Employer of Record in Bangladesh

An Employer of Record (EOR) in Bangladesh legally employs your workers on your behalf. This means the EOR handles all local HR tasks, including payroll, taxes, benefits, and compliance with Bangladesh's labor laws. You get to manage your team's day-to-day work, while the EOR takes care of the complex administrative responsibilities. Using an EOR like Rivermate allows you to hire employees in Bangladesh without setting up a local legal entity, saving you time and money.

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. It is a practical solution for companies that want to hire talent quickly without the burden of establishing a legal presence.

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.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Bangladesh includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Bangladesh.

Hiring in Bangladesh offers access to a large and growing workforce. The country's economy is expanding, and many skilled workers are available, particularly in the IT and garment sectors. To hire employees, you generally need to establish a local legal entity or partner with an Employer of Record (EOR). The main piece of legislation governing employment is the Bangladesh Labor Act of 2006, which sets the rules for employment contracts, working conditions, and termination.

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.

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:

Hiring contractors in Bangladesh

You can hire independent contractors for specialized, project-based work. This offers flexibility. However, it's crucial to classify workers correctly.

The main difference between an employee and an independent contractor comes down to control. You direct an employee's work, including their hours and location. A contractor, on the other hand, has more independence, uses their own tools, and decides how to complete the work.

Misclassifying an employee as a contractor can lead to serious problems. If a worker is found to be misclassified, you could be liable for back taxes, unpaid benefits, and other penalties. This is a significant risk.

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.

Navigating compensation and payroll in Bangladesh requires a clear understanding of local laws and practices. The system is governed by the Bangladesh Labour Act of 2006, which sets the rules for wage payments, minimum wage, and taxes. Your payroll process involves calculating salaries, allowances, and any bonuses, then making the necessary deductions for taxes and other contributions. It’s a structured process designed to be transparent and fair for both you and your employees.

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.

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:

In Bangladesh, providing competitive employee benefits and understanding leave policies is key to attracting and retaining talent. The Bangladesh Labour Act of 2006 outlines the minimum requirements for employers. This guide breaks down the essential benefits and leave entitlements for your employees in Bangladesh.

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 festival leave to observe their religious holidays.

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 around 11 paid festival holidays. If an employee works on a festival holiday, you must provide them with two compensatory paid holidays and a substitute day off.

Here is a list of public holidays in Bangladesh for 2025. Please note that dates for Islamic holidays are subject to the sighting of the moon.

Typical Supplemental Benefits

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

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.

When an employment relationship ends in Bangladesh, you need to follow a specific process. This involves giving the correct notice period, calculating final pay, and handling the paperwork. The Bangladesh Labour Act of 2006 sets the rules for both employers and employees. Following these rules is important for a smooth and legal exit process.

Notice periods

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

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.