359,034 |
These figures are from the Scale Wise Pay Package of Lump Sum Employees (2026) included in the supplied PESCO policy document.
PESCO Contractual Employees Annual Increment 2026
The policy provides for an annual increment within the applicable contractual pay scale.
An annual increment is admissible from 1 December of each year, subject to the employee having rendered more than six months of service in PESCO to his or her credit.
The policy also states that annual increments may be withheld, deferred or discontinued in accordance with applicable disciplinary rules.
The approved annual increment amounts shown in the pay package are:
| CPS | Annual Increment |
|---|---|
| CPS-1 | Rs. 1,355 |
| CPS-2 | Rs. 1,382 |
| CPS-3 | Rs. 1,426 |
| CPS-4 | Rs. 1,469 |
| CPS-5 | Rs. 1,523 |
| CPS-6 | Rs. 1,576 |
| CPS-7 | Rs. 1,631 |
| CPS-8 | Rs. 1,689 |
| CPS-9 | Rs. 1,747 |
| CPS-10 | Rs. 1,805 |
| CPS-11 | Rs. 1,865 |
| CPS-12 | Rs. 1,977 |
| CPS-13 | Rs. 2,116 |
| CPS-14 | Rs. 2,253 |
| CPS-15 | Rs. 2,392 |
| CPS-16 | Rs. 2,807 |
| CPS-17 | Rs. 4,507 |
| CPS-18 | Rs. 5,688 |
| CPS-19 | Rs. 8,784 |
The policy further states that budgetary or ad-hoc pay increases applicable to regular employees are not applicable to contractual employees covered under this policy.
Performance-Based Increase (PBI)
The policy introduces a Performance-Based Increase (PBI) mechanism for contractual employees.
The PBI is linked to Key Performance Indicators (KPIs) and is not automatic.
The policy states that consideration of PBI may take into account:
- Achievement of assigned KPIs
- Performance during the evaluation period
- Conduct
- Discipline
- Attendance
- Integrity
- Overall service record
- Overall company performance
- Financial position
- Operational efficiency
- Organizational targets
The PESCO Board of Directors retains discretion regarding the extent, deferment, reduction or admissibility of PBI.
Failure to achieve prescribed performance standards or maintain the required conduct and efficiency may result in withholding, deferment, reduction or non-admissibility of the increase.
PESCO Contractual Employees Leave Entitlement
Under the policy, contractual employees are entitled to 48 days of paid annual leave, including Ex-Pakistan leave and Hajj/Umrah leave, subject to the applicable conditions.
Medical leave is allowed according to the standing operating procedure in force.
The annual leave cannot be carried forward and will lapse at the end of each calendar year.
Paid Hajj Leave
Paid Hajj leave is admissible once during the entire service tenure of an employee in PESCO.
It is subject to prior approval from the competent authority and the applicable rules, policy guidelines and operational requirements of PESCO.
Leave Sanctioning Authorities
The policy specifies different authorities for approving leave.
Leave Up to 7 Days
| CPS/Scale | Leave Sanctioning Authority |
|---|---|
| CPS-01 to CPS-09 | Concerned SDO / AM |
| CPS-10 to CPS-14 | Concerned XEN / DM |
| CPS-15 to CPS-17 | Concerned SE / Manager |
Leave Exceeding 7 Days
| CPS/Scale | Leave Sanctioning Authority |
|---|---|
| CPS-01 to CPS-17 | DG (HR), PESCO |
| CPS-18 and above | CEO PESCO |
The policy also places responsibility on the relevant Drawing and Disbursing Officer, Accounts Officer and HR officer to maintain complete and updated leave records.
PESCO Contractual Employees Maternity Leave
Female contractual employees are entitled to maternity leave under the maternity leave policy already approved by PESCO.
The supplied policy states:
- 180 days for the first birth
- 120 days for the second birth
- 90 days for the third birth
The maternity leave is granted on full pay outside the leave account, subject to the conditions stated in the policy.
It cannot be granted more than three times during the entire service of a female employee, except where the leave is granted within the available leave account or as extraordinary leave without pay.
Paternity Leave for PESCO Contract Employees
Male contractual employees of PESCO are entitled to 7 days of paternity leave under the policy.
PESCO Contractual Employees TA/DA
Contractual employees are entitled to Travel and Daily Allowance (TA/DA) according to PESCO’s applicable TA/DA policy.
The policy states that contractual employees will receive the same rates and entitlements as regular employees of corresponding grades when they are deputed or authorized to travel on official duty.
Claims are processed and reimbursed according to the prescribed financial and administrative procedures.
Medical Facility for Contractual Employees
The policy provides medical facilities to contractual employees and their eligible dependents according to the applicable PESCO policy and Standard Operating Procedures.
