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Employer of Record (EOR) in Bangladesh | Hiring and Payroll with a Global PEO in Bangladesh | Employment Laws

An Employer of Record (EOR) in Bangladesh is a company that takes on the responsibility of being the legal employer for a worker. This includes managing payroll, benefits, and other employment-related tasks on behalf of the worker's actual employer.

employer of record bangladesh

Discover the key considerations and essential details you should be aware of before you hire your remote team in Bangladesh.

Bangladesh Overview

Unleash your growth potential in Bangladesh's vibrant tech hub! Access a vast talent pool of tech-savvy professionals at competitive costs, collaborate seamlessly with a 6-hour GMT+6 time zone, and leverage a business-friendly environment brimming with innovation. Dive into the Bay of Bengal and discover your dream remote team, powered by Bangladeshi talent and fueled by endless possibilities.

Time zoneUTC+06:00 (BST)
Total Time zones1
Working hours per week40
Working weekSunday-Thursday
Typical hours worked8
Personal Tax filing deadlineNA
Financial Year1 July – 30 June
Date formatNo official standard.
CurrencyBangladeshi Taka (BDT) (৳)
VATthe standard rate is 15%

Employment Contracts in Bangladesh

Employment contracts play a crucial role in defining the relationship between an employer and employee in Bangladesh. Here's a comprehensive overview:

Legality and Necessity:

  • Legally binding: While not mandatory for every employment relationship, a written contract is highly recommended as it serves as legal proof of terms and conditions agreed upon.

  • Alternative: In the absence of a written contract, the Bangladesh Labor Law regulates the relationship based on its provisions.

Key Components:

  • Parties: Names and addresses of both employer and employee.
  • Job title and description: Clearly specifying the employee's role and responsibilities.
  • Term: Whether permanent, temporary, or fixed-term contract.
  • Remuneration: Salary amount, payment frequency, bonuses, allowances, etc.
  • Working hours: Regular working hours, overtime provisions, and rest periods.
  • Leave: Annual leave, sick leave, maternity/paternity leave, and other types of leave.
  • Termination: Notice period required for termination by either party, grounds for termination, and severance pay provisions.
  • Confidentiality: Clauses protecting confidential information and intellectual property.
  • Dispute resolution: Process for resolving disagreements arising from the contract.

Additional Considerations:

  • Language: Bengali is preferred, but English is also permitted and commonly used.
  • Clear and concise: Use simple language and avoid ambiguity to prevent misunderstandings.
  • Legal review: Consider having a lawyer review the contract to ensure compliance with Bangladeshi labor laws.
  • Fairness and balance: Both parties should benefit from the agreement, and its terms should be fair and equitable.

Unlock legal clarity with an Employer of Record (EOR) in Bangladesh. Craft legally sound employment contracts tailored to local laws, ensuring clear terms and compliance for both employers and employees.

Worker Classification in Bangladesh

In Bangladesh, the classification of workers in any establishment is a crucial aspect that takes into account the diverse nature of employment. Workers may fall into various classes based on the specific nature and conditions of their work. Let's delve into the distinct categories that define the employment landscape in Bangladesh.

  • Apprentice: Individuals undergoing training, receiving allowances during the training period.
  • Substitute: Temporarily fills in for a permanent worker or probationer, ensuring smooth operations.
  • Casual Worker: Engaged for ad-hoc tasks, offering flexibility for short-term labor needs.
  • Temporary Worker: Employed for inherently temporary tasks, addressing specific project requirements.
  • Probationer: Assessed during a designated period in a permanent post before the final decision.
  • Permanent Worker: Initially hired on a permanent basis or upon successful completion of the probationary period.
  • Seasonal Worker: Employed to meet demands during specific seasons, providing a flexible workforce.

Understanding these classifications is essential for both employers and workers, as it establishes a framework that aligns with the dynamic nature of employment in Bangladesh. Clear delineation of roles and expectations within each category contributes to a harmonious and productive work environment.

Navigating the complexities of worker classification is simplified with an Employer of Record (EOR) in Bangladesh. Employers receive valuable insights, assisting in accurately classifying workers according to local regulations, ensuring compliance and mitigating risks.

Working Hours and Overtime in Bangladesh

In Bangladesh, the Bangladesh Labour Act, 2006, governs the working hours and overtime pay for adult workers. According to Section 100, no adult worker should ordinarily work for more than 8 hours a day, with the provision for extension to 10 hours under certain conditions.

Section 101 mandates intervals for rest or meals, ensuring workers receive breaks during their work hours. Weekly working hours are capped at 48, with a provision for extension to 60 hours, subject to specific conditions. Additionally, Section 103 entitles workers to weekly holidays.

