Bangladesh Employment Law & Compliance Guide for Employers
Key employment laws in Bangladesh: what employers need to know
Employment in Bangladesh is governed by the Bangladesh Labour Act 2006 (BLA) and the Bangladesh Labour Rules 2015, last amended by the Bangladesh Labour (Amendment) Act 2026 (Act 43 of 2026). Foreign employers are most often surprised that there is no national minimum wage, only sector rates set by the Minimum Wage Board, and that ending a permanent worker’s employment costs 120 days’ notice plus 30 days’ wages per year of service. This page summarises the core employer rules as of October 2026, with official sources.
Bangladesh employment rules at a glance
| Topic | What the rule is | Official source |
|---|---|---|
| Minimum wage | No national minimum wage. The government sets sector rates on the Minimum Wage Board's advice. Ready-made garments: Tk 12,500 a month for the entry grade (gazetted December 2023), plus annual increments on basic wage. Other sectors have their own rates. | Ministry of Labour and Employment: Garments sector minimum wage gazette |
| Standard working hours | 8 hours a day and 48 hours a week. With overtime, up to 10 hours a day and 60 hours a week, averaging no more than 56 hours a week over a year. Weekly rest: 1 day (1.5 days in shops and commercial establishments). | Bangladesh Labour Act 2006, section 100 (bdlaws) |
| Overtime pay | Twice the ordinary rate of basic wage plus dearness allowance and any ad hoc or interim wage, for work beyond 8 hours a day or 48 hours a week. | Bangladesh Labour Act 2006, section 108 (bdlaws) |
| Paid annual leave | After 1 year of continuous service, adult workers earn 1 day of paid leave per 18 days worked (1 per 22 in tea gardens, 1 per 11 for newspaper workers). Unused leave carries forward up to 40 or 60 days depending on the sector. | Bangladesh Labour Act 2006, section 117 (bdlaws) |
| Public holidays | 13 paid festival holidays a year (raised from 11 by the 2026 amendment), with dates fixed by the employer. Work on a festival holiday earns 1 substitute day off plus 2 days' compensatory wages. | Bangladesh Labour Act 2006, section 118 as amended by Act 43 of 2026 (bdlaws) |
| Sick leave | 14 days of sick leave on full pay a year, with a certificate from a registered doctor; unused days lapse. Workers also get 10 days of casual leave on full pay a year. | Bangladesh Labour Act 2006, section 116 (bdlaws) |
| Maternity and parental leave | 120 days of paid maternity benefit (60 days before and 60 after birth) for women with at least 6 months' service, extended from 16 weeks by the 2026 amendment. Not payable to a woman with 2 or more living children. No statutory paternity leave. | Bangladesh Labour Act 2006, section 46 as amended by Act 43 of 2026 (bdlaws) |
| Probation period | 6 months for clerical work and 3 months for other work; a skilled worker's probation can be extended by 3 months. A worker not confirmed in writing at the end of probation is treated as permanent. | Bangladesh Labour Act 2006, section 4 (bdlaws) |
| Notice period | Employer termination without cause: 120 days for monthly-paid permanent workers, 60 days for other permanent workers, 30 or 14 days for temporary workers, or pay in lieu. Permanent workers resign with 60 days' notice. | Bangladesh Labour Act 2006, section 26 (bdlaws) |
| Severance pay | Termination without cause or retrenchment: 30 days' wages per completed year, or gratuity if higher. Resignation (permanent workers): 7 days' wages per year up to 3 years' service, 15 days for 3 to 10 years, 30 days from 10 years. | Bangladesh Labour Act 2006, sections 26 and 27 (bdlaws) |
| Employer social contributions | No general social security contributions. Costs arise where they apply: matching provident fund contributions (7% to 8% of basic), gratuity, group insurance for 100+ permanent workers, and 5% of net profit to the Workers' Participation and Welfare Funds for qualifying companies. | PwC Worldwide Tax Summaries: Bangladesh, other taxes (professional source) |
