Hire Employees in Bangladesh

Your own entity is normally a private limited company registered with the RJSC, with BIDA registration where there is foreign investment. It commits you to Bangladeshi corporate tax, monthly withholding to the NBR and establishment registration where headcount reaches twenty.

An Employer of Record inverts the sequence: the Bangladeshi entity issues the appointment letter and identity card, withholds income tax, administers any provident fund and provisions end-of-service benefits — while you direct the day-to-day work.

The regime is genuinely in flux, and that is the main reason to carry the relationship externally at low headcount. The Labour (Amendment) Act was implemented through SRO 53-Law/2026 in February, a tripartite committee is reviewing employer concerns, and a change of government may affect its work.

Bangladesh has no comprehensive state social insurance, so employer cost is built from provident fund, gratuity and end-of-service benefits rather than payroll taxes. Budget roughly 5–10% depending on whether a provident fund operates and whether the company meets the Workers' Profit Participation Fund thresholds.

The regime is genuinely in flux and that is the reason to be cautious here rather than the cost. The Labour (Amendment) Act was implemented through SRO 53-Law/2026, gazetted on 16 February 2026. A tripartite committee formed in January 2026 is reviewing employer concerns, and a change of government in February may affect its work. Anything on this page should be re-checked before it drives a decision.

Two changes from that amendment matter most. The establishment registration threshold is now twenty workers counted across all categories — permanent, temporary, casual and contract — replacing the previous variable thresholds. And end-of-service benefit now vests at three years of service rather than five.

The item foreign employers most often miss is notice. It is 120 days for permanent monthly-rated workers on retrenchment or termination without cause — four months where most models assume one.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a small Bangladeshi entity somewhere between 15 and 20 employees. Model both before committing — see EOR vs Entity for the full comparison, and plan any later migration so employees keep seniority.

Bangladesh has no comprehensive state social insurance, so employer cost is built from provident fund, gratuity and end-of-service benefits rather than payroll taxes. Budget roughly 5% to 10% depending on whether a fund operates.

Under section 264 of the Labour Act a permanent employee contributes 7% to 8% of basic salary after a year of service and the employer matches it. Where a scheme runs under a trust deed, rates of 5% to 10% are common and the deed governs.

The 2026 amendment introduced clearer duties to establish or expand provident fund schemes, specifying contribution structures, trust governance and reporting timelines. Employers relying on the older three-quarters-demand mechanism should re-check their position rather than assume continuity.

The Workers’ Profit Participation Fund adds 5% of net profit before tax for companies meeting capital and asset thresholds — profit-linked rather than payroll-linked, so it sits outside the monthly cycle entirely.

Bangladesh has no general social security scheme, so employer cost depends entirely on which triggers a business crosses — and one of them changed in 2026. The provident fund was previously voluntary unless three quarters of workers demanded it. The 2026 amendment makes it compulsory in establishments with at least 100 workers and lowers the general registration threshold to 20. Where a fund exists, the employer must match the employee’s 7% to 8% of basic pay. Employees may instead elect the state Progoti pension at a flat BDT 2,000 to 10,000 a month, which the employer must also match — so the cost follows the employee’s choice. End-of-service eligibility on resignation fell from five years to three, at 7 days of pay per year rising to 30 days at ten years. Note that WPPF is gated on capital rather than headcount: it bites at BDT 1 crore of paid-up capital or BDT 2 crore of permanent assets, not at a worker count. This is an unsettled area — a tripartite committee was reviewing the amendments as of January 2026 — so confirm the current position before relying on detail.

Four representative profiles, costed with the 2026 contribution rates above. Salaries are illustrative market midpoints, not GX operating data — use them to see how the on-cost percentage behaves as pay rises, not as a salary benchmark for a specific role. For real market data on your roles, ask for a costing.

Watch the on-cost percentage rather than the absolute figure. 1 of the charges here are capped and 4 are not, so the effective employer rate falls as salary rises — but it flattens rather than disappearing. The senior rows below show where it settles.

Four representative profiles costed on 2026 statutory rates. Salaries are illustrative market midpoints, not GX operating data.

Payroll runs monthly in taka, with a payslip issued at each disbursement. Income tax is withheld at source and remitted to the National Board of Revenue, with annual returns typically due by 30 November.

The tax-free threshold differs by category, with higher amounts for women, senior citizens, persons with disabilities, third-gender individuals and recognised freedom fighters. Published sources disagree on the 2026 figures, so the Finance Ordinance should be checked before configuring payroll rather than relying on secondary guidance.

There is no statutory thirteenth month, but festival bonuses around Eid are strong market convention in most sectors and become binding once written into the contract. Non-residents are taxed at a flat 30% with no deductions.

Thresholds and ceilings are uprated periodically, so a figure correct in January may not hold later in the year. Where a row below is flagged, published sources disagreed and the conflict is recorded rather than resolved.