Compensatory weekly holidays are provided in case workers are deprived of their weekly holidays due to exemptions. The Act allows compensatory holidays and permits workers to work on weekly holidays with the option to add it to festival holidays.

Sections 105 and 106 address the spread over of work hours and night shifts, setting limits and defining holidays for shift work extending beyond midnight. Section 108 outlines extra allowances for overtime work, entitling workers to twice their ordinary rate of basic wage for overtime hours worked in an establishment.

These regulations aim to establish a fair balance between the rights of workers and the operational needs of establishments, ensuring compliance with labor standards in Bangladesh.

An Employer of Record (EOR) in Bangladesh supports employers in adhering to working hours and overtime regulations. This assistance includes establishing compliant schedules, managing overtime effectively, and ensuring that employees receive fair compensation for additional work, promoting a balanced and legally compliant work environment.

Probation Period in Bangladesh

In Bangladesh, the probationary period for workers is a crucial phase that varies based on the nature of their roles. Let's unravel the specifics:

  1. Probation Duration:
    • For workers handling clerical duties, the probationary period spans 6 (six) months.
    • For workers in roles beyond clerical functions, the probationary period is 3 (three) months.
    • *Note: Skilled workers may encounter an extension of their probation by an additional 3 (three) months if the quality of their work remains challenging to assess within the initial 3 (three) months.*
  2. Confirmation of Permanent Status:

    Regardless of whether a confirmation letter is issued or not, a worker is considered permanent in accordance with sub-section (7) once the probationary period, or any extended period, concludes satisfactorily.

  3. Termination and Reappointment:

    If a worker's service is terminated during the probationary period (including any extension) and they are reappointed by the same employer within 3 (three) years, they are deemed probationers. The earlier probation period is factored into the total duration of their probation.

  4. Transition for Permanent Workers:

    In the event that a permanent worker is appointed as a probationer in a new role, the employer retains the flexibility to revert the worker to their previous permanent post at any time during the probationary period.

Understanding these probationary nuances is essential for both employers and workers. It provides a framework for evaluating performance, ensuring fair treatment during transitions, and establishing a stable and mutually beneficial employment relationship in Bangladesh.

Employers benefit from clear guidance on probationary periods with an Employer of Record (EOR) in Bangladesh. Assistance is provided in defining and implementing probationary terms in accordance with local laws, facilitating a structured and compliant approach to employee evaluation.

Employers benefit from clear guidance on probationary periods with an Employer of Record (EOR) in Bangladesh. Assistance is provided in defining and implementing probationary terms in accordance with local laws, facilitating a structured and compliant approach to employee evaluation.

Employee Benefits in Bangladesh

Maternity Benefit in Bangladesh

In Bangladesh, provisions outlined in the Bangladesh Labour Act, 2006, safeguard the rights of women workers during and after pregnancy. Employers are prohibited from engaging women in the 8 weeks following delivery, and no woman may work during this period. The Act also prohibits engaging women in arduous work during pregnancy, ensuring their well-being.

Under the Act, women workers are entitled to maternity benefits, encompassing an 8-week period preceding and following delivery. To qualify, a woman must have worked for her employer for at least 6 months preceding her delivery. The Act mandates employers to pay maternity benefits promptly and outlines acceptable proof of childbirth. The amount of maternity benefit is calculated based on the daily, weekly, or monthly average wages.

In the unfortunate event of a woman's death during delivery or the 8-week post-delivery period, the Act specifies the distribution of maternity benefits to the surviving child's caretaker or the woman's nominee or legal representative.

Additionally, the Act imposes restrictions on terminating a woman's employment within 6 months before and 8 weeks after delivery without sufficient cause, ensuring job security during this crucial period. These regulations collectively aim to support and protect the well-being of women workers in Bangladesh.

Casual Leave (Section 115)

Workers are entitled to 10 days of casual leave with full wages in a calendar year. This leave cannot be accumulated for the succeeding year and doesn't apply to tea plantation workers.

Sick Leave (Section 116)

Every worker (excluding newspaper workers) is entitled to sick leave with full wages for 14 days annually. Certification from a registered medical practitioner is required, and this leave cannot be carried forward.

Annual Leave with Wages (Section 117)

Adult workers completing one year of continuous service are entitled to leave with wages, calculated based on the preceding 12 months' work. Rates vary for different types of establishments. Adolescent workers also have similar provisions. Unused leave can be carried forward, but there are limits.

Festival Holidays (Section 118)

Workers are allowed 11 festival holidays with wages in a calendar year. Employers set the days, and if a worker works on a festival holiday, substitute holidays and compensatory wages are provided.

Calculation of Wages during Leave or Holiday (Section 119)

During leave or holidays, workers are paid at the rate equal to the daily average of their full-time wages, excluding overtime and bonus for the month preceding the leave. Cash in lieu of food grain benefits is included. Payment is made before the leave begins for certain durations.

