Payroll & Employment Guide Bangladesh

Employment contracts in Bangladesh can be written, oral or electronic and must comply with the Bangladesh Labour Act. Whether fixed-term or permanent, contracts should clearly define the nature of the job, terms of employment, and the rights and obligations of both the employer and the employee.

Notice periods: Ranging from 30 to 120 days, depending on the role and length of service

Termination of employment: Can take place due to resignation, dismissal for cause, retrenchment, or by mutual agreement, following proper legal procedures.

Employers in Bangladesh are required to provide mandatory employment benefits in accordance with the country’s labour law. Many of them also offer extra perks to stay competitive in the job market. Understanding both of them is essential to attracting and retaining talent.

• Mandatory benefits: Social security, workplace safety, overtime pay.
• Common perks: Health insurance, transport reimbursements, meal allowances.

Leave policies: Paid annual leave, sick leave, parental leave.

Bangladesh has a structured tax system that applies to both individuals and businesses. Employers are responsible for withholding income taxes and social security contributions, while additional tax rules apply to royalty income and VAT.

Personal income tax rate: 13% or 23%, depending on the amount of income.
VAT: 15%
Tax allowances: Personal income allowance, Children’s education expenses.
Additional tax reliefs: N/A

Employers are required to pay salaries as outlined in individual or collective contracts, and they can’t be less than the minimum wage set by the Council of Ministers. Salaries must be paid on a monthly basis, unless otherwise agreed upon.

Salary payment deadline: The last day of the month.
Taxes and contributions payment deadline: By the 20th of the following month.
Payroll declarations deadline: By the 20th of the following month
Payroll currency: BDT

In Bangladesh, employment is primarily governed by the Bangladesh Labour Act, 2006, along with its subsequent amendments. Employers must comply with specific rules around wages, benefits, working conditions, and termination procedures.

Total employment cost:

• Employer’s social security contributions: Varies by industry and role
• Employer’s health insurance costs: 1.7%
• Employees’ social security contributions: 9.5%
• Employees’ health insurance costs: 1.7%

Minimum wage: 12,500 BDT per month

Probation period: 3 to 6 months

Foreign citizens working in Bangladesh are required to obtain the appropriate work permits and visas. The process, permit type, and costs are different depending on the applicant’s nationality, job role, and length of stay.

Types of permits: EU, US, and Kosovo nationals can get a five-year Unique permit; other foreign nationals may receive permits of varying lengths.
Process length: Up to 3 months
Process cost: 1800€

Utilising EOR services in Bangladesh enables you to employ individuals legally in the country without establishing a local legal entity. The EOR takes over all the legal responsibilities as an official employer, including:

• Legal employment and contracts
• Payroll processing
• Benefits administration
• Tax withholding
• Onboarding/offboarding employees

Utilising PEO services in Bangladesh offers HR and administrative support, allowing you to remain the legal employer. PEO services are ideal for employers who already have legal entities in Bangladesh but need support to manage their workforce operations, including:

• HR support and workforce administration
• Payroll and benefits management
• Compliance and local labour law guidance
• Employment contracts assistance

Native Teams offers a payroll calculator tailored to Bangladesh’s labour regulations. With this tool, you can quickly calculate gross and net salaries, as well as determine employer and employee contributions and other required deductions.

Here is a list of public holidays in Bangladesh: