Employer of Record in Bangladesh
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Hiring in Bangladesh at a glance
An Employer of Record in Bangladesh acts as the legal employer, managing payroll, contracts, and compliance on your behalf.
The primary compliance challenge is operating under the Bangladesh Labour Act 2006 and sector-specific wage board notifications without a registered local entity.
- EOR hiring takes 1 to 2 weeks versus several months for entity setup
- Overtime is paid at 200% of regular salary
- Standard notice period extends up to 120 days for monthly workers
- Minimum wage updated to BDT 12,500 per month as of January 2024
This page covers employment contracts, payroll, leave entitlements, tax obligations, termination rules, and how to select the right EOR provider for Bangladesh.
Gloroots operates as an EOR provider in Bangladesh. This guide presents the full picture so readers can assess every available path and choose the one that fits their situation.
What Is an Employer of Record in Bangladesh?
An Employer of Record in Bangladesh is the statutory employer of record, responsible for employment contracts, payroll execution, and compliance under the Bangladesh Labour Act 2006.
Foreign companies hiring IT, ITES, or RMG talent without a local entity use an EOR to employ workers legally in Bangladesh.
In practice, the client selects the candidate, and the EOR drafts a compliant contract, runs monthly payroll, administers statutory benefits, manages festival bonus obligations, and handles day-to-day employment matters on the client's behalf. To understand the full model, see how does EOR work.
Your Hiring Options in Bangladesh: EOR vs. Entity vs. PEO vs. Contractor
Companies hiring in Bangladesh can choose from four distinct paths: an EOR, a locally registered entity, a PEO arrangement, or an independent contractor engagement. Each carries different cost structures and compliance obligations.
An EOR suits companies testing the Bangladesh market, hiring between 1 and 20 employees, or prioritizing speed of employment. Gloroots EOR services cover this path end to end.
A direct entity works for large, long-term headcount. A contractor engagement fits short-term project work but requires locally compliant contracts and correct classification under the Bangladesh Labour Act 2006.
| Path | Setup Time | Compliance Ownership | Cost Structure | Best For |
|---|---|---|---|---|
| EOR | 1 to 2 weeks | EOR provider | Approx. $500+ per employee per month | Fast market entry, 1 to 20 employees |
| Own Entity | Several weeks to months | Client company | High overhead, fixed costs | Large headcount, long-term presence |
| PEO | Varies | Shared | Varies by provider | Companies with an existing local entity |
| Contractor | Fastest | Client company | Lowest upfront cost | Short-term projects, misclassification risk applies |
EOR onboarding runs 1 to 2 weeks at approximately $500 per employee per month. Contractor engagements are faster and cheaper but carry misclassification risk under the Bangladesh Labour Act 2006.
How to Hire in Bangladesh Through an EOR: Step by Step
Hiring in Bangladesh through an EOR follows six steps, from deciding on your employment structure through to running compliant monthly payroll and managing the ongoing employment relationship.
Each step below covers a specific decision or action. Completing them in order reduces compliance gaps and keeps your timeline on track.
- Decide between EOR and direct entity
- Vet and select an EOR provider
- Draft and execute a compliant employment contract
- Run onboarding and statutory registrations
- Execute monthly payroll and benefits administration
- Manage ongoing employment and termination obligations
The sections below cover steps one and two in detail, including the specific factors that affect each decision in the Bangladesh context.
Step 1: Decide Between EOR and Direct Entity
Assess your headcount, timeline, and target sector (IT, ITES, or RMG) before choosing. Entity setup in Bangladesh takes several weeks to months, while an EOR can have workers employed within 1 to 2 weeks.
Step 2: Vet and Select an EOR Provider
Confirm the provider holds its own registered entity in Bangladesh, understands sector-specific wage board notifications, and can administer festival bonus obligations accurately before signing any agreement.
Step 3: Draft a Compliant Employment Contract
Specify the contract type: permanent, fixed-term, or temporary, as required under the Bangladesh Labour Act 2006. Verify the employee meets the minimum employment age of 14 years before signing.
