How to Hire Employees in Bangladesh
Hiring employees in Bangladesh? Learn the Labour Act requirements, provident fund contribution rules, minimum wage, overtime limits, probation terms, and how an EOR helps you hire compliantly without a local entity.
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- An Employer of Record (EOR) is the fastest route to compliant hiring in Bangladesh without entity setup.
- Employers must contribute 5% of basic salary to the provident fund, matched by the employee.
- Permanent employees are entitled to one month's notice before termination.
- The minimum wage for entry-level RMG workers is BDT 12,500 per month as of 2026.
- Employees with one or more years of service receive two mandatory festival bonuses, equivalent to a 13th and 14th month pay.
- There are no mandatory employer payroll taxes or social security contributions beyond the provident fund.
Foreign companies can hire employees in Bangladesh through a local entity, an Employer of Record, or by engaging independent contractors.
The key compliance requirements are the Bangladesh Labour Act, provident fund contributions, and sector-specific minimum wages that vary by industry.
This guide covers hiring models, employment contracts, payroll obligations, termination rules, and common compliance risks.
Gloroots operates as a Global Employer of Record in Bangladesh, managing employment contracts, payroll, provident fund contributions, and statutory filings so companies can employ talent without setting up a local entity.
Job Market and Hiring Trends in Bangladesh
Bangladesh's ready-made garment sector employs approximately 4 million workers and accounts for around 84% of total export earnings, according to BGMEA data from 2023.
The IT and technology sector is growing fast, with skilled roles in short supply and a large surplus of entry-level manufacturing labor.
- Bangladesh ranked 41st in the Global Innovation Index 2023 (WIPO).
- IT and ITES sector revenue reached approximately $1.4 billion in FY2022-23 (BASIS).
- RMG accounts for approximately 84% of total export earnings (BGMEA, 2023).
- Youth unemployment stands at approximately 10.6% (Bangladesh Bureau of Statistics, 2023).
- Over 650,000 freelancers are active on global platforms, making Bangladesh the second largest freelancer base in Asia (BASIS, 2022).
When sourcing candidates, Bengali language support during the application stage improves response rates and candidate experience, particularly for roles outside the tech sector.
Major job boards active in Bangladesh include Bdjobs.com, Chakri.com, LinkedIn, Indeed Bangladesh, and Skill.jobs. Each platform serves different segments, from entry-level manufacturing roles to senior technology positions.
Your Options for Hiring in Bangladesh: Entity vs. EOR vs. Contractor
Foreign companies hiring in Bangladesh choose between three models: establishing a local entity, working with an Employer of Record, or engaging independent contractors. Each carries distinct compliance obligations under the Bangladesh Labour Act.
Entity setup requires registering a Bangladeshi subsidiary. The process takes two to four months and places full Labour Act liability on your company.
Contractor engagement suits genuinely independent, project-based work. It is not appropriate when you control how, when, or where the work is done.
| Path | Setup Time | Cost | Compliance Burden | Best For |
|---|---|---|---|---|
| Local Entity | 2–4 months | Registration, legal, and ongoing admin fees | Full Labour Act liability on employer | Long-term, large-scale operations |
| Employer of Record | Days | Per-employee monthly fee, no setup cost | Shifted to EOR provider | Fast, compliant expansion without entity |
| Independent Contractor | Immediate | No setup cost | Misclassification risk on engaging company | Genuine short-term project work |
Foreign companies operating in Bangladesh without a registered entity also face permanent establishment (PE) risk. Under Bangladeshi tax law, a fixed place of business or sustained service provision by employees in Bangladesh can trigger PE status, exposing the foreign company to corporate tax obligations.
To reduce PE exposure: keep employees in supportive or administrative roles rather than revenue-generating ones, execute contracts and signings outside Bangladesh, and document each staff member's tasks clearly to demonstrate the absence of a fixed business presence.
Understanding how does EOR work helps clarify why it is the most practical path for companies that want compliant employment without triggering PE risk. When evaluating providers, a guide to the best employer of record options can support your selection process.
