Focus of this research paper is to assess social exclusion in children due to underage employment in Peshawar-Pakistan. Social exclusion in children was found significantly and positively associated with undertaking paid work, leave entitlement in the job, low monetary returns, long work duration and harsh treatment from employer. Moreover, social exclusion was pronounced in children from families with health problems, insufficient amount for food, education, utility bills, new cloths and honorable social life. Likelihood of social exclusion in children increases with their involvement in paid job, feminine gender, belonging to religious minorities and are from single parent family, however, likelihood of social exclusion decreases when a child stops feeling himself as poor. Protecting children against underage employment, provision of economic security at family level and forceful and broader application of child labor law in both public and private sectors of economy by the government with a comprehensive follow up strategy were suggested policy recommendations.