The medical facility can include reimbursement or direct payment of medical expenses within the prescribed limits and procedures.
It covers both:
- Outpatient Department (OPD) treatment
- Inpatient Department (IPD) treatment
If an employee chooses to receive medical facilities under this policy, the medical allowance corresponding to the relevant pay scale will be deducted from the employee’s salary.
Gratuity for PESCO Contractual Employees
The policy provides contractual employees with eligibility for gratuity benefits according to the PESCO Gratuity Policy.
The gratuity will be calculated and paid according to the rates, conditions and procedures approved by the PESCO Board of Directors.
PESCO had already issued a separate gratuity policy for contractual employees working on a lump-sum pay package in February 2025.
Career Progression Under PESCO Contractual Policy 2026
The policy introduces performance-based career progression opportunities for contractual employees.
Career advancement is to be determined through a comprehensive evaluation framework.
Factors include:
- Sustained performance against approved KPIs
- Professional skills and role-specific expertise
- Integrity, conduct and behavioural standards
- Required eligibility and qualifications
- Contribution toward departmental and organizational goals
- Operational requirements and availability of sanctioned vacancies
- A consistently unblemished service record
Career progression is therefore based on performance and merit rather than simply length of service.
Does Career Progression Make an Employee Regular?
No.
Even if a contractual employee progresses to another scale, grade or rank under the policy, the employee remains contractual.
The policy specifically states that career progression does not create a right to:
- Regularization
- Permanent appointment
- Pensionable status
A fresh contract will be issued after career progression to the next scale, grade or rank.
Performance Evaluation
All employees covered under the policy are subject to annual performance evaluation.
The evaluation can consider:
- Professional competence
- Punctuality
- Conduct
- Behaviour
- Initiative
- Integrity
- Work quality
- Contribution toward company goals
Performance ratings can directly affect eligibility for annual increments, nomination for training, induction, selection and career progression.
Repeated or consistently poor performance may result in disciplinary proceedings or termination of the contract according to the applicable provisions.
The policy also requires performance ratings such as “Excellent” or “Outstanding” to be supported by documented performance evidence, measurable achievements and verifiable outcomes against assigned KPIs.
Training and Development
Contractual employees are to have access to departmental and external training, workshops and professional development programs.
They may also be allowed to appear in departmental examinations, tests and career progression-related assessments.
The HR Directorate is responsible for maintaining a transparent training calendar and nomination process for employees across cadres.
The policy states that field formations should nominate contractual employees for training according to merit and policy without deviation.
Transfer and Posting
Contractual employees may be transferred and posted anywhere within PESCO’s operational jurisdiction when required because of administrative needs or organizational interest.
This means employees covered by the policy may be posted to different locations according to PESCO’s operational requirements.
Discipline and Conduct
Employees covered by the policy are governed by PESCO’s applicable Efficiency and Discipline (E&D) Rules and disciplinary framework.
Misconduct, negligence or violation of company rules may result in disciplinary proceedings.
Possible consequences can include penalties or termination, depending on the nature of the matter and applicable procedure.
The policy states that the principles of natural justice will be observed during disciplinary actions.
Termination of PESCO Contractual Employees
The policy contains separate provisions for termination without cause and termination for cause.
Termination Without Cause
Either party may terminate the employment contract without assigning a reason by providing one month’s prior written notice.
Alternatively, one month’s gross salary may be paid in lieu of notice.
Competent Authority for Termination
| Contractual Pay Scale | Competent Authority |
|---|---|
| CPS-1 to CPS-16 | Director General (HR) |
| CPS-17 & CPS-18 | Chief Executive Officer (CEO) |
| CPS-19 and above | Board of Directors |
Termination for Misconduct
PESCO reserves the right to terminate a contract for proven misconduct, fraud, gross negligence or violation of company policies.
Such action is to be taken after due process under the applicable PESCO disciplinary policy and/or E&D Rules.
Probation Period
Newly appointed contractual employees will serve a six-month probation period.
During probation, the employee’s:
- Performance
- Conduct
- Adaptability
will be evaluated by the immediate supervisor.
If an employee’s performance is considered unsatisfactory, the probation period may be extended or the contract may be terminated by the competent authority according to the applicable contractual terms.
Retirement Age Under PESCO Contractual Policy
Employees covered under this policy will retire automatically upon reaching the age of 60 years.
After retirement, employees will be entitled to withdrawal of approved terminal benefits according to the applicable PESCO policies.
The policy does not provide pensionary benefits or government regularization as a consequence of contractual service.
BPS-Based Contract Employees and Option Under the New Policy
A specific provision is included for employees who are currently working on BPS-based contract terms, excluding regular employees.