Step 4: Onboard and Register Statutory Requirements
Collect personal ID documents, tax identification numbers, and age verification from each new hire. Register the employee for applicable statutory schemes and confirm the monthly payroll cycle, with payment on or before the last day of the month.
Step 5: Run Compliant Monthly Payroll
Run payroll monthly, applying the current minimum wage of BDT 12,500 per month. Calculate overtime at 200% of the regular rate and administer festival bonuses in line with applicable wage board notifications.
Step 6: Manage Offboarding and Exit
Issue written notice of 120 days for monthly workers or 60 days for others. Calculate severance at 30 days' salary per year of service for employees with at least one year of tenure, then return all employment documents.
How to Choose the Right EOR in Bangladesh
Selecting an EOR in Bangladesh requires evaluating specific operational and legal capabilities, not just price. Use the criteria below to assess any provider before committing.
The right provider must demonstrate verified knowledge of the Bangladesh Labour Act 2006, Labour Rules 2015, and sector-specific wage board notifications. Confirm they track regulatory updates, including changes introduced under the 2023 Amendment Bill.
Governance structure matters. Look for a provider that offers local execution with centralized reporting, so your finance and legal teams retain visibility across all employment filings and payroll runs.
- Compliance coverage: Confirmed handling of statutory registrations, payroll filings, and contract compliance under Bangladesh law.
- Pricing transparency: Predictable, country-specific pricing with no hidden fees. Review best employer of record criteria before shortlisting.
- Human support: Dedicated account ownership, not ticket-based support, for employment lifecycle questions.
- Payroll accuracy: Demonstrated ability to apply minimum wage updates, overtime rules, and festival bonus schedules correctly each cycle.
Local Legal Knowledge
Confirm the provider understands the Bangladesh Labour Act 2006, Labour Rules 2015, and sector-specific wage board notifications. Verify they have incorporated changes introduced under the 2023 Amendment Bill into their compliance processes.
Own Entity vs. Partner Network
Choose a provider with its own legal entity in Bangladesh. Relying on third-party partner networks adds liability layers that complicate compliance and accountability.
Support Model
Confirm the provider offers in-country HR support. Bangladesh's festival bonus cycles and sector-specific compliance queries require local expertise, not remote-only ticket systems.
Pricing Transparency
Clarify whether the provider charges a flat fee or a percentage of salary. For Bangladesh, benchmark against approximately $500 or more per employee per month. See pricing details before committing.
Security and Data Compliance
Verify how the provider stores and handles employee personal ID and tax identification documents collected at onboarding. Weak data practices create regulatory exposure in Bangladesh.
Integration Capability
Check whether the provider's platform connects with your HRIS and finance tools. Clean integration supports accurate payroll reporting without manual data transfers.
Workforce and Talent Pool in Bangladesh
Bangladesh has a population of approximately 168 million, with a large and growing working-age base. The skilled labor pool is expanding steadily across technical and professional sectors.
Dhaka and Chittagong are the primary talent hubs. Key industries include IT, IT-enabled services (ITES), and ready-made garment (RMG) outsourcing.
Bengali is the official language, and English proficiency is strong in professional and IT sectors. Labor costs are competitive, and the cost of living ranks 117th globally, making Bangladesh an affordable market for international employers. Companies hiring across South Asia often compare Bangladesh directly with employer of record India when evaluating regional talent strategy.
| Metric | Detail |
|---|---|
| Workforce Size | Large working-age population within ~168 million total |
| Median Age | Approximately 27 years |
| English Proficiency | Strong in IT and professional sectors |
| Top Talent Hubs | Dhaka, Chittagong |
| Key Industries | IT, ITES, RMG/garment outsourcing |
Employment Law Essentials in Bangladesh
Bangladesh employment law is governed primarily by the Bangladesh Labour Act 2006 and the Labour Rules 2015. These instruments set binding requirements for contracts, working hours, and wages across most sectors.
Section 5 of the Labour Act requires employers to issue a written appointment letter or work agreement at the point of hire. Rule 19 of the Labour Rules specifies the mandatory contents of that agreement, including the employee's name, address, role, start date, workplace location, worker category, and compensation details.