Employees vs. Contractors in Bangladesh
Bangladeshi authorities assess the substance of a working relationship, not the label on the contract. A worker called an independent contractor is still treated as an employee if the facts support it.
The practical classification test looks at three factors: whether the company controls how, when, and where work is performed; whether the arrangement is exclusive; and whether the worker is economically dependent on a single engaging company for their income.
| Factor | Employee | Contractor |
|---|---|---|
| Control | Employer directs how, when, and where work is done | Worker controls their own methods and schedule |
| Benefits and Social Security | Entitled to provident fund, leave, and statutory benefits | Not entitled to statutory employment benefits |
| Taxation | PAYE withheld at source by employer, remitted to NBR | Contractor self-files and manages own tax obligations |
| Contractual Agreement | Written employment contract required under Labour Act | Service agreement; no employment protections apply |
| Exclusivity | Typically works exclusively for one employer | Free to work for multiple clients simultaneously |
A contract labeled "independent contractor" carries no legal weight in Bangladesh if the working relationship resembles employment. Labour courts look at the actual conditions of work. Companies that misclassify employees as contractors face back taxes, penalty assessments, and reclassification claims that apply retroactively to every affected hire.
Cost to Hire an Employee in Bangladesh
Total employment cost in Bangladesh equals salary plus provident fund contributions, mandatory allowances, and two annual festival bonuses.
Employer contributions beyond the provident fund are limited. There is no mandatory social security scheme and no payroll tax on employers beyond provident fund remittance. This makes Bangladesh's cost structure simpler than most comparable markets. Market benchmarks, including figures cited by third-party providers, place total employer burden at roughly 8.93% of salary. For a detailed breakdown of what EOR arrangements add to that figure, see employer of record cost.
| Contribution | Employer Rate | Employee Rate | Notes |
|---|---|---|---|
| Provident Fund | 5% of basic salary | 5% of basic salary | Conditional on company size; not universally mandatory for all employers |
| Income Tax (PAYE) | 0% | Progressive rate | Withheld at source by employer and remitted to the National Board of Revenue |
| Social Security | None | None | No mandatory national scheme exists |
| Festival Bonuses | 2x approximately one month basic salary per year | Not applicable | Mandatory for employees with one or more years of service under the Bangladesh Labour Act |
Mandatory allowances, including house rent, medical, transport, and sometimes food, are embedded in the minimum wage structure for non-probationary workers. Probationary employees receive base wage only, without those allowances.
Compliance Risks While Hiring in Bangladesh
Non-compliance with the Bangladesh Labour Act triggers financial penalties, back-pay liability, and regulatory audits that compound with every additional hire.
The risks below are not theoretical. The Department of Inspection for Factories and Establishments actively audits employers, and Bangladeshi labour courts interpret disputes in favor of employees.
- Misclassification: Treating employees as contractors triggers retroactive provident fund contributions, back taxes, and reclassification claims. The relationship, not the contract label, determines status.
- Provident fund errors: Late or incorrect remittance attracts penalties. The Department of Inspection for Factories and Establishments audits fund compliance directly.
- Overtime violations: The Labour Act caps overtime at two hours per day and twelve hours per week. Failure to pay at the 200% statutory rate creates immediate liability.
- Minimum wage non-compliance: Sector-specific rates apply across industries. The RMG floor of BDT 12,500 per month is not a universal rate. Employers in other sectors must apply the correct sectoral minimum.
- Festival bonus omission: Two mandatory annual bonuses are required for employees with one or more years of service. Failure to pay triggers Labour Act liability.
- Termination without proper notice or severance: Bangladeshi labour courts tilt toward employee protection. Terminating without the required notice period or severance payment creates legal exposure.
- Appointment letter omission: The Labour Act requires a formal appointment letter and a photo ID card for every worker. Missing either document is a compliance breach.