These employees are required to exercise an option to accept and be governed by the new policy.
According to the PESCO implementation memorandum, existing BPS-based contract employees were required to exercise this option within 60 days of issuance of the 17 June 2026 memorandum.
Employees who opt into the approved policy can receive the facilities, benefits and career progression opportunities provided under the framework.
Those who do not exercise the option or decline the new framework continue under the terms and conditions of their existing employment contract and do not become entitled to the facilities, benefits or career progression opportunities provided under the new policy.
PESCO Contractual Employees Compensation Policy 2026 – Key Points
Here are the main points in simple form:
- Policy applies to contractual employees from CPS-1 to CPS-19.
- It applies to employees working against sanctioned posts.
- The revised pay packages take effect from 1 July 2026.
- Separate Contractual Pay Scales have been introduced.
- Pay package includes basic pay, utilities allowance, house rent and medical allowance.
- Free electricity units are not admissible under this policy.
- Annual increment is provided from December 1, subject to the six-month service condition.
- Performance-Based Increase is linked to KPIs and performance.
- Contractual employees receive 48 days of paid annual leave under the stated conditions.
- Paid Hajj leave is allowed once during the entire service tenure.
- Female employees receive maternity leave according to the approved policy.
- Male contractual employees receive 7 days of paternity leave.
- TA/DA is available according to the applicable PESCO policy.
- Medical facilities can cover eligible employees and dependents according to applicable rules.
- Gratuity is available according to the PESCO Gratuity Policy.
- Career progression is performance- and merit-based.
- Career progression does not convert contractual employment into regular employment.
- Employees may be transferred anywhere within PESCO’s operational jurisdiction.
- The retirement age is 60 years.
- The policy does not itself provide pension or regularization.
- Contract termination can occur with one month’s notice or salary in lieu of notice, subject to the policy.
- Misconduct and policy violations can result in disciplinary action or termination.
PESCO Contractual Employees Compensation Policy 2026 PDF
The complete policy contains the detailed provisions, including the contractual pay scales and stage-wise pay packages.
PESCO’s official Employee Policies page currently lists the PESCO Contractual Employees Compensation Policy with a publication date of 17 June 2026.
The supplied PESCO document also contains the complete Scale-Wise Pay Package of Lump Sum Employees (2026) and Stage-Wise Pay Package of Lump Sum Employees.
Frequently Asked Questions
What is PESCO Contractual Employees Compensation Policy 2026?
It is a PESCO framework that regulates the compensation, benefits, performance evaluation, career progression and employment conditions of eligible contractual employees working against sanctioned posts.
When did the PESCO Contractual Employees Compensation Policy 2026 take effect?
The revised policy and pay packages are effective from 1 July 2026, according to PESCO’s implementation memorandum.
Which employees are covered by the policy?
Contractual employees working against sanctioned posts under CPS-1 to CPS-19 are covered, subject to the policy’s conditions.
Are daily-wage employees covered?
No. The policy specifically excludes daily-wage personnel, casual labour, part-time employees, third-party workers, outsourcing agencies and other external service providers.
What is the starting pay package under CPS-1 in PESCO?
The approved CPS-1 total package is Rs. 54,900, consisting of basic pay, utilities allowance, house rent and medical allowance.
What is the CPS-19 pay package in PESCO?
The approved CPS-19 total package is Rs. 359,034, including basic pay, utilities allowance, house rent and medical allowance.
Do contractual employees get free electricity units?
No. The policy specifically states that free electricity units are not admissible to employees covered under this policy.
Do contractual employees get annual increments?
Yes. The policy provides annual increments from December 1, subject to the prescribed service condition and other applicable provisions.
Can contractual employees get career progression?
Yes. Career progression opportunities are provided on a performance and merit basis, subject to eligibility, performance, qualifications, sanctioned vacancies and other policy conditions.
Does career progression make a contractual employee permanent?
No. The policy specifically states that career progression does not create a right to regularization, permanent appointment or pensionable status.
What is the retirement age?
The policy provides for automatic retirement at 60 years of age.
Conclusion
The PESCO Contractual Employees Compensation Policy 2026 establishes a structured framework for contractual employees working against sanctioned posts. It introduces CPS-1 to CPS-19 pay scales, defined pay packages, annual increments, performance-based increases, leave provisions, medical facilities, gratuity, career progression and performance evaluation.
At the same time, the policy clearly maintains the contractual nature of employment. Career progression does not itself result in regularization or pensionable status, and contractual employees remain subject to the terms of the policy, their appointment contracts and applicable PESCO rules.
The revised scale-wise and stage-wise pay packages became effective from 1 July 2026, making this policy an important reference for existing and future PESCO contractual employees.