Three contract types are recognized: permanent, fixed-term, and temporary. Each carries distinct obligations around notice, termination, and pay. The standard workweek is 40 hours, and overtime is compensated at 200% of the regular rate. The national minimum wage stands at BDT 12,500 per month as of January 1, 2024, equivalent to approximately 78 BDT per hour for a standard 40-hour week. The National Minimum Wage Board reviews sector-specific rates every five years, and many sectors set floors above the national minimum.
Employment Contracts
The Bangladesh Labour Act 2006 recognizes three contract types: permanent, fixed-term, and temporary. Section 5 and Rule 19 of the Labour Rules set out the mandatory written terms each agreement must include. Gloroots prepares compliant employment contracts for each worker category, reducing filing risk for international employers.
Working Hours and Overtime
The standard workweek is capped at 40 hours. Overtime is paid at 200% of the regular rate, and blue-collar workers may not work more than 2 additional hours per day.
Minimum Wage
Bangladesh's national minimum wage is BDT 12,500 per month, effective January 1, 2024, equal to approximately 78 BDT per hour for a standard 40-hour workweek. The National Minimum Wage Board sets sector-specific rates every five years. Rates in many sectors exceed the national floor, so employers should verify the applicable rate for each worker category.
Leave and Statutory Benefits in Bangladesh
Bangladesh law sets minimum leave entitlements and mandatory benefits that apply to most employees. Employers must meet these floors before offering any supplemental provisions.
Maternity leave was extended to 120 days under the Bangladesh Labour (Amendment) Bill 2023, up from 112 days. Female employees with at least six months of service receive this leave on a paid basis. Those with less than six months of service may take maternity leave unpaid. There is no statutory paternity leave, though employers and employees may agree to it in writing.
Festival bonuses are a common mandatory benefit in many industries, typically paid at one month's salary twice per year. Supplemental benefits such as private health coverage, transport allowances, and housing provisions are widely offered but not legally required. Employers may also establish voluntary provident fund schemes, contributing a portion of salary, though no statutory obligation exists.
| Leave type | Entitlement | Pay rate | Key conditions |
|---|---|---|---|
| Annual | 1 day per 18 days worked | Full pay | Industry-specific calculations may apply |
| Sick | 14 days per year | Full pay | Medical certificate required; no carry-forward |
| Maternity | 120 days | Full pay (6 months' service required) | Unpaid if under 6 months' service |
| Casual | 10 days per year | Full pay | Statutory entitlement |
| Festival/public holidays | Up to 11 days per year | Full pay | Paid festival holidays as designated |
Annual Leave
Employees accrue 1 day of annual leave for every 18 days worked in a calendar year. Specific industries may apply different accrual calculations under sector-level agreements.
Sick Leave
Employees in Bangladesh are entitled to 14 days of paid sick leave per year. Unused sick leave cannot be carried forward. A medical certificate is required for any absence.
Maternity and Paternity Leave
Under the Bangladesh Labour (Amendment) Bill 2023, female employees with at least six months of service are entitled to 120 days of paid maternity leave. Employees with less than six months of service may take maternity leave on an unpaid basis.
Bangladesh law does not mandate paternity leave. Employers and employees may agree on paternity leave terms in writing.
Public Holidays
Employees in Bangladesh are entitled to up to 11 days of paid festival holidays per year, plus 10 days of casual leave as a statutory entitlement.
Payroll, Tax and Statutory Contributions in Bangladesh
Bangladesh operates a monthly payroll cycle. Employers must pay salaries on or before the last working day of each month.
Festival bonus obligations present a high-risk compliance area. Sector-specific wage board notifications vary by industry and must be tracked separately from the national minimum wage. Failing to account for these obligations can result in regulatory penalties and employee disputes.
The tax year runs from July 1 to June 30. Non-resident individuals are taxed at a flat rate of 30% on Bangladesh-sourced income.