- Data protection: The Cyber Security Act 2023 governs how employers handle employee and candidate data. Non-compliance carries its own regulatory consequences separate from the Labour Act.
Each risk above has a direct financial consequence. Addressing them before the first hire is less costly than resolving them after a complaint or audit.
Key Labor Laws in Bangladesh
The Bangladesh Labour Act 2006, as amended, is the primary statute governing employment across all sectors. Sector-specific wage rules, such as those for the ready-made garment industry, layer on top of the Act's baseline requirements.
Employment contracts
Written contracts are mandatory for permanent roles. The Labour Act also requires employers to issue a formal appointment letter and a photo identity card to every worker. Fixed-term contracts that are repeatedly renewed can trigger permanent employment status, with all associated obligations.
Working hours and overtime
The standard workweek is capped at 48 hours, typically Monday through Saturday. Overtime is limited to 2 hours per day and 12 hours per week, compensated at 200% of the regular pay rate. Employees are entitled to at least one full rest day per week, typically Sunday, and a minimum one-hour break for every five hours worked. Some technology and white-collar employers operate a 40-hour week.
Minimum wage
Minimum wages are sector-specific and set by the Minimum Wage Board. Entry-level workers in the ready-made garment sector earn BDT 12,500 per month. Other sectors carry different rates: leather goods Grade 1 at BDT 13,520, rerolling mills Grade 1 at BDT 16,800 to 20,400, road transport Grade 1 at BDT 16,680 to 20,200, and tannery Grade 1 at BDT 34,168. For non-probationary workers, the minimum wage includes base wage plus applicable allowances.
Leave entitlements
Statutory leave types are covered in the Employment Benefits section. The key categories are: earned leave at one day per 18 days worked, 14 days sick leave, 10 days casual leave, and 16 weeks maternity leave.
Probation periods vary by worker category. Temporary and fixed-term workers have no probation period. Clerical workers serve up to 6 months. Skilled and indefinite-term workers serve 3 months, extendable by a further 3 months. Successful completion of probation converts the worker to permanent status automatically.
On trade union rights: workers can form a union with support from 20% or more of the workforce. Collective bargaining rights apply, and employers cannot interfere with union formation or activity.
What to Include in an Employment Contract or Offer Letter in Bangladesh
Written contracts are legally required for permanent roles in Bangladesh. Bangladeshi labour courts interpret any ambiguities in contract terms in favor of the employee, so precision in drafting matters.
Every permanent employment contract should include the following:
- Full names and addresses of both parties
- Job title and description of duties
- Basic monthly salary and applicable allowances
- Working hours (maximum 48 hours per week) and overtime policy (200% rate, capped at 2 hours per day)
- Probation period terms by worker category
- Leave entitlements: earned, sick, casual, and maternity
- Festival bonus entitlement
- Notice period: 7 days during probation; minimum 1 month for permanent employees
- Termination conditions and valid grounds
- Confidentiality, IP ownership, and non-compete scope
- Governing law: Bangladesh Labour Act 2006
The Labour Act also requires employers to issue a formal appointment letter as a document separate from the full employment contract. A photo identity card must be issued to every worker. Both are mandatory, not optional.
Payroll and Taxes in Bangladesh
Payroll runs monthly in BDT. Salaries are due by the end of the month for work performed that month.
Foreign employers pay employees through a local entity bank account, an EOR managing payroll in BDT, or a global payroll service. Mobile financial services such as bKash, Nagad, and Rocket are widely used for workers without formal bank accounts. See Gloroots pricing for a breakdown of managed payroll and compliance costs.
Income tax is withheld at source (PAYE) by the employer and remitted to the National Board of Revenue (NBR). Progressive rates apply above the exemption threshold. Non-residents are taxed at a flat 30%.
