How to hire employees in Bangladesh

Bangladesh's economy, with its agricultural foundation and burgeoning industrial and manufacturing sectors, presents a vibrant landscape for job creation. This diversification is critical as the nation aims to provide employment for its vast working-age population. Despite the challenges posed by the global pandemic, which slowed economic growth and increased unemployment, Bangladesh is steadily regaining its momentum.

The cities of Dhaka and Chittagong, as economic hubs, play pivotal roles in driving the country's revival. Offering a blend of traditional and modern industries, Bangladesh emerges as an enticing prospect for enterprises aiming to explore new markets and harness the potential of its diverse and resilient workforce.

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What you need to know before hiring employees in Bangladesh

Job market in Bangladesh

When exploring how to hire employees in Bangladesh, the following trends can help you hire cost-effectively and pay talent correctly. 

• Bangladesh's economy is showing strong signs of resilience and potential for growth with a recent annual inflation rate around 6.15%, expected to stabilize at approximately 5.5%.
• The nation's unemployment rate remains comfortably below 4.4%, indicating a stable employment environment amidst a shift from agriculture to a burgeoning service sector, the main GDP contributor.
• As part of the Next Eleven, Bangladesh's growth trajectory highlights its status as a compelling destination for hiring, with a promise for future growth.
• The strategic move towards the service industry, paired with a steady unemployment rate, presents a ripe opportunity for tapping into a youthful, dynamic workforce eager to contribute to the digital and service sectors.

• With a GRWI score of 0.533, ranking 84th among 108 countries, Bangladesh's standing in the remote work landscape is highlighted, based on cybersecurity, economics, infrastructure, and social safety criteria. This offers valuable insights for strategic planning and decision-making for employers considering remote team expansion or hiring in Bangladesh.

Bangladesh Hiring Trends

• Transformative Shifts in Hiring: The hiring landscape in Bangladesh is undergoing significant changes, with the manufacturing sector emerging as a key economic driver.
• Economic Growth: Bangladesh's GDP rose to $460.2 billion in 2022, marking a substantial increase since 2014. The country is anticipated to continue its growth trajectory.
• GDP Growth Rate: Recorded a robust growth rate of 5.3% in 2023, showcasing the country's potential for sustainable employment opportunities.
• IT Industry Boom: The IT sector stands out for its rapid growth, significantly contributing to digital and remote work environments.
• Workforce Trends: There's a shift towards valuing skill enhancement and meaningful employment over mere salary considerations. This is evident from the efforts to bridge the earnings gap across different educational levels.
• Government Initiatives: Bangladesh is implementing initiatives aimed at improving job prospects and endorsing flexible work arrangements, moving towards more people-centric hiring practices.
• Challenges: Despite positive trends, there are challenges such as bridging the skill and earnings gap among workers with different educational backgrounds.
• Business Strategy for Hiring: For companies looking to tap into Bangladesh's talent pool, it's crucial to adapt to the evolving job market trends and workforce preferences.

How to hire employees from Bangladesh

1. Set up an entity in the country

Setting up a business entity in Bangladesh presents a strategic pathway for enterprises aiming to capitalize on the burgeoning market of South Asia, ensuring direct control over employment mechanisms and fostering prospects for extensive economic returns.

This process is initiated by selecting an optimal corporate structure, such as a Private Limited Company or Branch Office, pivotal for laying the groundwork for scalable advancement. Proceeding to formal registration with the Registrar of Joint Stock Companies and Firms (RJSC) and securing a Tax Identification Number (TIN) are essential strides towards embedding your venture within Bangladesh's commercial ecosystem.

Navigating through this journey entails contending with a spectrum of complexities, encompassing legalities, fiscal obligations, and operational challenges that necessitate an in-depth understanding of Bangladeshi corporate and employment laws alongside adept handling of human resources and payroll functions.

2. Hire independent contractors

Engaging independent contractors in Bangladesh offers businesses the agility to address specific project needs or temporary assignments by forming agreements with individuals or entities. This method grants considerable flexibility, essential for adapting to project-specific requirements or tapping into specialized skills without the long-term obligations of traditional employment. 

However, accurate classification of such workers is crucial to avoid legal complications and potential penalties. Moreover, it's important to recognize that contractors might not exhibit the same level of commitment or loyalty as full-time, in-house employees, a vital consideration in this employment approach. 

Utilizing contractors effectively allows companies to scale their operations in Bangladesh dynamically, accessing a diverse skill set on an as-needed basis.

3. Partner with an EOR in the country

Utilizing an EOR service facilitates seamless entry into Bangladesh's vibrant market, avoiding the intricate processes involved in setting up a legal entity. This approach markedly reduces potential liabilities and achieves cost efficiency. Engaging with an EOR ensures adherence to Bangladesh's employment laws, taxation, and regulatory requirements, minimizing legal risks and fostering a compliant operational framework. Companies can concentrate on their primary business objectives while expanding their presence in Bangladesh, capitalizing on the local workforce and resources effectively. This method offers a strategic advantage in leveraging Bangladesh's economic and labor market potential.

