Employer of Record Guide in Bangladesh
Bangladesh's thriving tech sector and competitive talent pool make it an attractive destination for global hiring, but navigating local employment laws requires careful attention to detail. Our comprehensive guide helps you hire compliantly while tapping into one of South Asia's most dynamic emerging markets.
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With major economic hubs like Dhaka and Chittagong driving growth in tech and manufacturing, Bangladesh offers access to skilled professionals at competitive rates. Understanding the local market dynamics—from in-demand skills to tax structures—is essential for successful expansion.
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Your EOR guide in Bangladesh
Bangladesh's employment framework features sector-specific minimum wages, comprehensive leave policies, and detailed statutory requirements that vary significantly across industries. This guide breaks down the essential compliance elements you need to navigate when hiring and managing employees in Bangladesh.
Minimum Wage
Bangladesh has sector-specific minimum wages rather than a universal national minimum wage. The minimum wage varies significantly by industry and is set by the Minimum Wage Board.
| Sector | Minimum Wage (BDT/month) | Effective Date |
|---|---|---|
| Garments (RMG) | 12,000 | December 2023 |
| Tea Industry | 4,350 | 2019 |
| Jute Industry | 8,500 | 2018 |
| Leather Industry | 8,000 | 2019 |
| Banking & Insurance | 15,000 | 2015 |
| Private Security | 8,500 | 2019 |
Note: Writer should double-check these figures as minimum wage rates are subject to periodic revisions by the government.
Payroll Cycle
- Monthly: Most common payment frequency in Bangladesh
- Bi-weekly: Less common but permitted
- Weekly: Primarily for daily wage workers
Salaries must be paid by the 7th day of the following month according to the Bangladesh Labour Act.
Individual Income Tax
| Income Bracket (BDT) | Tax Rate |
|---|---|
| Up to 350,000 | 0% |
| 350,001 to 450,000 | 5% |
| 450,001 to 750,000 | 10% |
| 750,001 to 1,150,000 | 15% |
| 1,150,001 to 1,650,000 | 20% |
| Over 1,650,000 | 25% |
Note: Tax rates are for individual taxpayers for the 2023-24 tax year. Rates may vary for female taxpayers and senior citizens.
Tax Residency Criteria
Individuals who stay in Bangladesh for 182 days or more in a tax year are considered residents for tax purposes and must pay tax on worldwide income. Non-residents pay tax only on Bangladesh-sourced income.
Employer Payroll Contributions
Employers in Bangladesh are required to make several statutory contributions:
| Contribution Type | Employer Rate | Employee Rate | Total |
|---|---|---|---|
| Provident Fund | 10% | 10% | 20% |
| Group Insurance | 0.5% | - | 0.5% |
| Welfare Fund | 2% | - | 2% |
| Workers' Profit Participation Fund | 5% of net profit | - | 5% |
Note: Contributions are calculated on basic salary plus dearness allowance.
Working Hours
The standard working hours in Bangladesh are:
- 8 hours per day
- 48 hours per week
- 6 days per week (with Friday or another day as weekly holiday)
Certain industries like tea gardens and newspapers have different hour regulations under the Bangladesh Labour Act.
Overtime Pay
- Overtime is paid at 2× the ordinary rate for hours worked beyond 8 hours per day
- Maximum overtime allowed is 2 hours per day
- 12 hours of overtime per week maximum
- Overtime must be voluntary and cannot be forced
Bonus Payments
- Festival Bonus: Two festival bonuses per year (equivalent to basic salary each)
- Service Benefit: After 5 years of continuous service, employees receive gratuity equal to 30 days' wages for each year of service
- Profit Sharing: 5% of net profit must be distributed among workers in companies with 50+ employees
Employment Classifications
- Permanent Workers: Entitled to full benefits and job security
- Temporary Workers: Limited-term contracts with reduced benefits
- Casual Workers: Day-to-day employment with minimal protections
- Apprentices: Special category with reduced wages during training period
Annual Leave
- Earned Leave: 1 day for every 18 days worked (approximately 20 days per year)
- Casual Leave: 10 days per year
- Medical Leave: 14 days per year with full pay
- Accumulation: Earned leave can be accumulated up to 40 days
Sick Leave
- 14 days per year with full pay
- Medical certificate required for leave exceeding 3 consecutive days
- Additional unpaid sick leave may be granted with medical certification
Maternity Leave
- 16 weeks of paid maternity leave (8 weeks before and 8 weeks after delivery)
- 2 additional periods of 16 weeks each for subsequent children
- Paid at full salary by the employer
- Job protection guaranteed during leave
Paternity Leave
- 7 days of paid paternity leave
- Must be taken within 6 months of child's birth
- Applies to male employees with at least 1 year of service
Festival Leave
- 11 days for major religious festivals
- Includes Eid-ul-Fitr, Eid-ul-Adha, Durga Puja, and other religious observances
- Additional leave may be granted for regional festivals
Summary
| Leave Type | Duration | Paid? | Funding |
|---|---|---|---|
| Annual (Earned) | ~20 days/year | Yes | Employer |
| Casual Leave | 10 days/year | Yes | Employer |
| Sick Leave | 14 days/year | Yes | Employer |
| Maternity Leave | 16 weeks | Yes | Employer |
| Paternity Leave | 7 days | Yes | Employer |
| Festival Leave | 11 days/year | Yes | Employer |
Termination Types
Termination with Cause:
- Misconduct, dishonesty, or breach of contract
- No notice or compensation required
- Must follow proper disciplinary procedures
Termination without Cause:
- Requires notice period or payment in lieu
- Severance compensation may be required
- Must not be discriminatory
Notice Period Requirements
| Length of Employment | Notice Period |
|---|---|
| Less than 120 days | None |