Income tax brackets (general taxpayers)
| Taxable income (BDT) | Rate |
|---|---|
| First 350,000 | 0% |
| Next 100,000 | 5% |
| Next 400,000 | 10% |
| Next 500,000 | 15% |
| Next 500,000 | 20% |
| Next 2,000,000 | 25% |
| Above 3,850,000 | 30% |
Higher tax-free thresholds apply to specific groups: BDT 400,000 for female taxpayers and those aged 65 or above; BDT 475,000 for disabled individuals; BDT 500,000 for gazetted war-wounded freedom fighters.
Employer and employee contributions
| Contribution type | Employer rate | Employee rate | Notes |
|---|---|---|---|
| Provident Fund | 5% of basic salary | 5% of basic salary | Conditional on company size; eligible workers only |
| Income tax (PAYE) | 0% | Progressive (see brackets above) | Withheld at source by employer |
| Social security | None | None | No mandatory national scheme |
Employment Benefits in Bangladesh
Statutory benefits are set by the Bangladesh Labour Act. Supplemental benefits such as private health insurance, transport allowances, and meal subsidies are common in the technology and services sectors.
Paid time off and public holidays
Earned leave accrues at one day per 18 days worked. Employees also receive 10 days of casual leave per year with no carry-forward. Bangladesh observes 18 public holidays, including Eid-ul-Fitr, Eid-ul-Adha, Independence Day, Victory Day, Bengali New Year (Pahela Baishakh), Labour Day, National Mourning Day, Christmas Day, and others. Employees required to work on a festival holiday receive a substitute day off plus two days of compensatory pay.
Sick leave
Employees are entitled to 14 paid sick days per year. A medical certificate is required. Unused sick leave does not carry forward to the following year.
Maternity and paternity leave
Employees with six or more months of service receive 16 weeks (120 days) of paid maternity leave. Employees with less than six months of service, or those who already have two surviving children, receive unpaid leave. A miscarriage entitles the employee to four weeks of paid leave. Bangladesh has no statutory paternity leave.
Public health insurance
There is no universal public health insurance scheme in Bangladesh. Companies with 100 or more employees must provide health insurance as a mandatory benefit. Below that threshold, health insurance is optional. Mandatory minimum wage allowances include a medical or health insurance allowance for non-probationary workers.
Leave entitlements summary
| Leave type | Entitlement | Pay rate | Key conditions |
|---|---|---|---|
| Earned leave | 1 day per 18 days worked | 100% | Carry-forward rules vary |
| Sick leave | 14 days per year | 100% | Medical certificate required; no carry-forward |
| Casual leave | 10 days per year | 100% | No carry-forward |
| Maternity leave | 16 weeks (120 days) | 100% | 6+ months service; unpaid if under 6 months or 2+ surviving children |
| Festival bonuses (13th and 14th month) | 2 x approximately 1 month basic salary | 100% | 1+ year service; Eid-ul-Fitr and Eid-ul-Adha; Hindu employees: Durga Puja; Christian employees: Christmas |
The two mandatory festival bonuses are distinct from leave entitlements. They function as a 13th and 14th month salary and apply to employees with at least one year of service.
Work Permits and Visas in Bangladesh
Three primary work visa categories exist for foreign nationals. Each visa must be obtained before applying for a work permit through the Bangladesh Investment Development Authority (BIDA).
The employer sponsors both the visa and the work permit. Tourist visas cannot be converted into work permits. Required documents include a signed application, passport photos, an employer confirmation letter, an appointment letter, and a full employment contract.
| Visa Type | Purpose | Validity |
|---|---|---|
| E2 | Foreign employees in private sector industries | Standard work permit validity |
| E3 | Machinery or software installation, maintenance supervision, project inspection | Project duration |
| PI | Private investors | Investor visa validity |
Required documents for the work permit application:
- Completed and signed visa application form
- Two recent passport-sized photographs
- Original passport plus a copy of the photo page
- Employer letter confirming the job offer
- Appointment letter and employment contract with full terms and salary details
Onboarding New Hires in Bangladesh
Onboarding in Bangladesh is a compliance step, not just a welcome process. Several registrations must be completed before an employee's first working day.
