Employer of Record in Bangladesh

Bangladesh is situated in South Asia and lies between the Himalayas to the north and the Bay of Bengal to the south, bordered primarily by India and Myanmar.

As one of the most populous countries in the world, Bangladesh has a workforce of more than 70 million people. Historically, the economy was driven by the ready-made garment (RMG) sector, which remains one of the largest garment-exporting industries globally.

To reduce reliance on the RMG sector, Bangladesh has begun diversifying its economy. Significant growth has taken place in the IT, business process outsourcing, pharmaceuticals, logistics and manufacturing sectors.

Dhaka serves as the primary commercial and technology hub, while Chattogram remains the center of trade and logistics due to its major seaport.

Foreign employers view Bangladesh as a low-cost international hiring market compared to other Asian countries. They can find English-speaking graduates with technology, business process, medical and logistics experience for less than in Europe. Bangladesh also has a growing digital infrastructure, which makes doing business in the country easier.

While Bangladesh offers substantial business and hiring opportunities, employers must navigate local labor laws, payroll obligations and tax obligations. For companies looking to enter the market quickly and access top talent, an Employer of Record offers a streamlined alternative to establishing a business in the country.

An Employer of Record in Bangladesh enables companies to hire employees without establishing a local legal entity. An EOR like Rivermate becomes the legal employer for payroll, tax, benefits, employment contracts, and statutory compliance while you manage the employee’s day-to-day performance.

How an Employer of Record (EOR) Works in Bangladesh

Using an EOR in Bangladesh simplifies your expansion. Here is how it works:

1. You Find the Talent: You recruit and select the best candidate for your team in Bangladesh.
2. The EOR Hires Them: The EOR provider, as the legal employer, signs a locally compliant employment contract with your chosen candidate.
3. Onboarding and HR Management: The EOR manages the complete onboarding process. They also handle all HR functions, such as payroll processing, tax withholding, and providing statutory benefits.
4. You Manage Your Team: You direct your employee's daily tasks and responsibilities, just like any other member of your team. The EOR remains in the background, ensuring everything is compliant with local laws.

Why use an Employer of Record in Bangladesh

Expanding your team into Bangladesh offers great opportunities, but it also comes with significant compliance challenges. An EOR simplifies this process, making your entry into the market smooth and efficient.

Here are some key reasons to use an EOR in Bangladesh:

• Avoid Entity Setup: You can hire employees without the time and expense of registering a local company in Bangladesh.
• Ensure Compliance: EORs are experts in Bangladeshi labor law. They ensure your employment practices meet all legal requirements for contracts, termination, and severance. The Bangladesh Labour Act of 2006 sets out these rules, and an EOR helps you navigate them.
• Simplify Payroll and Taxes: The EOR manages all aspects of payroll, including calculating salaries, withholding income tax, and making contributions to social security funds like the Workers' Profit Participation Fund (WPPF).
• Offer Competitive Benefits: An EOR can provide your employees with statutory and supplementary benefits, helping you attract and retain top talent in the local market.
• Save Time and Resources: By outsourcing HR and administrative tasks, you can focus on your core business operations and managing your team's success.

Bangladesh offers international companies a large, well-educated, and experienced talent pool. Recruitment is concentrated in Dhaka, Chattogram, Gazipur and Narayanganj. These areas have a significant number of skilled professionals in the manufacturing, logistics, supply chain and IT sectors.

Bangladesh produces a large number of graduates each year in the engineering, business and technology disciplines. This serves as a constant feeder into the country's fastest-growing industries. English is widely spoken in professional contexts, reducing language barriers for companies looking to build teams to manage regional operations.

Competition can be intense despite the large number of candidates, and good offers are quickly accepted. Counteroffers are also increasingly common within the technology sector. In recent years, Bangladesh’s economy has developed, and with it, the career opportunities. Therefore, Bangladesh can no longer be considered a low-cost labor environment; however, the total employment costs are still lower than in Europe or some Asian countries.

In reality, Bangladesh runs two labor markets at the same time: the mass employment economy (garment manufacturing, retail, support services) and the skilled professional economy (technology, engineering, finance, pharmaceuticals).

The legal framework in Bangladesh is not complex, and foreign employers will find straightforward employment contracts, easy-to-manage payroll administration, and lower social security obligations than in Europe.

Employment contracts & must-have clauses

You must provide employees with a written employment contract. For clarity and legal compliance, the contract should be in both Bengali and English. Think of the contract as the foundation of your relationship with your employee. It needs to be solid.

