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How to hire and pay employees in Bangladesh
Slasify
Jun 21, 2025
| Key Takeaways |
|---|
| 1. Payroll is monthly, with no national minimum wage (sectoral minimums may apply), ensuring flexibility for employers. |
| 2. Personal income tax is progressive up to 30% for residents, flat 30% for non-residents, with no local taxes on employment income. |
| 3. Standard working hours are 8 per day and 48 per week, with overtime capped at 10 hours/day or 60 hours/week, paid at 200% of the normal rate. |
| 4. Annual leave accrues at 1 day per 18 days worked, with a maximum carryover of 60 days. Employees also receive 25 paid public holidays plus optional religious holidays. |
| 5. Maternity leave is 8 weeks pre-natal and 8 weeks post-natal, paid under eligibility rules. Casual leave: 10 days per year. Other leave types apply according to law. |
| 6. Termination and severance vary by reason: resignation requires 60 days notice; redundancy with 1+ year service requires 1 month; other employer-initiated dismissals: 60–120 days. Severance depends on service length and dismissal reason. |
| 7. Statutory bonuses include 2 festival bonuses per year (not exceeding basic salary) and potential profit-sharing through Workers Profit Participation Fund if applicable. |
| 8. Probation periods are 3–6 months, depending on the role, with extensions possible for skill assessments up to a maximum of 6 months. |
Discover the global hiring and employment landscape in Bangladesh – home to a rapidly growing economy and a workforce eager to propel the manufacturing and export sectors.
Personal Income Tax
Non-residents are taxed at a flat rate of 30%, while tax residents are taxed based on the following progressive tax rate:
| Taxable Income (BDT) | Progressive Tax Rate (%) |
|---|---|
| Up to 350,000 | - |
| 350,001–450,000 | 5 |
| 450,001–850,000 | 10 |
| 850,001–1,350,000 | 15 |
| 1,350,001–1,850,000 | 20 |
| 1,850,001–3,850,000 | 25 |
| Over 3,850,000 | 30 |
Local Taxes
There are no local taxes on employment income in Bangladesh.
Statutory Contributions
There are no mandatory social security contributions for employers and employees in Bangladesh unless the employer has constituted a provident fund for their employees.
Payment of Wages
Employees must be paid at a fixed period not exceeding a month. The wages payable to the employee shall be paid within 7 days following the end of their fixed wage period.
Minimum Wage
There is no national minimum wage in Bangladesh, though each sector may regulate their own sectoral minimum wages.
Statutory Bonus
Employees who have completed at least a year of continuous service are entitled to 2 festival bonuses per year, the amount of which shall not be more than their basic salary per bonus.
Moreover, employers meeting certain requirements are obligated to share 5% of their profits with their employees by establishing and contributing to the Workers Profit Participation Fund and Welfare Fund. This obligation is regulated under Chapter XV of the Labor Act and Chapter XV of the Labor Rules.
Termination
An employment relationship may be terminated for a range of different reasons, including redundancy, the employee's prolonged illness, criminal convictions and misconduct.
Employers dismissing their employees on the grounds of the misconduct must record the allegations in writing, give the employees a week to explain themselves and conduct a fair enquiry into the allegations.
Notice Period
Notice period varies according to the reason for termination, as follows:
| Reason for Termination | Notice Period |
|---|---|
| Dismissal due to misconduct or criminal conviction | - |
| Resignation | 60 days |
| Retrenchment due to redundancy | Employees who have complete a full year of continuous service are entitled to a month's notice |
| Other reasons for dismissal on the employer's initiative | 120 days for monthly-rated employees or 60 days for other employees |
Severance Pay
Employees may be entitled to different severance depending on the reason for their termination, as follows:
| Reason for Termination | Severance Pay |
|---|---|
| Dismissal due to misconduct or criminal conviction | - |
| Redundancy or Employee's ill-health | Employees who have complete a full year of continuous service shall be entitled to 30 days' wage for each year of their service. |
| Resignation | Employees who have completed at least 5 years of service shall be entitled to 14 days' wage for each year of their service, and those who have completed at least 10 years of service shall be entitled to 30 days' wage for each year of their service. |
| Other reasons for dismissal on the employer's initiative, including retirement | Employees shall be entitled to 30 days' wage for each year of service regardless of their term of service. |
For the purpose of calculating severance entitlement, an employee who in the preceding 12 calendar months has worked for no less than 240 or 120 days shall be deemed to have completed a full year or 6 months of continuous service, respectively.