Employer and employee contributions
| Contribution type | Employer rate | Employee rate |
|---|---|---|
| Mandatory social insurance | None | None |
| Voluntary provident fund | Voluntary | Voluntary |
Income tax slabs
| Income range (BDT) | Tax rate |
|---|---|
| Up to 350,000 | 0% |
| 350,001 to 450,000 | 5% |
| 450,001 to 750,000 | 10% |
| 750,001 to 1,150,000 | 15% |
| 1,150,001 to 1,650,000 | 20% |
| Above 1,650,000 | 30% |
| Non-residents (flat rate) | 30% |
Taxpayer category exemption thresholds
| Taxpayer category | Tax-free limit (BDT) |
|---|---|
| General taxpayers | 350,000 |
| Female taxpayers | 400,000 |
| Senior male taxpayers (65+) | 400,000 |
| Individuals with disability | 475,000 |
| Gazetted war-wounded freedom fighters | 500,000 |
Work Visas and Permits in Bangladesh
Foreign nationals working in Bangladesh require a valid work permit and the appropriate visa category. Applications are processed through the Bangladesh Board of Investment or the relevant ministry, depending on the sector.
An EOR acts as the legal employer in Bangladesh and can support work permit applications for foreign nationals. The Employment Visa is the standard requirement for foreign workers. The EOR's legal employer status means the sponsorship obligation sits with the EOR, not the client company.
Visa types for foreign workers in Bangladesh
| Visa type | Purpose | Validity |
|---|---|---|
| Employment Visa | For foreign nationals employed by a Bangladesh-registered entity | Up to 1 year (renewable) |
| Business Visa | For short-term business activities, meetings, and negotiations | Up to 1 year (multiple entry, renewable depending on approval) |
| Investor/Project Visa | For foreign investors or project-based assignments | Up to 1 year (renewable) |
Misclassification Risk in Bangladesh
Misclassifying an employee as an independent contractor under the Bangladesh Labour Act 2006 exposes employers to back payments, regulatory fines, and legal disputes.
Bangladesh courts and labor authorities assess the true nature of a working relationship using several criteria:
- Behavioral control: The employer directs how, when, and where the worker performs tasks, indicating an employment relationship rather than a contractor arrangement.
- Financial control: The employer controls payment terms, expense reimbursement, and whether the worker can offer services to other businesses.
- Integration into business operations: The worker performs functions that are core to the employer's regular business activity, not a distinct, project-based service.
- Provision of tools and equipment: The employer supplies the tools, equipment, or workspace the worker uses to perform their duties.
Penalties for misclassification in Bangladesh include:
- Back payment of statutory benefits, festival bonuses, and severance calculated from the original start date.
- Regulatory fines issued by labor authorities under the Bangladesh Labour Act 2006.
- Reputational risk with local regulators, which can affect future hiring and operational approvals.
Gloroots acts as the legal employer under its Global Employer of Record service. This transfers misclassification liability away from the client company and onto Gloroots as the entity of record.
Hiring, Onboarding, Termination and Offboarding in Bangladesh
Bangladesh employment law sets clear obligations at every stage of the employment lifecycle. The Labour Act 2006, revised in 2013, and the Labour Rules 2015 govern contracts, working hours, leave, termination, and severance. Employers must follow these rules from the first day of hiring.
The minimum employment age is 14 years. All workers must receive a written employment contract under Section 5 of the Labour Act. The contract must include the details specified in Rule 19 of the Labour Rules, covering job role, compensation, and contract type.
Probation periods are six months for clerical staff and three months for all other employees. Payroll runs monthly, with payment due on or before the last working day of each month. Overtime is capped at two hours per day for blue-collar workers and compensated at 200% of the regular rate.
Festival bonuses are a standard obligation in Bangladesh. Most industries pay two bonuses per year, each equivalent to one month's salary. Employers must budget for these payments and track eligibility carefully across the workforce.
Termination and offboarding carry specific notice and severance requirements. Workers employed for one year or more are entitled to 30 days' wages for each year of service. Getting these calculations right at the point of separation reduces legal exposure significantly.
Onboarding
Before Day One
- Issue a written employment contract per Labour Act Section 5, confirming contract type as permanent, fixed-term, or temporary.
