How to read this guide. Every figure is quoted with its section of the Bangladesh Labour Act 2006 (as amended), the Labour Rules 2015 or the current Finance Act, and was reviewed by Farhana Rahman, LL.M on 1 September 2026. It is a map of obligations, not legal advice for your specific case.
Which laws apply when a foreign company employs staff in Bangladesh?
Employment in Bangladesh is governed by the Bangladesh Labour Act 2006 as amended and the Bangladesh Labour Rules 2015, which set contract, hours, leave, wage, Provident Fund, gratuity and termination rules. Income-tax withholding on salaries is administered by the National Board of Revenue under the Income Tax Act 2023. Foreign investment and expatriate work permits go through BIDA.
What must be paid into Provident Fund and gratuity?
Where a Provident Fund is constituted, the Act provides for an employee contribution of not less than 7% and not more than 8% of basic wages, matched equally by the employer (Bangladesh Labour Act 2006, s.264). Gratuity is a minimum of 30 days' wages for each completed year of service, rising to 45 days' wages per year where service exceeds 10 years (Bangladesh Labour Act 2006, s.2(10)). The Act sets no additional eligibility threshold for gratuity beyond a completed year of service.
What other statutory obligations does an employer carry?
Obligations map for a foreign employer in Bangladesh, as applied by EORBangladesh in every contract and payroll run.
| Obligation | Source | Current position | Handled by EORBangladesh |
|---|
| Written appointment letter and ID card | Labour Act s.5; Rules Form 6 | Required at appointment | Yes |
| Working hours and overtime | Labour Act s.100, s.102, s.108 | 8 h/day, 48 h/week; overtime at 2× basic | Applied in contracts and records |
| Weekly holiday and leave | Labour Act s.103, s.115–118 | 1 day/week; 10 casual, 14 sick, 11 festival; earned leave 1 per 18 days | Leave records maintained |
| Provident Fund | Labour Act s.264 | 7–8% employee, matched by employer, where constituted; EORBangladesh applies 8% | Administered |
| Gratuity | Labour Act s.2(10) | 30 days' wages per year; 45 days after 10 years | Accrued and settled |
| Festival bonus | Labour Rules 2015, Rule 111 | Two per year, each up to one month's basic | Calculated and paid |
| Income-tax withholding on salary | Income Tax Act 2023; Finance Act 2026 | Threshold BDT 375,000; 5–30% progressive | Withheld and remitted monthly |
| Minimum wage | Sector wage boards (e.g. RMG: BDT 12,500 from Dec 2023) | Not applicable to most professional roles; checked per role | Checked per role |
| Termination notice and payments | Labour Act s.20, s.23, s.26, s.27 | 120 days' notice (employer) / 60 days (resignation); compensation 30 days per year | Procedure administered |
| Maternity benefit | Labour Act s.46–50 | 16 weeks paid after 6 months' service | Administered |
| Statutory registers and service book | Labour Rules 2015, Rules 19–21, Forms 6–9 | Prescribed forms | Maintained digitally |
| Expatriate work permit | BIDA | 4–6 weeks; USD 650 service fee plus government fees | Application support |
How is income tax withheld from salaries?
Employers must deduct income tax at source from salary at the rates set by the NBR under the current Finance Act and remit it monthly, issuing each employee an annual certificate. Current rules provide a tax-free threshold of BDT 375,000 for individuals (higher for women, senior citizens and persons with disabilities) and progressive rates of 5% to 30% above it (Finance Act 2026, FY 2026–27). Withholding failures are the employer's liability, which is one reason foreign companies without a local finance function use an EOR.
What are the most common compliance mistakes foreign employers make?
- Paying Bangladesh-based staff as contractors when the relationship is employment in substance, creating misclassification exposure
- Structuring salary as a single gross figure, which makes Provident Fund, gratuity and bonus calculations on basic wages ambiguous
- Omitting festival bonuses and gratuity from the cost model, so the true employer cost is understated by roughly a fifth
- Terminating without the 120 days' notice and compensation that s.26 prescribes
- Failing to keep the registers the Labour Rules 2015 require, which surfaces at audit or inspection
How does EORBangladesh keep your Bangladesh employment compliant?
As the legal employer, we carry the obligations above for staff employed through EOR and apply them in every contract, payroll run and record. Compliance content on this site is reviewed by Farhana Rahman, LL.M quarterly and after every Finance Act; contracts are updated within 30 days of any change to the Act, Rules or tax schedule.
This page is informational only and is not a substitute for licensed legal or tax advice in Bangladesh or in your own jurisdiction. Statutory figures are quoted from the Bangladesh Labour Act 2006 as amended, the Bangladesh Labour Rules 2015 and current NBR rules, and were reviewed by Farhana Rahman, LL.M on 1 September 2026.