Employment Documentation in Bangladesh

In Bangladesh, the service book is a vital document that employers are obligated to provide for every worker, serving as a comprehensive record of their employment journey. This document, kept in the custody of the employer, includes essential details such as personal information, work history, wages, and allowances. When hiring, employers may request the worker's previous service book, and if one doesn't exist, a new service book is provided. Workers have the option to maintain a duplicate copy at their own expense. Upon termination, employers hand over the service book to the worker, and in case of loss, a copy is supplied by the employer at the worker's cost. Notably, these regulations do not apply to apprentices, substitutes, or casual workers. The service book, known by various names such as "Employee Record" or "Employment Record" in different countries, is designed in a specific form with entries signed by both parties, standing as a crucial tool for tracking and documenting the professional trajectory of employees in Bangladesh and equivalent documents in other regions.

Managing employment documentation is streamlined with the assistance of an Employer of Record (EOR) in Bangladesh. This service ensures the proper preparation and storage of essential employment documents, helping employers meet regulatory requirements and maintain organized records.

Termination and Compensation in Bangladesh

Explore the nuanced landscape of termination and compensation in Bangladesh, as we delve into the legal obligations and rights governing the termination process for both employers and employees. Uncover the prescribed notice periods, compensation structures, and distinctive provisions under the Bangladesh Labour Act, 2006.

Termination by Employer in Bangladesh: Navigating Legal Obligations

In Bangladesh, the termination of a permanent worker's employment by an employer involves a prescribed notice period. According to the Bangladesh Labour Act, 2006, a written notice of 120 days is required for monthly rated workers, while a 60-day notice is applicable for other workers. Temporary workers, unless affected by the completion of assigned tasks, must be provided with a notice of 30 days for monthly rated workers and 14 days for others. Alternatively, termination without notice is possible if the employer compensates the worker with wages equivalent to the notice period.

When a permanent worker is terminated under this section, the employer is obligated to provide compensation. The compensation is calculated at a rate of 30 days' wages for every completed year of service or gratuity, if applicable—whichever is higher. These regulations ensure a fair and legally compliant termination process, offering financial acknowledgment for workers affected by termination under these specific circumstances.

Voluntary Termination by Workers in Bangladesh: Workers' Rights and Responsibilities

Workers in Bangladesh have the right to voluntarily resign from their employment, as outlined in the Bangladesh Labour Act, 2006. Permanent workers are required to provide their employers with a written notice of 60 days before resigning, while temporary workers have notice periods of 30 days for monthly rated workers and 14 days for others. Alternatively, a worker can resign without notice by compensating the employer with an amount equal to the wages for the notice period.

An interesting provision states that if a worker remains absent from work for more than 10 days without notice or permission, the employer serves a notice. If the worker fails to explain or return to work within the stipulated time, they are deemed to have resigned from service.

Upon voluntary resignation by a permanent worker, the employer must provide compensation. The compensation is either at the rate of 14 days' wages for each completed year of service (for 5 to less than 10 years) or at the rate of 30 days' wages for each completed year of service (for 10 years or more). Alternatively, the worker may receive gratuity if applicable, with the higher of the two considered as compensation. This compensation is in addition to any other benefits payable under the Act, ensuring a fair acknowledgment of the worker's service.

An Employer of Record (EOR) in Bangladesh provides support in termination processes and compensation management. Employers are guided through legal procedures, ensuring fair and compliant terminations while addressing compensation matters in accordance with local regulations.

Severance Pay in Bangladesh

Circumstances for Severance Pay

Severance pay is provided to a worker under the following circumstances:

  • Discharge Due to Incapacity or Ill-health: A worker, employed continuously for at least one year, is entitled to severance pay of 30 days' wages for each completed year of service or any part thereof exceeding six months (Section 22(2) LA).
  • Termination with Notice Without Reason: In cases of termination with notice without any specific reason, the worker is eligible for severance pay amounting to 30 days' wages for each completed year of service or any part thereof exceeding six months (Section 26(4) LA).
  • Additional Benefits: Beyond 10 completed years of service, workers are entitled to 45 days' wages for each completed year (Section 2(x) LA).
  • Dismissal for Misconduct (Except Specific Offenses): If a worker is dismissed for misconduct other than specific offenses, they are entitled to at least 15 days' wages for each completed year of service (Section 23(3) LA).

Severance Pay Tenure

Tenure Severance Pay
6 months or more 0 day(s)
9 months or more 30 day(s)
1 year or more 30 day(s)
4 years or more 120 day(s)
5 years or more 150 day(s)
10 years or more 300 day(s)
20 years or more 600 day(s)

Redundancy Payment

In cases of retrenchment, a worker with at least one year of continuous service is entitled to a redundancy payment of at least 30 days' wages for each completed year of service. If retrenchment occurs after the worker has been laid off for more than 45 days in a year, an additional fifteen days' wages are provided (Section 20(2) and 20(3) LA).