Your employment contracts should include these key details:

• Company and employee information
• Job title and description
• Start date
• Probationary period
• Salary and any other compensation in Bangladeshi Taka (BDT)
• Working hours
• Leave entitlements
• Termination requirements

Probation periods

In Bangladesh, you can use a probation period to assess a new employee's suitability. The length of this period depends on the type of role.

Worker Type	Initial Probation Period	Possible Extension
Clerical Worker	6 months	Not extendable
Other Workers	3 months	Can be extended by 3 months

After the probation period ends, the employee automatically becomes permanent, even without a confirmation letter.

Working hours & overtime

A standard work week in Bangladesh is 48 hours. Typically, this is worked over six days, with Friday being the usual day off. Daily work hours should not exceed eight hours, although with overtime, an employee can work up to ten hours a day.

Overtime is paid at twice the rate of the basic salary. Total weekly hours, including overtime, should not exceed 60 hours.

Public & regional holidays

Your employees in Bangladesh are entitled to paid festival holidays. The government announces a list of public holidays each year. While some dates are fixed, others depend on the lunar calendar.

Here are the expected public holidays for 2025:

Date	Holiday
February 15	Shab e-Barat
February 21	Language Martyrs' Day
March 26	Independence Day
March 28	Shab-e-qadr
March 29	Eid ul-Fitr Holiday
March 30	Eid ul-Fitr Holiday
March 31	Eid ul-Fitr
April 1	Eid ul-Fitr Holiday
April 14	Bengali New Year
May 1	May Day
May 11	Buddha Purnima/Vesak
June 5	Eid al-Adha Holiday

Hiring contractors in Bangladesh

Contracting is fast becoming the most popular form of employment in Bangladesh. This is driven by both corporate outsourcing strategies and the booming digital freelancing market.

With the number of gig and independent contractors estimated at 8 million and growing, the trend is set to continue as the digital economy grows.

Contractors are governed by the Contract Act, not labor law, and are required to sign service agreements with client companies. They are responsible for paying their own taxes. In contrast, an employee signs an employment contract, and the employer withholds taxes and social security contributions on their behalf. Confusing contractors with employees increases the risk of worker misclassification, which can result in backdated payments for the employer.

An EOR can help you avoid these risks. We hire the worker on your behalf, making sure they are classified correctly according to local labor laws. This lets you work with talent in Bangladesh without the legal and financial risks of misclassification. We handle the complexities so you can focus on growing your business.

Bangladesh maintains a minimum wage requirements that vary by industry, with the garment sector operating under a specific wage framework. Employers should verify applicable wage orders for the industry in which they want to hire workers.

Employers are responsible for withholding taxes and social security contributions, maintaining payroll records, and complying with reporting requirements.

Payroll cycles & wage structure

In Bangladesh, you typically run payroll on a monthly cycle. For companies with fewer than 100 employees, you must pay wages within seven working days after the wage period closes. If you have 100 or more workers, this extends to ten working days.

A typical wage structure includes:

• Basic Salary: This is the fixed part of the compensation as agreed in the employment contract. It usually makes up 50-60% of the gross salary.
• Allowances: Many employers offer allowances for housing, transport, and medical expenses.
• Bonuses: Employees who have completed at least one year of service are entitled to two festival bonuses each year.

Overtime & minimums

The standard work week in Bangladesh is 48 hours, usually divided into six 8-hour days. Any work beyond this is considered overtime. You cannot ask an employee to work more than 60 hours in a week, and the annual average should not exceed 56 hours per week. The overtime pay rate is double the employee's regular hourly wage.

Minimum wage varies by industry. For example, in the garment industry, the minimum wage is BDT 12,500 per month. These sector-specific minimums are set by the government.

Employer taxes and contributions

As an employer in Bangladesh, you have a few key financial responsibilities. There is no mandatory social security contribution. However, you are responsible for corporate income tax and may need to contribute to a workers' fund. If at least three-fourths of your employees request it, you must also establish a provident fund and make matching contributions.

Contribution	Rate	Notes
Corporate Income Tax (Publicly Listed)	25%	This is the tax on your company's profits if you are listed on the stock exchange.
Corporate Income Tax (Non-Listed)	35%	This is the tax on your company's profits if you are a private company.
Workers' Profit Participation Fund (WPPF)	5% of net profit	Required for companies that meet certain capital and asset thresholds.
Provident Fund	Varies (typically 7-8%)	This is a retirement fund. Your contribution must match the employee's contribution.

