Employer of Record in Bangladesh

Hiring in Bangladesh for the first time can be overwhelming, especially when navigating unfamiliar employment laws. Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success. Playroll’s comprehensive guide can help you get started if you're hiring locally or relocating a team member.

Companies can hire employees in Bangladesh in the following three ways:

• Setting up a local entity. Entity establishment reduces risk exposure and enables direct hiring, but can be costly and time-consuming – making it less practical for companies seeking quick and flexible solutions for hiring in Bangladesh.
• Partnering with an Employer Of Record. An EOR, like Playroll, is a third-party entity that serves as the legal employer of your international workforce which hires, pays, and manages compliance with Bangladesh’s labor laws and tax regulations.
• Hiring independent contractors. Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.

Businesses can only operate smoothly in Bangladesh if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Bangladesh below, to avoid any compliance issues.

Employment Contract Requirements

When hiring in Bangladesh, it's crucial to follow specific formalities outlined by The Bangladesh Labour Act of 2006 and the Bangladesh Labour Rules of 2015. Contracts need to be in writing and signed by both parties. Key aspects include:

• Contracts must be in English (with the option for bilingual agreements)
• Contracts must be signed by both parties involved
• Terms of agreement and compensation
• Position
• Place of work

Onboarding Process

We can help you get a new employee started in Bangladesh quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Bangladesh

Weekly working hours are limited to 48 hours, with a limit of 12 hours of overtime and a maximum annual average of 56 hours per week. A standard workday is 8 hours, and the regular workweek lasts 5 days, from Sunday to Thursday.

Overtime in Bangladesh

Section 102 of the Labor Act sets the maximum weekly working hours at 48, and a maximum of 2 overtime hours per day. Overtime pay is usually calculated as follows: Total salary, including benefits, divided by 208, multiplied by 2, multiplied by the overtime hours worked

Probation Period in Bangladesh

Probation periods are mandatory. The minimum probation period is 3 months and the maximum probation period is 6 months.

Fiscal Year in Bangladesh

1 July - 30 June is the 12-month accounting period that businesses in Bangladesh use for financial and tax reporting purposes.

Payroll Cycle in Bangladesh

The payroll cycle in Bangladesh is usually monthly, with employees being paid on or before the last day of the month.

Minimum Wage in Bangladesh

The minimum wage for employees in Bangladesh is typically 78 BDT per hour, amounting to ~12,500 BDT per month for a typical 40 hour work week.

Bonus Payments in Bangladesh

Employees who have worked for at least one year are entitled to a Festive Bonus, twice per year.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 0% - 5% on top of the employee salary in Bangladesh.

Employee Payroll Tax Contributions

In Bangladesh , the typical estimation for employee payroll contributions cost is around Employees in Bangladesh are not required to make compulsory contributions to social insurance.%.

Individual Income Tax Contributions

The individual income tax in Bangladesh follows a progressive rate structure, ranging from 0% to 30%. Overarching tax rates may vary according to different factors, including household status and the number of dependents. In addition, the lesser of 450,000 BDT or one-third of the total taxable income is exempt from Income tax. For foreign residents, a flat tax rate of 30% applies.

Pension in Bangladesh

There are no mandatory pension contributions in Bangladesh.

Mandatory Leave Entitlement in Bangladesh

The annual leave entitlement in Bangladesh is 18 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Bangladesh

Bangladesh recognizes several national holidays, comprising of:

Paid Time Off in Bangladesh

Employees receive one day of annual leave for every 18 days worked within a calendar year. However, specific industries may have variations in the calculation of leave entitlement.

Maternity Leave In Bangladesh

Female employees qualify for 16 weeks of maternity leave - eight weeks pre-natal and eight weeks post-natal. The following details are applicable to Bangladesh's maternity leave benefit:

• This benefit is applicable to individuals with a minimum of six months of service.
• Those who have worked for less than six months or already have two surviving children are generally entitled to unpaid leave.
• National employment legislation mandates a prohibition for women to work for eight weeks following the birth of their child.

Paternity Leave In Bangladesh

In Bangladesh, there is no statutory paternity leave although some employers may provide it voluntarily.

Sick Leave In Bangladesh

Employees are entitled to a standard sick leave of 14 days per year. The following details are also applicable:

• This allowance resets annually and any unused days are not being carried forward.
• Employees must provide a medical certificate from a licensed doctor confirming their illness to qualify.

Parental Leave In Bangladesh

Termination Process in Bangladesh

In Bangladesh, employers are not permitted to terminate employment at will, except during the probationary period. Termination must be justified by valid reasons. These reasons may include:

• Mutual agreement
• Objective grounds
• Disciplinary dismissal
• Poor work performance

Notice Period in Bangladesh

Employers are obligated to give advance notice to employees being terminated without cause. This notice period varies, extending to 60 days for general workers and 120 days for those receiving monthly compensation. Alternatively, payment in lieu of notice can be given though this depends on the type of employment.

Severance in Bangladesh

Employees who have served a minimum of one year with an employer are eligible to receive severance pay equivalent to 30 days' wages for each year of service.