| Employee social contributions | None mandatory nationally. Where a provident fund exists, permanent workers contribute 7% to 8% of basic wage after 1 year of service, matched by the employer. Participation in the national Progoti universal pension scheme is an alternative. | Bangladesh Labour Act 2006, section 264 as amended by Act 43 of 2026 (bdlaws) |
| Income tax on salaries | Employers deduct tax from salary monthly under the Income Tax Act 2023. Residents: nil up to the threshold (Tk 400,000 for general taxpayers), then 10% to 30%. Non-resident foreigners: flat 30%. The income year runs July to June. | PwC Worldwide Tax Summaries: Bangladesh, taxes on personal income (professional source) |
| Mandatory bonuses and 13th-month pay | Festival bonus: workers with 1 year of continuous service receive up to 2 festival bonuses a year, each up to 1 month's basic wage (Labour Rules 2015). No 13th-month pay. Qualifying companies pay 5% of net profit to the Workers' Participation Fund. | Bangladesh Labour Act 2006 (bdlaws) |
| Work permits for foreign nationals | Foreign employees need an E (employment) visa and a work permit from BIDA (most companies), BEPZA (export processing zones), BEZA (economic zones) or the NGO Affairs Bureau, plus security clearance. The employer applies after the employee arrives. | Bangladesh Investment Development Authority (BIDA) |
| Employment contract requirements | Every worker must receive a written appointment letter and a photo identity card (section 5). The letter states the worker's classification: trainee, substitute, casual, temporary, probationer, permanent or seasonal. No registration of contracts. | Bangladesh Labour Act 2006, sections 4 and 5 (bdlaws) |
Employer obligations in Bangladesh, topic by topic
Filter by primary service relevance
Does an employment contract in Bangladesh have to be in writing, and how long is probation?
What are the working hours and overtime rules in Bangladesh?
Is there a minimum wage in Bangladesh, and what must employers pay?
How much leave must employers give in Bangladesh?
What payroll contributions and taxes does an employer pay in Bangladesh?
What notice and severance does an employer owe when ending employment in Bangladesh?
Can a company in Bangladesh hire foreign nationals, and which permit is needed?
Is it risky to use contractors instead of employees in Bangladesh?
Key employment laws in Bangladesh and official sources
- Bangladesh Labour Act 2006 (Act 42 of 2006), as amended to 2026 — Main employment law: worker classes, appointment letters, hours, leave, maternity, wages, termination, funds and trade unions.
- Bangladesh Labour (Amendment) Act 2026 (Act 43 of 2026) — Raised maternity benefit to 120 days and festival holidays to 13, changed resignation benefits and provident fund rules.
- Bangladesh Labour Rules 2015 — Detailed rules under the Labour Act, including festival bonuses, forms, records and fund administration.
- Income Tax Act 2023 — Governs income tax on salaries and the employer’s duty to deduct and deposit tax at source.
- Bangladesh Export Processing Zones Authority Act 1980 and Bangladesh EPZ Labour Act 2019 — Separate labour and work permit regime for enterprises in export processing zones.
FAQs: hiring employees in Bangladesh
Can a foreign company hire employees in Bangladesh without a local entity?
Not directly in most cases. Withholding tax, issuing appointment letters under the Labour Act and sponsoring work permits through BIDA generally require a registered company, branch or liaison office in Bangladesh. Without one, a foreign company can use an Employer of Record, which employs staff locally and runs payroll, festival bonuses and tax deductions. Contractors are possible for defined projects but carry reclassification and tax-presence risk.
How much does an employee cost in Bangladesh on top of gross salary?
Statutory add-on costs are low because there are no general social security contributions. Budget for 2 festival bonuses a year (up to 1 month’s basic wage each), overtime at twice the ordinary rate, and termination compensation of 30 days’ wages per year of service. Where a provident fund exists, the employer matches 7% to 8% of basic wage. Group insurance applies from 100 permanent workers, and qualifying companies pay 5% of net profit into workers’ funds.
What is the minimum wage in Bangladesh in 2026?