| 120 days to 1 year | 30 days |
| 1 to 5 years | 60 days |
| 5 to 10 years | 90 days |
| Over 10 years | 120 days |
Severance Pay
- Retrenchment: 30 days' wages for each year of service
- Lay-off: Compensation equal to 50% of wages for lay-off period
- Golden Handshake: Voluntary separation packages may be offered
Service Benefits (Gratuity)
After 5 years of continuous service:
- 30 days' wages for each completed year of service
- Payable upon termination, retirement, or death
- Based on last drawn wages
Final Pay Requirements
- Final settlement must be completed within 30 days of termination
- Must include all earned wages, leave encashment, and service benefits
- Provident fund settlement processed separately
Disciplinary Procedures
Before termination for cause, employers must:
- Issue show-cause notice
- Conduct proper inquiry
- Provide opportunity for defence
- Follow principles of natural justice
National Public Holidays
| Holiday | Date | Type |
|---|---|---|
| International Mother Language Day | February 21 | National |
| Independence Day | March 26 | National |
| Bengali New Year | April 14 | Cultural |
| May Day | May 1 | International |
| National Mourning Day | August 15 | National |
| Victory Day | December 16 | National |
| Christmas Day | December 25 | Religious |
Religious Holidays (Variable Dates)
| Holiday | Duration | Community |
|---|---|---|
| Eid-ul-Fitr | 3-4 days | Muslim |
| Eid-ul-Adha | 2-3 days | Muslim |
| Durga Puja | 4-5 days | Hindu |
| Kali Puja | 1 day | Hindu |
| Buddha Purnima | 1 day | Buddhist |
Note: Religious holiday dates vary based on lunar calendar.
Holiday Pay Rules
- Employees working on public holidays receive double pay
- Alternative compensatory leave may be provided
- Religious minorities entitled to their community's festival holidays
Regional Variations
- Chittagong: Additional local holidays
- Sylhet: Tea industry-specific holidays
- Tribal Areas: Indigenous community festivals recognised
Required Documents
Employment Contract Must Include:
- Job description and responsibilities
- Salary and benefits structure
- Working hours and leave entitlements
- Termination clauses and notice periods
- Confidentiality and non-compete clauses
Employee Documentation:
- National ID card or passport
- Educational certificates
- Experience certificates
- Medical fitness certificate
- Passport-size photographs
- Bank account details
Work Permit Requirements
For Foreign Nationals:
- Work permit from Board of Investment (BOI)
- Visa endorsement from Department of Immigration
- Tax Identification Number (TIN)
- Registration with relevant professional bodies
Legal Compliance
Mandatory Registrations:
- Employee registration with Department of Labour
- Provident fund registration
- Group insurance enrolment
- Workers' welfare fund registration
Contract Language
- Contracts may be in Bengali or English
- Bengali translation required for local employees if contract is in English
- All statutory notices must be displayed in Bengali
Probationary Period
- 6 months maximum probationary period
- Reduced notice period during probation (14 days)
- Performance evaluation required before confirmation
Onboarding Timeline
| Step | Timeline |
|---|---|
| Offer acceptance | Day 0 |
| Document verification | Day 1-3 |
| Contract signing | Day 3-5 |
| Statutory registrations | Day 5-10 |
| Payroll setup | Day 7-10 |
| Orientation program | Day 10-15 |
Worker Classification
Employee vs Contractor Distinction:
- Control Test: Level of supervision and direction
- Integration Test: How integral the work is to business
- Economic Reality Test: Financial dependence and risk
Misclassification can result in penalties and back-payment of benefits.
Labour Union Considerations
- Workers have the right to form and join trade unions
- 30% membership required to form a union in an establishment
- Collective bargaining agreements override individual contracts
- Strike action regulated under Industrial Relations Act
Industry-Specific Regulations
Garments Industry:
- Special safety and working condition requirements
- Compliance with international buyer standards
- Regular factory inspections mandatory
Tea Industry:
- Plantation Labour Act applies
- Housing and medical facilities required
- Different wage and hour regulations
Cultural Workplace Norms
Communication Style:
- Hierarchical respect important
- Indirect communication common
- Religious sensitivity required
Work-Life Balance:
- Friday prayer time accommodation for Muslims
- Festival season flexibility expected
- Family obligations highly valued
Remote Work Framework
Remote work is not extensively regulated but employers should:
- Ensure data security and confidentiality
- Provide necessary equipment and internet allowance
- Maintain regular communication and supervision
- Comply with labour law requirements regardless of work location
Compliance Monitoring
Government Inspections:
- Labour inspectors can visit workplaces
- Compliance with safety and wage regulations checked
- Penalties for violations include fines and prosecution
Record Keeping Requirements:
- Employee registers and attendance records
- Wage payment records
- Leave and overtime registers
- Accident and injury reports
What Borderless AI Handles:
When you hire through Borderless AI in Bangladesh, we manage:
- Employment contract drafting and compliance
- Statutory registration and documentation
- Payroll processing and tax compliance
- Leave management and statutory benefits
- Termination procedures and final settlements
- Ongoing regulatory compliance monitoring
Built-in benefits packages for Bangladesh
When the world is your competition, it pays to incentivize new hires and existing alike. Borderless AI benefits packages typically inlucde:
Medical Insurance
Dental Insurance
Retirement Contribution
Life Insurance
Vision Insurance
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