- Verify the employee meets the minimum employment age requirement of 14 years under Bangladesh law.
- Collect personal identification documents and tax identification numbers before the start date.
- Confirm the applicable probation period: six months for clerical roles, three months for all others.
Day One
- Complete all Rule 19 contract details, including job role, compensation structure, and workplace location.
- Confirm payroll bank account details and set up the employee in the monthly payroll cycle.
- Brief the employee on standard working hours: Sunday to Thursday, eight hours per day, 40 hours per week.
- Explain the overtime policy, including the two-hour daily cap and 200% pay rate for eligible workers.
First week
- Register the employee for any voluntary provident fund scheme if the employer offers one.
- Confirm festival bonus eligibility and the payment cycle applicable to the employee's role and industry.
- Document the probation start date and schedule a mid-probation check-in for performance tracking.
Beyond
- Run the first monthly payroll on or before the last working day of the employee's first month.
- Track probation milestones and document any performance concerns in writing during the period.
- Confirm casual leave entitlement of 10 days per year and festival holiday entitlement of up to 11 days.
Termination
Temporary workers on a monthly rate require 30 days' written notice. Other temporary workers require 14 days' notice. Grounds for termination include physical or mental incapacity, ongoing poor health, serious misconduct, or sustained inability to perform the role.
Offboarding
Settlement
- Calculate final salary including any outstanding overtime pay and festival bonus on a pro-rata basis.
- Process severance payment for employees whose tenure exceeds one year: 30 days' wages per year of service.
- Confirm correct tax withholding on the final payment before processing the transfer.
Documents
- Issue an experience or service letter confirming the employee's role, tenure, and dates of employment.
- Return all personal identification documents collected from the employee at onboarding.
- Provide payslip records covering the full period of employment for the employee's records.
Exit
- Revoke all system access on the employee's last working day without exception.
- Confirm there are no post-employment restrictive covenant issues under the employment contract.
- Close any voluntary provident fund contributions and confirm final fund balance with the employee.
What's New: Recent Regulatory Changes in Bangladesh
The Bangladesh Labour (Amendment) Bill 2023 passed in 2023 and increased paid maternity leave from 112 days to 120 days for all covered employees. This change applies across industries and requires immediate updates to employment contracts and payroll systems.
- Maternity leave is now 120 days: update all employment contracts and payroll systems to reflect the new entitlement.
- The minimum wage increased to BDT 12,500 per month effective January 1, 2024: update payroll immediately if not already done.
- The National Minimum Wage Board conducts ongoing sector-specific reviews: monitor for updates relevant to your industry.
- The Bangladesh tax year runs from July 1 to June 30: align all payroll tax filings to this cycle.
- A flat non-resident income tax rate of 30% applies: verify each employee's residency status at onboarding and annually.
Employers should conduct a quarterly compliance review of Bangladesh regulatory changes. Assign a named review owner internally to track updates from the National Minimum Wage Board and the Ministry of Labour.
Costs and Financial Planning for Hiring in Bangladesh
Total employment cost in Bangladesh extends beyond base salary to include statutory and supplemental obligations that vary by industry and tenure.
Hidden costs are significant. Festival bonuses typically equal one month's salary and are paid twice per year in most industries. Transport allowances and voluntary provident fund contributions are market-standard even where not legally required. Employers who omit these from budget planning face unexpected shortfalls at payment time. For a detailed breakdown of what to expect, see our guide on employer of record cost.
| Cost element | Direct entity | Gloroots EOR |
|---|---|---|
| Entity setup cost | High upfront capital required | None |
| Payroll administration | Internal resource or local vendor | Managed by Gloroots |
| Festival bonus compliance | Employer tracks and manages | Tracked and executed by Gloroots |
| Statutory leave administration | Employer manages internally | Administered by Gloroots |
| Misclassification liability | Full employer exposure | Governed under Gloroots employment |
| HR support | Requires dedicated local hire | Included with account ownership |
Common Challenges and How Gloroots Solves Them in Bangladesh
Hiring in Bangladesh involves festival bonus compliance, sector-specific wage tracking, and correct contract type classification across permanent, fixed-term, and temporary arrangements.