Compliance risk while hiring in Bangladesh

Engaging in the hiring process in Bangladesh brings forth compliance risks related to labor laws, taxation, and the correct classification of employees. To ensure adherence to Bangladesh's intricate legal and regulatory framework, it's vital to have a profound understanding of both national and potentially applicable international regulations. This approach helps prevent legal issues and upholds ethical employment practices. 

Utilizing local expertise or employing an Employer of Record greatly mitigates these risks, guaranteeing that your hiring strategies comply with legal requirements and promote responsible employment practices within the Bangladeshi market.

Key Aspects of Bangladesh  Labor Law

Employment Contract:

In Bangladesh, the foundation of an employer-employee relationship is laid out in a meticulously drafted employment contract. This contract, a mandatory written accord, delineates the responsibilities, rights, and conditions binding both parties.

Key inclusions are:

• The contract's designation, clarifying the employment's permanence or temporality.
• Full names and details of both employer and employee.
• The contract's active period.
• Work execution location.
• A thorough breakdown of job tasks.
• Compensation details, adhering to the legal minimum wage.
• A comprehensive list of benefits, including leave entitlements and year-end bonuses.
• Detailed termination conditions, including the procedure for both notice and severance.
• A specified mechanism for dispute resolution, pointing towards the Labor Courts for any disagreements.

The 2006 Bangladesh Labour Act, which employers must abide by, categorizes workers based on the nature of their employment, setting strict standards for hiring practices, work hours, remuneration, and termination processes. 

This act is a testament to Bangladesh's dedication to upholding equitable and lawful employment practices, offering a solid framework within which employment contracts are crafted and executed, ensuring a balanced and fair working relationship.

Working Hours:

In Bangladesh, the typical workweek runs from Sunday to Thursday, with each day encompassing 9 hours of work, not to exceed a total of 48 hours per week.

Overtime:

Overtime can be included in the employment agreement, with restrictions on certain categories of workers limited to 2 extra hours daily, compensated at double the normal wage rate.

Minimum Wage:

In Bangladesh, minimum wages for various sectors are set by the National Minimum Wage Board and are reviewed every five years. The general minimum wage stands at BDT 8,000 monthly, although it can differ by industry.

Payroll laws in Bangladesh

In Bangladesh, the frequency for payroll distribution is set on a monthly basis.

Employment benefits in Bangladesh

Leave Policies in Bangladesh

1. Paid Time Off

In Bangladesh, employees earn one day of annual leave for every 18 days worked within a year, although specific industries may have different methods for calculating leave entitlements.

2. Public Holidays

Bangladesh has 21 public holidays in 2024, but employees are entitled to 11 paid holidays, chosen at the employer's discretion.

3. Sick Days

Employees in Bangladesh can avail up to 14 days of paid sick leave annually, with the condition that it's utilized within the year and not carried forward. To qualify for this leave and its associated pay, presenting a medical certificate for each absence is mandatory.

4. Maternity and paternity leave

In Bangladesh, female employees with at least six months of service are eligible for 16 weeks of maternity leave, split equally before and after childbirth, with compensation provided by their employer. 

However, those with less than six months of tenure or more than two children may only qualify for unpaid leave. Additionally, employment during the eight weeks following delivery is prohibited.

In the event of a miscarriage before the start of maternity leave, women are entitled to four weeks of paid leave, without any wage deductions. While Bangladesh's labor laws do not mandate paternity leave, some companies voluntarily offer paid paternity leave benefits.

Public Health Insurance 

In Bangladesh, public health insurance operates under the government's management, aiming to provide healthcare services to its citizens, although it doesn't cover the entire population comprehensively. 

The health system is supported by public hospitals and clinics offering services at minimal or no cost. However, the coverage and quality of services can vary significantly across different regions, with urban areas generally having better facilities than rural ones. 

Despite efforts to improve healthcare accessibility and quality, challenges such as funding, infrastructure, and workforce shortages persist. The government has launched various health initiatives and programs targeting vulnerable populations, yet many Bangladeshis still rely on out-of-pocket payments for healthcare services, indicating a gap in public health insurance coverage.

Filing tax in Bangladesh

Income Tax:

In Bangladesh, employee income tax rates commence at 0% for annual incomes up to Tk. 350,000, scaling up through various brackets to 25% for incomes exceeding Tk. 1,650,000. This tiered structure facilitates equitable taxation, ensuring individuals contribute according to their earnings. Notably, tax exemptions are adjusted based on taxpayer categories, with specific limits set for women, senior citizens over 65, individuals with disabilities, and gazetted war-wounded freedom fighters, offering them additional tax relief. For a detailed understanding refer to our guide.