Before Day One
- Register the employee for the provident fund and obtain a Tax Identification Number (TIN)
- Issue a signed employment contract
- Issue a formal appointment letter, as required under the Labour Act
- Issue a photo identity card, also required under the Labour Act
- Collect the employee's NID copy, TIN, proof of address, and bank or mobile financial service details
- Obtain a work permit for any foreign national before their start date
Day One
- Provide company policies, role-specific training, and a workplace safety orientation
- Brief the employee on leave entitlements, overtime rules, festival bonus eligibility, and performance review timelines
First week
- Confirm payroll setup with correct allowances, including house rent, medical, and transport for non-probationary workers
- Set up overtime tracking systems
- Assign a direct manager and clarify probation terms and the confirmation process
Beyond the first week
- Schedule the probation review before the probationary period ends
- Note that permanent status applies automatically after successful probation, even without a formal confirmation letter
- Maintain a personnel file containing the signed contract, confidentiality agreements, and policy acknowledgments
NDAs, Confidentiality and IP Protection in Bangladesh
NDAs and confidentiality clauses are enforceable in Bangladesh under general contract law and the Cyber Security Act 2023, which also governs data protection and digital offenses.
Employment contracts should specify IP ownership explicitly. By default, work product created during employment belongs to the employer. Contracts must also state that confidentiality obligations survive termination, as courts will not imply this automatically.
Non-compete clauses are valid under Bangladeshi law but must be reasonable in geographic scope, duration, and subject matter. Overly broad restrictions risk being unenforceable. Courts assess each clause on its specific terms.
The Cyber Security Act 2023 applies directly to how employers handle employee and candidate personal data. Employers must store personal data securely and process it only on a lawful basis. Non-compliance with the Act carries regulatory penalties separate from any labour law exposure.
Termination and Offboarding in Bangladesh
Permanent employees in Bangladesh can be terminated for cause or without cause. The minimum notice period is one month, reduced to seven days during probation. In practice, permanent staff typically receive 60 to 120 days' notice depending on seniority and contract terms.
Valid grounds for termination under the Bangladesh Labour Act include: willful insubordination or disobedience; theft, fraud, or dishonesty; taking bribes; habitual absence without leave; absence without leave for more than 10 days; habitual late attendance; habitual breach of law or company rules; riotous or disorderly behavior; inciting others to riotous behavior; striking illegally; damage to employer's property; inefficiency or negligence causing loss; and breach of employment terms.
Final pay must include outstanding salary, gratuity, provident fund balance, and any accrued leave encashment. Missing any component creates a statutory liability.
| Scenario | Severance |
|---|---|
| Proven misconduct | None |
| Employer termination without cause (6+ months service) | 30 days' pay |
| Resignation (1 to 5 years' service) | 14 days' pay |
| Resignation (5+ years' service) | 30 days' pay |
| End-of-service benefit | 30 days' wages per completed year (45 days after 10 years) |
Upon retrenchment, the employer must notify the Chief Inspector of Labour and any trade union present before proceeding.
Offboarding steps:
- Issue written termination notice with stated grounds.
- Calculate and pay gratuity, provident fund balance, and accrued leave.
- Notify the Chief Inspector of Labour and any trade union if the termination is a retrenchment.
- Collect company property, revoke system access, and update the personnel file.
Business Culture in Bangladesh
Hierarchy shapes how decisions are made and how people communicate. Senior managers expect deference, and titles should be used in formal settings. Decisions flow top-down, so allow extra time for approvals at each level.
Relationship-building comes before business. Initial meetings focus on establishing trust rather than commercial terms. Rushing to the deal before that trust is in place typically slows the process.
Communication is indirect. Direct criticism or public disagreement is avoided. Feedback is delivered diplomatically, and reading between the lines is a practical skill for foreign managers working with Bangladeshi teams.
- Religious observance: Friday is the holy day. Ramadan affects working hours and meeting availability. Schedule important meetings outside Ramadan where possible.