| Challenge | How Gloroots Addresses It |
|---|---|
| Festival bonus compliance | Gloroots tracks bonus cycles and ensures correct payment at each festival period. |
| Sector-specific minimum wage tracking | Gloroots monitors National Minimum Wage Board notifications and applies sector updates as issued. |
| Contract type misclassification | Gloroots drafts compliant permanent, fixed-term, and temporary contracts aligned to the Bangladesh Labour Act 2006. |
| Maternity leave update compliance | Gloroots applies the 120-day entitlement introduced under the 2023 Amendment Bill. |
| Payroll timing | Gloroots processes monthly payroll on or before the last working day of each month. |
Why Gloroots Is a Strong EOR Partner in Bangladesh
Gloroots is well suited for companies hiring between 1 and 50 employees in Bangladesh's IT, ITES, or RMG sectors who need compliant contracts and payroll without setting up a local entity.
Country-specific strengths include festival bonus administration, updated maternity leave compliance under the 2023 Amendment Bill, and sector-specific wage board monitoring tied to National Minimum Wage Board notifications.
Gloroots manages the full Employment Lifecycle Management process, from contract issuance through offboarding, within a single governed platform.
Companies entering Bangladesh for the first time, or scaling a remote team quickly, can run employment without waiting for entity registration to complete.
Before signing with any EOR provider, verify that the January 2024 minimum wage update and the 2023 maternity leave change have both been applied to their payroll configuration. Providers who have not updated these figures expose clients to back-pay liability. For companies also hiring across Southeast Asia, see employer of record Singapore for a comparable entity-free employment model in the region.
Conclusion
Bangladesh's January 2024 minimum wage update and the 2023 maternity leave amendment make compliance a moving target for foreign employers operating without a local entity.
Companies entering Bangladesh should confirm their EOR provider has applied both changes before the first payroll run. Planning for quarterly regulatory reviews going forward reduces the risk of undetected liability as the National Minimum Wage Board issues further sector updates.
Frequently Asked Questions About Employer of Record in Bangladesh
The questions below cover the most common considerations for companies evaluating an EOR arrangement in Bangladesh.
Is Using an EOR Legal in Bangladesh?
Yes, EOR arrangements are legally permissible in Bangladesh. The EOR becomes the statutory employer under the Bangladesh Labour Act 2006, taking responsibility for employment contracts, payroll processing, and regulatory compliance. The client company retains day-to-day direction of the employee's work.
How Much Does an EOR in Bangladesh Cost?
EOR services in Bangladesh typically cost $500 or more per employee per month, depending on the provider and scope of services. This fee covers payroll administration, compliance management, and statutory benefits. Festival bonus obligations and any supplemental benefits add to the total employment cost beyond the base fee.
How Long Does It Take to Hire in Bangladesh Through an EOR?
Hiring through an EOR in Bangladesh typically takes 1 to 2 weeks from contract signing to the employee's first day. Setting up a direct legal entity requires registration with tax and labor authorities, a process that takes several weeks to months. An EOR removes that delay entirely.
What Employee Benefits Are Most Competitive in Bangladesh?
Beyond statutory entitlements, the most valued benefits in Bangladesh are private health insurance, transport allowances, and housing provisions. Festival bonuses, typically one month's salary paid twice a year, are standard in many industries and strongly influence candidate decisions. Voluntary provident fund contributions are also well-regarded.
What Is the Difference Between an EOR and Setting Up an Entity in Bangladesh?
An EOR lets you employ workers in Bangladesh within 1 to 2 weeks without registering a local company. Setting up a direct entity requires registration with Bangladesh's tax and labor authorities, taking several weeks to months and creating ongoing administrative overhead. EOR is better suited for smaller headcounts or market-testing phases.
Can an EOR Sponsor Work Visas in Bangladesh?
An EOR acting as the legal employer in Bangladesh can support Employment Visa applications for foreign nationals. The process typically involves the Bangladesh Board of Investment or the relevant ministry. Confirm with your EOR provider whether they manage visa sponsorship directly or require client involvement in the application.