Redundancy Payment Tenure

Tenure Redundancy Payment
6 months or more 0 day(s)
9 months or more 30 day(s)
1 year or more 30 day(s)
2 years or more 60 day(s)
4 years or more 120 day(s)
5 years or more 150 day(s)
10 years or more 300 day(s)
20 years or more 600 day(s)

Note: Termination due to misconduct or for economic reasons (retrenchment) has specific conditions regarding severance pay and redundancy payment.

Understanding and implementing severance pay is simplified with an Employer of Record (EOR) in Bangladesh. Guidance is offered on the calculation and distribution of severance pay, ensuring compliance with local laws and fostering a fair and legally sound termination process.

Employment Cost in Bangladesh

The cost of employing someone in Bangladesh depends on several factors, including:

  1. Employee Salary:
    • Minimum wage in Bangladesh is Tk. 8,000 per month (approximately $95 USD) for entry-level workers.
    • Actual salaries vary widely depending on experience, qualification, industry, and location.
    • Skilled professionals and those in high-demand fields can command significantly higher salaries.
  2. Employer Contributions:
    • No mandatory social security contributions: Unlike many countries, Bangladesh doesn't have a mandatory social security system for private sector employees.
    • Workers' Provident Fund (WPF): Voluntary scheme where employees contribute 5% of their salary and employers contribute an equal amount.
    • Workers' Welfare Fund (WWF): Voluntary scheme where employers contribute 1% of their monthly payroll.
    • Health Insurance: Many companies offer health insurance plans for employees, with employers contributing a portion of the premium.
    • Gratuity: Long-serving employees may be entitled to a gratuity payment upon retirement, typically calculated as a month's salary for each year of service.
  3. Employee Contributions:
    • Income Tax: Graduated income tax applies to employees' salaries, with rates ranging from 0% to 25% depending on income level.
    • WPF: Employees contribute 5% of their salary to the Workers' Provident Fund (if enrolled).
    • Health Insurance: Employees may contribute a portion of the health insurance premium.
  4. Additional Costs:
    • Bonuses: Some companies offer bonuses based on performance or company profits.
    • Leave Pay: Employees are entitled to paid leave, including annual leave, sick leave, and maternity leave.
    • Training and Development: Companies may invest in employee training and development programs.

Employers can effectively manage employment costs with the assistance of an Employer of Record (EOR) in Bangladesh. This service provides insights into cost structures, helping businesses optimize their budget while staying compliant with local regulations.

Personal Income Tax in Bangladesh

Bangladesh implements a progressive income tax system for residents, meaning the tax rate increases as your income rises. This ensures fairer taxation, where those with higher earning capacities contribute proportionally more to the national revenue.

Key aspects of personal income tax in Bangladesh:

  • Taxable income: Income from various sources like employment, business, property, agriculture, interest on securities, and capital gains is considered taxable.
  • Tax-free threshold: Individuals below a certain income level are exempt from paying income tax. In 2024, the basic exemption for men under 65 years of age is BDT 300,000, for women and men above 65 years of age it's BDT 350,000, and for individuals with disabilities and freedom fighters, it's BDT 450,000 and BDT 475,000 respectively.
  • Tax rates: The tax rate for residents ranges from 0% to 25%, depending on the income level. Here's a breakdown:

Income Range (BDT) Tax Rate
Up to 300,000 0%
300,000 - 400,000 5%
400,000 - 700,000 10%
700,000 - 1,100,000 15%
1,100,000 - 1,600,000 20%
Above 1,600,000 25%

Filing returns: Individuals are responsible for filing their income tax returns annually by November 30th of the following fiscal year.

An Employer of Record (EOR) in Bangladesh facilitates the simplification of personal income tax procedures. Assistance is provided in accurate income tax deductions, offering expert advice to employees and ensuring compliance with local tax regulations, contributing to a smooth and legally sound payroll process.

Selecting an Employer of Record (EOR) in Bangladesh is a strategic choice for businesses eyeing global expansion. Entrusting responsibilities such as navigating local employment regulations, managing intricate payroll structures, and ensuring compliance to the EOR, allows companies to effortlessly establish a presence in Bangladesh without the challenges of establishing a legal entity. This collaborative partnership empowers businesses to concentrate on their core objectives and growth strategies while ensuring their workforce in Bangladesh operates in strict adherence to local laws. The EOR streamlines international employment processes and offers expert guidance to navigate the nuanced landscape of employment regulations in Bangladesh.