Thresholds move on a local cycle that does not always fall in January, so a figure correct at the start of the year may not hold through it. Where a row below carries a flag, published sources disagreed and the conflict is recorded rather than resolved — there are 2 such rows on this page.

The sections that follow set out contracts and probation, working time, leave, termination and immigration in that order. Where an entitlement comes from a collective agreement rather than statute it is marked as such, because that distinction determines whether it is negotiable.

A written appointment letter and an identity card are both required. English is standard in the formal sector.

Establishment registration now applies at twenty or more workers counted across all categories — permanent, temporary, casual and contract — replacing the previous variable thresholds. Employers who count only permanent staff will cross the line without registering.

Probation is six months for most roles and three for clerical positions, extendable once. An employee who is neither confirmed nor dismissed at the end of probation is treated as confirmed by operation of law, so the decision date needs diarising rather than allowing to pass.

Eight hours a day and 48 a week, extendable to 60 in a week and 56 on average over the year. Overtime is paid at double the ordinary rate, and one day of weekly rest is mandatory.

Overtime is where payroll disputes usually start. Record hours from day one even where the role is salaried and the expectation is that overtime will not arise — reconstructing records after a complaint is far harder than keeping them.

Overtime is where payroll disputes usually begin, and the burden of proving hours worked generally sits with the employer. Record hours from the first day even for salaried roles where overtime is not expected — reconstructing a record after a complaint is considerably harder than keeping one.

Public holidays sit on top of the annual leave entitlement. Where a holiday falls at a weekend, practice varies — some markets move it, some grant a substitute day and some do neither, so check the position before assuming a day in lieu.

The 18 dates below are the statutory position. Employers in many markets grant more by policy or collective agreement, and sector agreements sometimes add local or patronal days that do not appear in a national list.

Bangladesh observes 18 paid public holidays in 2026. Dates that fall at a weekend and any substitution rules are set out below; entitlement is separate from annual leave.

Maternity: 16 weeks — 8 before and 8 after the birth — Full pay, employer-funded, for employees with at least six months of service. Maternity limit: Available for the first two surviving children — Not payable for a third or subsequent child under the Labour Act. Sick leave: 14 days a year — Full pay, on a registered medical practitioner’s certificate. Paternity: Not a general statutory entitlement — Provided by contract or company policy in the formal sector.

Festival bonus: A strong market convention around Eid — Commonly written into the contract, at which point it becomes binding.

End-of-service benefits vest earlier than they did. Entitlement on resignation for a permanent worker now arises at three years of service rather than five, at seven days' pay per year. It rises to fifteen days per year for more than three and under ten years, and thirty days per year at ten or more — or the amount under the employer's gratuity plan if that is greater.

Notice is the larger number. For permanent monthly-rated workers it runs to 120 days on retrenchment or termination without cause, or payment in lieu. That is long by international standards and needs modelling from the outset rather than discovered at exit.

Retrenchment carries additional obligations, including notice to the Chief Inspector and adherence to a last-in-first-out principle within the category, with re-employment preference for retrenched workers.

Because the amendment is recent and under review, confirm the current position before relying on any figure here.

A foreign national needs a work permit from BIDA and then an E-type visa sponsored by the employer. Foreign staff are subject to a ratio against local employees, generally applied by sector.

Allow two to three months. The BIDA permit precedes the visa and is assessed against the employer’s investment status and the justification for the role, so it drives the timeline rather than the consular step.

Export processing zones and economic zones operate through BEPZA and BEZA respectively, with their own approval routes that are generally faster for qualifying operations.

Notice of 120 days for permanent monthly-rated workers is the number that breaks foreign models. On retrenchment or termination without cause it is four months, or payment in lieu, where most models assume one.

End-of-service benefit now vests at three years rather than five following the 2026 amendment, at seven days’ pay per year, rising to fifteen days for more than three and under ten years and thirty days at ten or more — or the gratuity plan amount if greater.

Practical controls: count all worker categories against the twenty-employee threshold, model 120 days’ notice from the outset, provision end-of-service from year three, and re-check the position against SRO 53-Law/2026 before acting, since the tripartite review may move it again.

Work backwards from the start date. For a Bangladeshi national through an EOR, one to two weeks is realistic. A foreign national needs a BIDA work permit and E-type visa, adding two to three months, and foreign staff are subject to a ratio against local employees.

Confirm before making an offer: total headcount across all categories, since the twenty-worker registration threshold counts temporary, casual and contract staff as well as permanent; whether a provident fund operates and what the 2026 amendment requires of it; and that the budget carries 120 days' notice for a permanent role.

Establishment registration with the Chief Inspector of Factories and Establishments is required where the threshold is met. Provident fund enrolment follows twelve months of service where a scheme exists. Payslips must be issued with each disbursement, and the annual return is due by 30 November.