Bangladesh has no national minimum wage. The government sets minimum wages for individual sectors on the Minimum Wage Board’s advice. In the ready-made garments sector, the entry-grade wage is Tk 12,500 a month, set by the gazette of December 2023, with annual increments on basic wage. Other sectors, such as pharmaceuticals or construction, have their own rates. Check the latest gazette for your sector before setting pay.
How much notice and severance does an employer owe when dismissing an employee in Bangladesh?
Ending a monthly-paid permanent worker’s employment without cause requires 120 days’ notice (60 days for other permanent workers) or pay in lieu, plus compensation of 30 days’ wages per completed year of service or gratuity if higher. Retrenchment needs 1 month’s notice and the same compensation. Dismissal for misconduct needs a charge, a chance to respond and an inquiry. Managers are governed mainly by their contracts.
Can a company hire a foreign national in Bangladesh, and what permit is needed?
Yes. The foreign national needs an E (employment) visa and a work permit. BIDA issues work permits for most companies, BEPZA for export processing zones, BEZA for economic zones and the NGO Affairs Bureau for NGOs. Security clearance from the Ministry of Home Affairs is also needed. Permits are tied to one employer and role, are time-limited, and require income tax withholding on the salary.
Is it risky to engage contractors instead of employees in Bangladesh?
Yes. A person doing permanent, full-time work under the company’s control can be treated as a permanent worker under the Labour Act, with claims for notice, compensation, festival bonuses and leave. Outsourced labour is regulated, and the principal can be liable for unpaid wages. Foreign contractors also need work permits. Use contractors for defined projects, and employ ongoing staff directly or through an Employer of Record.
Related NNRoad resources for Bangladesh: Employer of Record in Bangladesh · Payroll in Bangladesh · Hiring foreign employees in Bangladesh · Contractors and on-demand talent in Bangladesh · Bangladesh employer cost calculator
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Regulation Updates in Bangladesh
Gazette notification declaring a seven-day holiday from 25 to 31 May 2026
What it is: A Gazette notification declares a seven-day holiday from 25 to 31 May 2026, which requires closure of government and private offices.
What it changes: This change affects working time obligations by requiring the closure of offices during the seven-day holiday period.
Who is affected:
- Workers or employers explicitly mentioned or clearly implied by the policy summary.
What employers should do:
- Plan and communicate the holiday period to staff.
- Ensure offices are closed during 25 to 31 May 2026 as required.
Notes: Effective month: 2026-05.
Bangladesh Labour (Amendment) Act, 2026
What it is: The Bangladesh Labour (Amendment) Act, 2026 updates the Labour law to expand the definition of ‘worker’, extend maternity leave to 120 days, and introduce mandatory workplace welfare funds and other new benefits.
What it changes: It broadens who is considered a worker, increases maternity leave to 120 days, and creates new mandatory workplace welfare funds and benefits that employers and payroll/EOR providers must implement.
Who is affected:
- Workers
- Employers
- Payroll/EOR providers
What employers should do:
- Align workforce definitions with the expanded ‘worker’ category.
- Provide 120 days of maternity leave as required.
- Establish and operate the mandated workplace welfare funds and other mandatory benefits.
Notes: Effective month: 2026-04.
Oct 2025: Bangladesh Essential Services Ordinance – Key Legal Update
This update appears to apply specifically to Biman Bangladesh Airlines Ltd. service categories covered by the Gazette notice. Employers should not treat it as a blanket essential-services rule for all private-sector employers in Bangladesh unless their organization, sector, or service category is specifically covered by a separate applicable Gazette notice.
Update first published on NNRoad in Oct 2025. The current rules are summarised in the sections above.
Jul 2025: Bangladesh 2025 Daily Hire Policy Draws Worker Criticism
A new 2025 policy allows government offices to hire temporary workers on daily wages — a move raising concerns over worker rights and benefits.
Update first published on NNRoad in Jul 2025. The current rules are summarised in the sections above.
Discover the latest employment and compliance updates in Bangladesh — helping you stay ahead in a changing regulatory landscape.