This makes we wonder where Pakistani middle management, at this job sites to keep both parties in line.
Hopefully this situation will be defused in a manner that becomes a learning experience for both sides.
Foreign contractors need to understand local customs and the expectation of local labor, similar to working with a unionized work force, and therefore local middle management should prevent foreign contractors from pushing on local expectations.
At the same time local labor needs to realize that exaggerated accusations (beyond stating that an engineer wanted someone to work during prayer time and due to frustration may have used choice words) drive away investors that employ them as well as undermine legitimate work ethos.
Imagine if this had happened in a gulf country. What would be the expectation of workers regarding the amount of time given for prayers and lunch? Both parties need to keep within their limitations.