Employee taxes and deductions

You must withhold income tax from your employees' salaries. This is known as Tax Deducted at Source (TDS). The income tax system is progressive, meaning the rate increases with income.

Here are the personal income tax rates for employees:

Taxable Income (BDT)	Tax Rate
Up to 350,000	0%
350,001 to 450,000	5%
450,001 to 750,000	10%
750,001 to 1,150,000	15%
1,150,001 to 1,650,000	20%
Above 1,650,000	25%

In Bangladesh, compensation packages often include statutory benefits as well as supplementary benefits. Employers must provide their workers with paid time off for festival days, but ‘festival bonuses’ are increasingly offered as a benefit to attract top talent.

Total employment costs (base salary plus benefits) are much lower in Bangladesh than in some European countries, but employers should still calculate these costs upfront before hiring commences.

Statutory Leave

You must provide your employees with the following types of paid leave.

• Casual Leave: Employees get 10 days of paid leave per year for emergencies or other personal matters. Unused casual leave does not carry over to the next year.
• Sick Leave: Employees are entitled to 14 days of sick leave annually at their full wages. To use this leave, an employee generally needs to provide a medical certificate.
• Annual Leave (Earned Leave): After one year of continuous service, an employee earns paid annual leave. The amount of leave depends on their industry. For most commercial or industrial workers, this is calculated as one day of leave for every 18 days worked.
• Maternity Leave: Female employees are entitled to 16 weeks of maternity leave, typically split with 8 weeks before and 8 weeks after childbirth. To be eligible for paid maternity leave, an employee must have worked for you for at least six months.
• Festival Leave: You must provide employees with 11 days of paid festival holidays per year. If an employee works on a festival holiday, you must provide them with two compensatory paid holidays or two days' wages.

Public Holidays & Regional Holidays

Your employees are entitled to paid holidays each year. While the exact number of festival holidays can vary, employees generally receive 11 paid festival holidays. If an employee works on a festival holiday, you must provide them with two compensatory paid holidays or two days' wages.

Here is a list of public holidays in Bangladesh for 2026. Please note that dates for Islamic holidays are subject to the sighting of the moon.

Date	Day	Holiday
February 4	Wednesday	Shab e-Barat
February 12	Thursday	Public Holiday (13th Parliamentary Election and Constitutional Referendum)
February 21	Saturday	Shahid Dibosh (International Mother Language Day)
March 17	Tuesday	Shab-e-Qadar
March 19	Thursday	Eid-ul-Fitr Holiday
March 20	Friday	Jumatul Bidah
March 20	Friday	Eid-ul-Fitr Holiday
March 21	Saturday	Eid-ul-Fitr (End of Ramadan)
March 22	Sunday	Eid-ul-Fitr Holiday
March 23	Monday	Eid-ul-Fitr Holiday
March 26	Thursday	Independence Day (National Day)
April 13	Monday	Chaitra Sankranti (regional)
April 14	Tuesday	Pahela Baishakh (Bangla New Year)
May 1	Friday	May Day
May 1	Friday	Buddha Purnima
May 26	Tuesday	Eid-ul-Azha Holiday
May 27	Wednesday	Eid-ul-Azha Holiday
May 28	Thursday	Eid-ul-Azha (Feast of Sacrifice)
May 29	Friday	Eid-ul-Azha Holiday
May 30	Saturday	Eid-ul-Azha Holiday
May 31	Sunday	Eid-ul-Azha Holiday
June 26	Friday	Ashura (Muharrum)
July 1	Wednesday	July Bank Holiday
August 5	Wednesday	July Mass Uprising Day
August 26	Wednesday	Eid-e-Milad-un-Nabi
September 4	Friday	Sri Krishna Janamashtami
October 20	Tuesday	Durga Puja Holiday
October 21	Wednesday	Durga Puja (Bijoya Dashami)
December 16	Wednesday	Bijoy Dibosh (Victory Day)
December 25	Friday	Christmas Day
December 31	Thursday	New Year’s Eve Bank Holiday

Typical Supplemental Benefits

To stay competitive, many employers in Bangladesh offer benefits that go beyond the legal requirements.

Statutory Benefits	Non-Statutory (Supplemental) Benefits
Minimum Wage	Health Insurance (including dental and vision)
Overtime Pay	Transportation Allowances
Festival Bonuses	Provident Fund
Paid Leave (Annual, Sick, Casual, Maternity)	Performance Bonuses
Provident Fund (in some cases)	Life Insurance
Gratuity	Fitness Programs or Memberships

How an EOR Can Help with Setting Up Benefits

Setting up a comprehensive and compliant benefits package in a new country can be complex. An Employer of Record (EOR) simplifies this process for you.

