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Employment Agreement Essentials

Understand the key elements of employment contracts in Bangladesh

Types of employment agreements

In Bangladesh, while there isn't a specific law dictating different types of employment agreements, the Bangladesh Labor Act 2006 and established practices provide the framework for various employment arrangements. Here's a breakdown of the common types:

Permanent Employment Contracts (Indefinite Contracts)

Permanent employment contracts, also known as indefinite contracts, are the most common type of employment agreement in Bangladesh. These contracts offer long-term employment security for the employee, with termination procedures outlined in the Labor Act. Key characteristics of these contracts include no pre-defined end date for employment and salary and benefits determined by the contract and the Labor Act.

Fixed-Term Contracts (Temporary Contracts)

Fixed-term contracts, also known as temporary contracts, have a defined duration of employment specified in the contract. Termination upon contract expiry is automatic unless both parties agree to an extension. Common reasons for fixed-term contracts include project-based work, seasonal requirements, and trial periods, although probationary periods within permanent contracts are more common.

Apprenticeship Agreements

Apprenticeship agreements are designed for vocational training and skill development. These agreements typically involve a fixed term with a specific training program outlined in the agreement. Apprentices are entitled to an allowance, not a full salary, as per the Apprenticeship Rules 2018.

Casual Employment

Casual employment refers to informal employment arrangements for short-term or sporadic work. These types of employment are less common but can exist in specific sectors like agriculture or day labor. Casual employment offers limited legal protections and benefits compared to formal contracts.

Collective Bargaining Agreements

Collective bargaining agreements are applicable to employees covered by a trade union. These agreements are negotiated between the employer and the trade union representing a group of employees. They outline terms and conditions of employment, including wages, benefits, working hours, and grievance procedures, which supersede individual employment contracts.

Essential clauses

The essential clauses in an employment agreement in Bangladesh include the identification of the parties involved, the commencement of employment and contract type, job description and duties, remuneration and benefits package, working hours and location, leave entitlements, termination clauses, confidentiality, and dispute resolution.

Parties to the Agreement

The employer and employee should be clearly identified with their full names and contact details. If the employer is acting on behalf of another entity, such as a subsidiary company, this should be specified.

Commencement of Employment and Contract Type

The start date of employment should be defined, along with the type of contract, which could be permanent, fixed-term, apprenticeship, etc.

Job Description and Duties

The employee's job title, department, and primary responsibilities should be outlined. A reference to a detailed job description document for more specific duties can be included.

Remuneration and Benefits Package

The employee's base salary, currency, and payment frequency should be specified, in compliance with minimum wage requirements. Any allowances, bonuses, or overtime pay structures should be detailed, along with benefits offered, such as paid leave, provident fund contributions, and health insurance plans (if applicable).

Working Hours and Location

The standard working hours per day/week should be defined, with a maximum of 48 hours per week. The primary work location should be specified, along with any possibility of remote work or relocation.

Leave Entitlements

The annual leave allowance, including sick leave, vacation leave, and maternity leave provisions, should be outlined. The agreement can offer more generous leave policies than the minimums set by law.

Termination Clauses

The notice periods required for termination by either party should be specified, following guidelines. Potential grounds for termination with or without notice, such as misconduct or redundancy, should be outlined. Any severance pay or compensation terms should be addressed.


Employers can include clauses protecting confidential information and intellectual property, defining the scope of confidential information and acceptable usage by the employee.

Dispute Resolution

The process for resolving any disagreements arising from the employment contract should be outlined. This may involve internal grievance procedures or escalation to the Department of Labour.

Probationary period

In the Bangladesh Labor Act (BLA) 2006, probationary periods in employment agreements are addressed, offering a balance between employer flexibility and employee rights.

Applicability and Duration

The BLA mandates a probationary period for all new hires, excluding those under apprenticeship agreements. The duration of the probationary period is dependent on the nature of the work. For clerical workers, the probationary period is six months. For other workers, the probationary period is three months, with a possible three-month extension if the employer cannot assess the quality of work within the initial period.

Express Agreement Not Required

Bangladeshi law does not require a written mention of the probationary period in the employment contract for it to be valid. However, it is always recommended to have a well-drafted agreement with clear terms.

Termination During Probation

During the probationary period, either the employer or the employee can terminate the contract by providing written notice. The notice period is not specified in the BLA. Justification is not required for termination during probation.

End of Probation and Confirmation

Successful completion of the probationary period signifies the employee's confirmation as a permanent worker. There's no requirement for the employer to issue a formal confirmation letter, but it's a good practice to do so.

Important Considerations

Even during probation, employees are entitled to basic rights and protections under the BLA, including minimum wage and working hour regulations. Once the probationary period ends, termination becomes subject to the provisions outlined in the BLA, including notice periods and potential severance pay requirements.

Confidentiality and non compete clauses

Confidentiality clauses in employment contracts within the Bangladeshi legal landscape are not explicitly addressed in the Bangladesh Labor Act, 2006 (BLA). However, employers can still use these clauses to protect sensitive information.

Enforceability of Confidentiality Clauses

Courts in Bangladesh are likely to enforce confidentiality clauses provided that:

  • The information protected is clearly defined as a legitimate trade secret or confidential business information.
  • The restrictions placed on the employee's use or disclosure of the information are reasonable and don't hinder their ability to perform their job duties.

Best Practices for Confidentiality Clauses

  • Clearly define confidential information within the contract.
  • Outline limitations on employee use and disclosure of confidential information during and after employment.
  • Seek legal counsel to ensure the clause is enforceable.

On the other hand, non-compete clauses, which restrict an employee's ability to work for a competitor after leaving the company, are generally considered unenforceable in Bangladesh.

Reasoning for Non-Compete Clauses

Section 27 of the Bangladesh Contract Act, 1872, prohibits agreements in restraint of trade. Courts have interpreted this to include non-compete clauses in employment contracts.

Exceptions for Non-Compete Clauses

There might be limited exceptions in very specific situations, such as senior executives with access to highly sensitive information and unique skills. However, the enforceability of such clauses remains highly uncertain.

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