Hiring in Bangladesh means following the Bangladesh Labour Act 2006 and its rules, which recent amendments have changed significantly. Whether you have one employee in Dhaka or a growing team, you need to know the basics: contracts, probation, working hours, leave, festival bonuses and how to end employment legally. This plain-language guide covers the key Bangladesh labour law rules for employers in 2026.
- Who the Labour Act covers
- Employment contracts and probation
- Working hours and overtime
- Leave and public holidays
- Festival bonus, wages and provident fund
- Resignation, termination and severance
- What changed in 2025–2026
Who does the Labour Act cover?
The Bangladesh Labour Act 2006 protects “workers,” a broad group that includes most staff in factories, shops, offices and service businesses. Employees whose roles are mainly managerial, administrative or supervisory may fall outside some parts of the Act. For them, the employment contract and company service rules matter even more. In practice, international employers apply Labour Act standards to all staff to keep things simple and avoid disputes.
Employment contracts and probation
- Written appointment letter: every worker must receive an appointment letter and an identity card.
- Probation: up to 6 months for clerical roles and 3 months for other roles. For skilled workers, probation can be extended by a further 3 months.
- Worker categories: the law recognizes permanent, probationer, temporary, casual, apprentice and seasonal workers. The category affects notice periods and benefits.
Working hours and overtime
Normal working hours are 8 hours a day and 48 hours a week, with at least one weekly day off (usually Friday). With overtime, a worker can work up to 10 hours a day. Overtime is paid at twice the ordinary rate of basic wage plus dearness allowance, where applicable.
Leave and public holidays
| Type of leave | Entitlement |
|---|---|
| Casual leave | 10 days per year, full pay |
| Sick leave | 14 days per year, full pay |
| Annual (earned) leave | 1 day for every 18 days worked (1 for every 14 days in factories under the 2025 amendments) |
| Festival holidays | 13 paid days per year, up from 11 |
| Maternity leave | 120 days paid, up from 112 |
If an employee works on a festival holiday, they are entitled to compensatory paid leave and a substitute holiday.
Festival bonus, wages and provident fund
- Festival bonus: employees with one year of continuous service receive two festival bonuses per year, each up to one month’s basic wage.
- Wage payment: the wage period cannot exceed one month, and wages must be paid within seven working days after it ends. Final dues after employment ends must be paid within 30 working days.
- Provident fund: employers with 100 or more permanent workers must establish a provident fund. Contributions are 7–8% of basic pay from both the worker and employer, or workers can opt for the government’s Progoti pension scheme.
- Income tax: employers must deduct tax at source from salaries. See our article on the cost of hiring an employee in Bangladesh for the FY2026-27 tax rates.
Resignation, termination and severance
When an employee resigns
A permanent worker must give 60 days’ written notice, and a temporary worker 30 days, or pay wages in lieu of notice. Under the 2025 amendments, workers who resign after at least three years of service receive an end-of-service payment. This is 7 days’ wages per year at three years, 15 days’ wages per year from three to under 10 years, and 30 days’ wages per year after 10 years. If the employer’s gratuity scheme pays more, the higher amount applies.
When the employer ends employment
- Termination without cause (termination simpliciter): for permanent monthly-paid workers, 120 days’ written notice or wages in lieu, plus compensation of 30 days’ wages for each completed year of service, or gratuity if higher.
- Retrenchment (redundancy): one month’s notice and 30 days’ wages for each year of service.
- Dismissal for misconduct: requires written charges, a proper inquiry and a chance for the worker to respond. Skipping these steps is one of the most common reasons employers lose cases at the labour court.
What changed in 2025–2026?
The Bangladesh Labour (Amendment) Ordinance took effect on 17 November 2025, and Parliament later passed the amendments as an Act in 2026. Key changes for employers include:
- Maternity leave increased to 120 days
- Festival holidays increased to 13 days
- A mandatory provident fund for employers with 100+ permanent workers
- End-of-service benefits on resignation after three years instead of five
- Stronger rules on discrimination and sexual harassment
- New, lower thresholds for trade union registration and a ban on blacklisting workers
Some details are still being clarified through rules and government review, so check the latest gazetted text or work with a local expert.
Frequently asked questions
Q: Is a festival bonus mandatory in Bangladesh?
A: Yes. Workers with at least one year of continuous service are entitled to two festival bonuses a year.
Q: Can I fire an employee in Bangladesh without a reason?
A: Yes, but you must give long notice (120 days for permanent monthly-paid workers) or pay in lieu, plus compensation for each year of service.
Q: Do these rules apply if I hire through an Employer of Record?
A: Yes. The EOR is the legal employer and makes sure contracts, leave, bonuses and terminations follow the law.
Stay compliant with NNRoad
NNRoad’s Employer of Record service in Bangladesh gives you locally compliant contracts, payroll and HR support, so you can hire confidently without becoming a Bangladesh labour law expert. If you don’t have a local entity yet, read how to hire employees in Bangladesh without a company, or email [email protected].
This article is for general information only and does not constitute legal advice. Labour rules are current as of 2026 and may change.