Bangladesh is the eighth-most populous country in the world, located in South Asia. It’s one of the world's fastest-growing economies, and one of the fastest growing middle-income countries. There is no payroll taxes for employers in Bangladesh.

Types of Contracts

Employment in Bangladesh can be structured through various types of contracts, as recognized under the Bangladesh Labour Act, 2006. These include:

• Permanent (indefinite) contracts- Standard form of employment, where workers gain permanent status after the probationary period if no fixed duration is specified.
• Fixed-term contracts- Suitable for project-based or time-bound roles. These must be in writing with a defined duration; repeated renewals may be deemed permanent.

Minimum Wage

In Bangladesh, minimum wages vary by industry, job category, and skill level. For example, as of December 2024, monthly minimums in Export Processing Zones (EPZs) range roughly from BDT 12,800 for unskilled helpers up to about BDT 15,200–17,000 for senior or highly skilled operators.

Working Hours & Overtime

In Bangladesh, the standard workweek is 40 hours, typically structured as 8 hours per day from Sunday through Thursday, with Friday and Saturday designated as weekly holidays.

• Standard hours: 8 hours per day, 40 hours per week.
• ‍Workweek: Sunday to Thursday; Friday and Saturday are weekly holidays.
• ‍Overtime pay: Work beyond 8 hours per day must be compensated at 200% of the regular hourly wage.
• ‍Limits:
  • Maximum 10 hours of work per day (including overtime).
  • Maximum 60 hours of work per week.
  • Average weekly hours cannot exceed 56 over the course of a year.

Probation Period

The probation period is regulated under the Bangladesh Labour Act, 2006.

• Fixed-term contracts: Probation periods are typically 3 months, depending on the role and employer policy.
• Indefinite (permanent) contracts: Standard probation is usually 3 to 6 months.

Employees are generally confirmed as permanent after successful completion of probation unless extended for valid reasons (e.g., absence, performance review).

Taxes & Local Employment Costs

Employee Taxes

The TDS, or personal income tax (PIT), will be calculated according to employee income based on the tax slab rates. TDS (Tax Deducted at Source) on employee salaries in Bangladesh is applied based on annual income according to the tax slabs, with rates ranging from 0% to 25% depending on the employee’s income.

Employee income tax is calculated as follows:

• up to BDT 350,000 - 0%
• over BDT 350,000 up to 450,000 - 5%
• over BDT 450,000 up to 750,000 - 10%
• over BDT 750,000 up to 1,150,000 - 15%
• over BDT 1,150,000 up to 1,650,000 - 20%
• over BDT 1,650,000 - 25%

For female tax payers and male tax payers above the age of 65, the tax-free limit is BDT 400,000.

Employer Taxes & Contributions

Under Bangladeshi law, there are no mandatory employer contributions such as social security or provident fund. The only legally required payments by an employer are:

• Monthly salary as specified in the employment contract.
• Festival bonuses – typically paid twice a year, each equivalent to the employee’s basic salary (commonly known as Tunjangan Hari Raya or similar sector-specific bonuses).
• Termination benefits – including gratuity or severance payments, calculated based on the employee’s contract terms and length of service.

Employers are also required to calculate the applicable TDS based on the employee's income and remit it to the National Board of Revenue (NBR).

Annual Leave (Vacation)

• Eligibility: All employees who have completed at least one year of continuous service are entitled to annual leave.
• ‍Leave Entitlement:
  • Employees are entitled to 21 days of paid annual leave after one year of service.
  • For every additional year of service, the leave entitlement increases by one day, up to a maximum of 30 days per year.
• Carry Forward: Unused leave may be carried forward as per company policy, but generally, leave must be taken within the next calendar year.

Sick Leave

• Employees are entitled to 14 days of paid sick leave per year.
• Sick leave is fully paid by the employer at the employee’s normal rate of salary.
• Employees are generally required to submit a medical certificate to qualify for sick leave pay.

Maternity Leave

• Eligibility: Female employees who have worked for at least 6 consecutive months are entitled to paid maternity leave.Duration: 16 weeks total — 8 weeks before childbirth and 8 weeks after childbirth.
• ‍Limitations:
  • Employees with less than 6 months of service or who already have two surviving children are generally eligible for unpaid leave only.
  • Employees cannot return to work for at least 8 weeks following childbirth
• Paid maternity leave is at the employee’s normal salary.

Paternity Leave

Paternity leave is not mandated by law in Bangladesh. Any paternity leave provided is at the discretion of the employer and subject to company policy. Many private companies, especially in multinational corporations (MNCs) and large private firms, provide 3–10 days of paid paternity leave. Leave is usually taken around the time of childbirth.

Public Holidays

Public Holidays will be announced by the government every year as it is set up by the lunar calendar. Employees are generally entitled to festival holidays with pay, but the holidays are determined by the employer. Employees may be required to work on a festival holiday, but shall receive 2 compensatory paid holidays and a substitute holiday.

Benefits

Festive Bonuses

Employees who have completed at least one year of continuous service are entitled to two festival bonuses per year.

• Option 1: 50% of monthly gross salary
• Option 2: Basic Salary amount

The option should be decided by the employer and should be the same for all employees. Typically paid before major festivals, as determined by the employer.

Termination Process

Employees in Bangladesh may be terminated under specific circumstances, with entitlements varying accordingly:

• Termination Due to Illness: Employees unable to work due to physical or mental health conditions are entitled to severance pay in line with their contract and length of service.
• Termination for Misconduct or Criminal Offense: Employees found guilty of serious misconduct or criminal activity may be terminated without notice and do not receive severance.
• Termination for Non-Fault Reasons (Retrenchment, Redundancy, or Performance Issues): Employees terminated for reasons unrelated to misconduct are entitled to advance notice and severance pay based on their length of service and contract terms.

Notice Period

Notice periods in Bangladesh are dependent on both probation status and reason for termination, ensuring legal compliance while reflecting organizational policy.

• During Probation: Minimum 7 days’ written notice is required for termination.
• ‍After Probation (Permanent Employees): Standard notice period is one month, with some organizations adjusting slightly longer or shorter based on policy.
• ‍Termination Type Impact:
  • Misconduct or Criminal Offense: No notice is required; termination can be immediate.
  • Non-Fault Reasons (Retrenchment, Redundancy, Performance Issues): Standard notice period (30 days) applies.
  • Termination Due to Illness: Notice period follows the standard requirement unless otherwise agreed in the employment contract.

Statutory Payments

In Bangladesh, statutory payments refer to the legally mandated financial obligations that employers must fulfill toward their employees. These include compensation in lieu of notice, severance pay, and payments upon resignation, as governed by the Bangladesh Labour Act, 2006.

• Compensation in Lieu of Notice: Employers may terminate an employee for convenience without providing notice by paying compensation equivalent to 30 days’ wages for each completed year of service.
• Severance Payments: Employees terminated for reasons such as retrenchment, redundancy, or incapacity (excluding misconduct or criminal offenses) are entitled to severance pay, calculated as one month’s wages for each completed year of service. Wages usually refer to the last drawn basic salary, but some companies include allowances if specified in the contract.
• Payments upon resignation: The employer must pay all accrued salary, benefits, and any earned but unused leave up to the last working day. No severance is required, as the resignation is voluntary. If the employee resigns without providing notice, they are typically required to pay the employer an amount equal to the wages for the notice period.

Employers must ensure final settlement includes unpaid wages, pro-rata annual leave, and any festival bonuses due.

Bangladesh's fiscal year is from July 1st to June 30th.