Other Tax and Social Security Contributions:

In Bangladesh, neither employers nor employees are required to make mandatory social insurance contributions.

Business Culture in Bangladesh

Business Culture in Bangladesh is characterized by its emphasis on hierarchy, respect, and the importance of building personal connections. Here are the key elements:

• Initial greetings often involve a handshake, becoming more informal with established relationships.
• Respect for hierarchy is paramount, with decisions typically made by senior management.
• Building personal relationships is crucial for successful business dealings, with frequent face-to-face meetings valued.
• Punctuality is appreciated, yet there's an understanding of potential delays due to traffic.
• Conservative dress codes are observed, with men wearing suits and women dressing modestly in business attire.
• Small talk before business discussions helps build rapport.
• Negotiations may be lengthy, requiring patience and a respectful approach.
• Awareness of religious practices, such as prayer times and Ramadan, is important for scheduling meetings.
• Gifts are appreciated and should be given and received with both hands, reflecting respect.

Understanding and adapting to these cultural nuances can significantly enhance business interactions and foster long-lasting partnerships in Bangladesh.

Top sectors to hire from in Bangladesh

Service Sector

Employing 41.2% of the workforce and contributing approximately 51.04% to the GDP in 2022, the service sector stands out as the leading domain for recruitment. This sector, being the largest GDP contributor, encompasses a wide range of industries including information technology, telecommunications, and tourism. The expansion and modernization in these areas suggest a growing demand for skilled professionals in IT, customer service, and digital marketing.

Industry Sector

With 21.71% of employment and a substantial 33.92% contribution to the GDP, the industrial sector presents significant opportunities for hiring. Notably, the ready-made garments industry, which is part of this sector, is a major employment source and a key driver of Bangladesh's economic growth. Other promising areas for recruitment include pharmaceuticals, shipbuilding, and leather manufacturing, which demand expertise in engineering, production management, and quality control.

Agricultural Sector

Though there's a noticeable shift from agriculture to services in terms of employment and GDP contribution, the agricultural sector still plays a critical role in Bangladesh's economy, engaging 37.09% of the workforce and contributing 11.22% to the GDP. This sector offers hiring opportunities particularly in agribusiness, food processing, and agricultural technology, seeking professionals in agronomy, supply chain management, and agricultural innovation.

Top cities to hire from Bangladesh

Dhaka:

‍As the capital and the largest city, Dhaka is the epicenter of Bangladesh's economic, political, and cultural life. It hosts a multitude of corporate headquarters, financial institutions, and educational establishments, making it a prime location for talent in sectors like finance, IT, and services.

Chittagong:

‍Known as the commercial capital, Chittagong is vital for its port, which handles most of the country's export-import trade. This city is ideal for hiring in logistics, manufacturing, and shipping industries. The presence of the Chittagong Stock Exchange also makes it a hub for financial services.

Gazipur:

‍With its proximity to Dhaka, Gazipur is home to numerous industrial parks and export processing zones, making it a strategic spot for manufacturing and textile industry recruitment. It also hosts significant educational and research institutions, offering access to a skilled labor pool.

Sylhet:

‍Sylhet is renowned for its tea gardens and natural gas fields, presenting unique opportunities in agriculture, energy, and tourism sectors. The city's growing IT sector also makes it an emerging spot for tech talent.

Hire in Bangladesh compliantly with Gloroots

Gloroots, serving as an Employer of Record (EOR) in Bangladesh, provides a streamlined solution for overcoming the challenges of recruitment. Their EOR platform ensures rapid onboarding of candidates, enabling a swift start to operations while complying with both local and international standards. Tailored for businesses of all scales, Gloroots streamlines payroll, benefits administration, and tax obligations, eliminating the necessity for establishing a local presence. This approach empowers companies to efficiently assemble a remote team in Bangladesh, enhancing operational efficiency and ensuring compliance. For detailed insights on how Gloroots can support your Bangladesh hiring initiatives, please contact us.

Frequently Asked Questions 

1. How do I legally hire employees in Bangladesh?

To hire legally in Bangladesh, employers must ensure employment contracts are in compliance with the Bangladesh Labour Act, including detailed job descriptions, compensation, and termination policies. Registration of the contract with the relevant authorities is also required.

2. Can foreign nationals be employed in Bangladesh?

Yes, foreign nationals can be employed in Bangladesh, provided they obtain the necessary work permits and visas. Employers must demonstrate the need for foreign expertise and ensure compliance with immigration laws.

3. What are the typical working hours in Bangladesh?

The standard workweek in Bangladesh is 48 hours, spread over six days from Saturday to Thursday, with a maximum of 8 hours per day. Overtime compensation is required for hours worked beyond this.

4. How does public health insurance work for employees in Bangladesh?

Currently, there's no mandatory public health insurance scheme for employees in the private sector in Bangladesh. However, employers often provide private health insurance as part of the employment package to attract and retain talent