- Decision-making: Consensus-oriented at senior levels, but implementation is hierarchical.
- Punctuality: International business contexts expect it. Local norms may be more flexible.
- Working week: Standard schedule is Monday to Saturday, 9am to 5pm. Some technology employers use a Monday to Friday 40-hour week. Overtime is common in manufacturing.
Top Sectors to Hire From in Bangladesh
Bangladesh's workforce is concentrated in five sectors that offer genuine hiring depth for international employers. Each has a distinct talent profile and growth trajectory.
Ready-Made Garments (RMG): The RMG sector employs approximately 4 million workers and accounts for around 84% of Bangladesh's total export earnings (BGMEA, 2023). In-demand roles include production supervisors, quality control managers, and compliance officers.
Information Technology and IT-Enabled Services: Sector revenue reached approximately $1.4 billion in FY2022-23 (BASIS), supported by over 650,000 active freelancers. In-demand roles include software engineers, data analysts, UI/UX designers, and BPO agents. Companies already hiring tech talent across South Asia often extend into Bangladesh alongside operations in India. See our guide to hire employees in India for a regional comparison.
Pharmaceuticals: Bangladesh ranks as the world's 8th largest generic drug producer, with sector exports growing at approximately 15% annually. In-demand roles include regulatory affairs specialists, quality assurance chemists, and production pharmacists.
Leather and Footwear: Dhaka's Savar tannery cluster is a major export hub. In-demand roles include leather technologists, production managers, and export documentation specialists.
Financial Services and Fintech: Mobile financial services platforms including bKash and Nagad have driven rapid fintech growth. In-demand roles include mobile banking product managers, compliance analysts, and data scientists.
Top Cities to Hire From in Bangladesh
Bangladesh's talent is concentrated in a handful of cities, each with a distinct specialization. Knowing where to hire shapes how quickly you can fill roles and at what cost.
- Dhaka: The capital and primary business hub. Dhaka holds the largest white-collar and tech talent pool in the country, with a concentration of IT/ITES firms, financial services, multinational offices, and government agencies.
- Chittagong (Chattogram): Bangladesh's main port city and second-largest commercial center. Strong talent in logistics, shipping, international trade, and manufacturing management.
- Gazipur: A major industrial satellite city north of Dhaka. Concentration of ready-made garment factories and manufacturing talent.
- Sylhet: A growing BPO and tech hub. Strong diaspora ties to the UK drive high English-language proficiency, making it a reliable source for customer service, BPO, and hospitality roles.
- Rajshahi: A university city with a strong academic talent base. An emerging hub for education technology and agri-tech roles.
Companies expanding across South Asia can also compare talent market structures in hire employees in Sri Lanka and hire employees in Vietnam for regional context.
Hire Compliantly in Bangladesh with Gloroots
Gloroots acts as the legal employer in Bangladesh, handling written contracts, provident fund registration, PAYE withholding, festival bonus administration, and Bangladesh Labour Act compliance while you direct the employee's work.
Use Gloroots when testing the Bangladeshi market, scaling quickly, or expanding across South Asia without entity setup.
- No local entity required: Hire in Bangladesh in days, not months.
- Fast onboarding: Compliant contracts and provident fund registration from Day One.
- Local compliance and payroll: Labour Act adherence, sector-specific wages, and overtime tracking.
- Predictable pricing: Transparent cost breakdowns with country-level GL mapping.
- Dedicated support: Ongoing compliance monitoring and audit-ready reporting.
| Feature | What Gloroots handles |
|---|---|
| Employment contracts | Written contracts compliant with the Bangladesh Labour Act |
| Provident fund | Registration and 5% employer contribution remittance |
| Payroll and tax | PAYE withholding and remittance to the National Board of Revenue |
| Festival bonuses | Administration of statutory festival bonus obligations |
| Compliance monitoring | Ongoing Labour Act adherence and audit-ready reporting |
Gloroots is one option among several. The right choice depends on your hiring volume, timeline, and whether you plan to establish a permanent presence in Bangladesh.