Probationary Period
The duration of of an employee's probation shall be 6 months for those whose function is of clerical nature, and 3 months for other functions.
Skilled workers can extend their probationary period for another 3 months if their first 3 months is not enough to ascertain their capabilities, totaling to a maximum of 6 months.
Note: Probationary period is only allowed for employees hired on a permanent basis.
Work Time Rules
Standard Working Hours
Standard working hours are subject to a maximum of 8 hours per day or 48 hours per week.
Break Period
An employee's entitlement to break period depends on the number of hours they work that day, as follows:
| Hours worked | Break period |
|---|---|
| 5 | 30 minutes |
| 6 | 1 hour |
| 8 | 1 hour, which can be split into two 30-minute breaks |
The employee's break period shall not count as part of their working hours and shall therefore be unpaid.
Overtime
Employees are allowed to work more than their standard hours as overtime, provided that their total working hours do not exceed 10 hours per day, 60 hours per week or a yearly average of 56 hours per week.
Overtime work shall be paid at 200% of the employee's ordinary rate of pay.
Weekly Rest Days
An employees' entitlement to weekly rest days varies across work sectors, as follows:
| Sector | Weekly Rest Entitlement |
|---|---|
| Commercial or industrial establishments | 1.5 days |
| Factories | 1 day |
| Road transport establishments | 1 day |
Those required to work during their weekly rest days shall be entitled to a compensatory day off.
Holiday and Leave Entitlements
Public Holidays
Employees are entitled to take at least 11 days of public holidays with pay, the dates of which shall be mutually agreed upon by the contracting parties. There are 25 days of mandatory public holidays in Bangladesh for 2025.
| Holiday | Date |
|---|---|
| Shab e-Barat | February 15 |
| Shaheed Day | February 21 |
| Independence Day | March 26 |
| Jumatul Bidah, Shab i-Qadr | March 28 |
| Eid al-Fitr | March 29–April 2 |
| Bengali New Year | April 14 |
| May Day | May 1 |
| Buddha Purnima | May 11 |
| Eid al-Adha | June 5–10 |
| Ashura | July 6 |
| Shuba Janmashtami | August 16 |
| Mawlid | September 5 |
| Vijaya Dashami | October 1–2 |
| Victory Day | December 16 |
| Christmas Day | December 25 |
In addition to mandatory public holidays, there are optional holidays the employee can enjoy depending on their respective religions. A complete list of optional holidays for 2024 is provided in the official government release.
Employees are entitled to take a total of 3 days of optional holidays per year, which shall be declared and approved by the start of each year.
Those required to work on a paid public holiday must be compensated with 2 days of paid compensatory holidays and a substitute holiday.
Annual Leave
Employees who have completed a continuous year of service shall be entitled to take paid annual leave, which accumulates at a rate of 1 day for every 18 days worked.
Accrued leave not taken can be carried over to the following year, provided that the accumulated leave does not exceed 60 days per year for employees in industrial and commercial establishments.
Sick Leave
Employees are entitled to 14 days of paid sick leave each calendar year, provided that they have produced a certificate from a registered medical practitioner stating that they are sick and require leave for treatment.
Maternity Leave
Employees with at least 6 months of continuous service immediately preceding the expected date of their delivery are entitled to 8 weeks of pre-natal and 8 weeks of post-natal leave.
Maternity leave shall be paid unless the employee already have at least 2 surviving children at the time of delivery.
In any case, employees intending to receive maternity benefits shall notify their employers in writing 8 weeks before the expected date of delivery and nominate a person to receive the payment in the event of their untimely death. Those who fail to notify their employers of their leave before their child's delivery shall do so within 7 days of childbirth.
Note: No employer shall knowingly engage a woman in any work during the 8 weeks immediately following the day of childbirth.
Other Leave
Employees are entitled to 10 days of paid casual leave per year. This leave cannot be accumulated and carried over to any subsequent years.
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