An EOR already has a legal entity in Bangladesh. This means you don't have to go through the lengthy process of setting one up yourself. We handle all the administrative tasks related to employee benefits.

Here’s how we can help:

• Compliance: We ensure your benefits package complies with all local labor laws, including the Bangladesh Labour Act.
• Administration: We manage everything from enrolling employees in mandatory social security to administering paid leave.
• Competitive Packages: We can advise you on what supplemental benefits are common in the market to help you attract top talent.
• Payroll: We handle all payroll calculations, including deductions for benefits and taxes.

Using an EOR allows you to offer your employees in Bangladesh a competitive and compliant benefits package from day one, without the administrative burden.

Terminations in Bangladesh are regulated by the Bangladesh Labour Act, 2006. Employer obligations include a statutory notice period, settlement of wages, severance pay (if applicable), and payment of accrued leave.

Employers should maintain thorough records when terminating employment to reduce legal risks. Misconduct-related dismissals require investigation and adherence to a disciplinary process before termination.

Offboarding processes in Bangladesh should be structured and consistent. They can include final payroll settlement, the return of company assets, completion of employment documentation and finalization of visas and work permits (if applicable).

Notice periods

You must give employees written notice before termination. The length of the notice period depends on their employment status and pay cycle.

Employee Type	Pay Cycle	Notice Period
Permanent	Monthly Paid	60 days
Permanent	Other	30 days
Temporary	Monthly Paid	30 days
Temporary	Other	15 days

Alternatively, you can pay the employee their wages for the notice period instead of having them work.

If an employee resigns, they also need to provide notice. A monthly paid worker must give 30 days' notice, while others must give 14 days.

Severance pay

When you terminate an employee for reasons like redundancy, you must pay them compensation. This is calculated as 30 days' wages for every year they have worked for you.

If your company has a gratuity policy, you will pay the gratuity amount or the compensation, whichever is higher. An employee is entitled to gratuity after completing at least one year of continuous service.

Severance pay is not typically required if an employee is dismissed for proven misconduct.

How Rivermate handles compliant exits

Navigating employee exits in a different country can be complex. We make sure every termination in Bangladesh is handled correctly and legally.

Here’s how we help you stay compliant:

• Clear Process: We follow a structured process for every exit, whether it's a resignation or a termination.
• Legal Compliance: We stay up to date with the Bangladesh Labour Act to ensure every step is compliant. This includes managing the correct notice periods and calculating all final payments.
• Documentation: We handle all the necessary paperwork. This includes issuing the written termination order and providing a clear final settlement.
• Final Pay: We calculate and process all final dues. This includes any payment in lieu of notice, severance pay, and unused leave.

We manage the entire offboarding process for you. This lets you focus on your business while we handle the local legal requirements.

Getting the right visas and work permits in Bangladesh is essential for your team. The process involves multiple government bodies, including the Bangladesh Investment Development Authority (BIDA) or the Bangladesh Export Processing Zones Authority (BEPZA). A work visa allows a foreign national to enter the country for a job. A work permit gives them the legal authorization to actually perform that job. You must get the work visa first, then the employee can travel to Bangladesh. Once they arrive, you have 15 days to apply for their work permit.

Employment visas & sponsorship realities

An Employer of Record (EOR) can sponsor work permits and visas for your employees in Bangladesh. This service simplifies your expansion by handling the legal and administrative tasks of hiring foreign nationals. An EOR acts as the legal employer, managing payroll, taxes, benefits, and compliance with local labor laws.

Here is what an EOR can typically do:

• Sponsor employment visas and work permits.
• Manage the application process with authorities like BIDA.
• Ensure compliance with immigration and employment regulations.
• Handle HR tasks like drafting employment contracts and managing payroll.

However, there are practical limits. The ability to sponsor foreign employees can be affected by visa quotas. This means there may be restrictions on the number of foreign workers a company can hire.

Business travel compliance

For short-term visits, a business visa is the correct route. This visa is for activities like attending meetings, negotiating contracts, or participating in training. It is not for employment.

Key points for business travel:

• Purpose: The visit must be for business activities, not paid work.
• Invitation: You will need an invitation letter from a company in Bangladesh.
• Duration: A business visa is often issued for up to one year with multiple entries, but each stay is typically limited to a maximum of 60 days.
• No Employment: A person on a business visa cannot legally work in Bangladesh.

Always make sure your team members use the correct visa for their activities to avoid legal issues.