Frequently Asked Questions About Hiring in Bangladesh
| Question | Short Answer |
|---|---|
| What are the minimum wage rates in Bangladesh? | Sector-specific; RMG entry-level floor is BDT 12,500/month. Other sectors set by the Minimum Wage Board. |
| What statutory benefits must employers provide? | Two festival bonuses, 16 weeks maternity leave, 14 days sick leave, 10 days casual leave, earned leave, 18 public holidays. |
| How does income tax work for employees? | Progressive PAYE from 0% to 30%. Employer withholds and remits to NBR. Non-residents taxed at flat 30%. |
| What work visas are available for foreign employees? | E2 (private sector), E3 (machinery/software/project), PI (investors). BIDA work permit required. Employer sponsors. |
| How does termination work in Bangladesh? | Notice periods vary: 7 days probation, 1 month minimum permanent. Severance depends on cause and tenure. |
| Is the Provident Fund mandatory for all employers? | Mandatory for certain companies based on size. Contribution is 5% employer plus 5% employee of basic salary. |
What are the minimum wage rates in Bangladesh?
The minimum wage in Bangladesh is sector-specific and set by the Minimum Wage Board. The ready-made garment (RMG) sector sets the most widely referenced floor at BDT 12,500 per month for entry-level workers as of 2026.
Other sectors, including leather goods, rerolling mills, road transport, and tanneries, have their own grade-based rates. Non-probationary workers are also entitled to mandatory allowances on top of basic salary. Employers must verify the applicable sectoral rate before setting compensation.
What statutory benefits must employers provide in Bangladesh?
Employers must provide two festival bonuses per year to employees with at least one year of service. Maternity leave is 16 weeks at full pay. Employees are entitled to 14 days of sick leave, 10 days of casual leave, and earned leave accruing at one day per 18 days worked.
Bangladesh observes 18 public holidays annually. Companies with 100 or more employees must provide health insurance coverage. These obligations apply regardless of whether the employer operates through a local entity or an Employer of Record.
How does income tax work for employees in Bangladesh?
Bangladesh uses a Pay As You Earn (PAYE) system. Employers withhold income tax from employee salaries each month and remit it to the National Board of Revenue (NBR). Tax rates are progressive, ranging from 0% to 30% depending on annual income.
Female, elderly, and disabled taxpayers receive higher exemption thresholds under current NBR rules. Non-resident employees are taxed at a flat rate of 30% on Bangladesh-sourced income, with no progressive bracket applied.
What work visas are available for foreign employees in Bangladesh?
Bangladesh issues three main work visa categories for foreign nationals. The E2 visa covers private sector employment. The E3 visa applies to roles involving machinery, software, or project-based work. The PI visa is for investors establishing or managing a business.
All foreign workers require a BIDA (Bangladesh Investment Development Authority) work permit before starting employment. Tourist visas cannot be converted to work visas inside Bangladesh. The employer sponsors the permit application and bears responsibility for compliance.
How does termination work in Bangladesh?
Notice periods depend on employment status. Probationary employees require 7 days notice. Permanent employees require a minimum of one month, though 60 to 120 days is standard practice for senior roles. Termination without cause requires 30 days severance pay.
Employees who resign with one to five years of service receive 14 days severance. Those with five or more years receive 30 days. Retrenchment requires prior notification to the Chief Inspector of Labour. Valid grounds for termination are enumerated in the Bangladesh Labour Act.
Is the Provident Fund mandatory for all employers in Bangladesh?
Provident Fund obligations depend on company size. For companies that meet the applicable threshold under the Bangladesh Labour Act, contributions are mandatory. Both the employer and employee each contribute 5% of the employee's basic salary.
Smaller companies may treat the Provident Fund as voluntary, but this depends on the specific size threshold confirmed under current regulations. Employers should verify their obligation before onboarding eligible workers. Late or incorrect contributions attract penalties from the relevant authorities.
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