To navigate the country’s complex payroll, taxation, and compliance processes, businesses that wish to enter the Bangladeshi market will require the aid of local human resources specialists. In this case, partnering with an Employer of Record (EOR) is the smartest thing to do. With the help of an EOR, you can efficiently oversee and recruit personnel without the need to establish a local presence in the country. This strategy adeptly manages the intricacies and difficulties that are associated with international expansion. So, for you to get ahead in the game, you must first understand the fundamentals of Employer of Record (EOR) in Bangladesh; which we have addressed in this blog for you! 

A Comprehensive Guide to Employer of Record (EOR) in Bangladesh

An Employer of Record (EOR) can streamline the employment and compensation processes for employees in Bangladesh. Even in the absence of a local entity in Bangladesh, EOR services ensure adherence to regulations, the pay of your employees, and the provision of appropriate benefits. This blog discusses everything you need to know about Employer of Record (EOR) in Bangladesh. 

Employer of Record (EOR)

An Employer of Record (EOR) is a third-party entity that assumes all employer-related obligations and duties on behalf of your company and becomes the legal employer of your staff. An EOR is entirely accountable for all employment-related aspects, such as payroll, taxes, benefits, and compliance. EOR may be situated in the same nation as the enterprise for which they provide labor, or in a foreign nation with different employment regulations. An EOR provides services such as crafting and managing employment contracts that adhere to local regulations, supervising all tax and payroll withholding, providing timely compensation for supported personnel and statutory and comprehensive benefits, maintaining adherence to termination and offboarding protocol, ongoing assistance with respect to regional labour laws and regulations among other services.  

Why You Should Hire in Bangladesh Using EOR?

Bangladesh’s economy has grown rapidly because of its highly skilled labour force. Due to its strategic geographical location, the nation serves as an economic hub. Furthermore, Bangladesh maintains industry-specific pay boards that set minimum rates for every business. To preserve the rights of its workforce, Bangladesh has robust labour laws that safeguard employees’ rights. Bangladeshi regulations require that the employer create an employment contract that includes all relevant information, including the employee’s pay, benefits, and rates of compensation. All businesses and workers are subject to these laws, regardless of nationality. While ensuring compliance in Bangladesh is not too difficult, it can be difficult for a foreign employer. Therefore, it’s ideal to work with an EOR to assist you in staying compliant with local labour laws. 

Employment Contracts

Working Hours

• The Bangladesh Labor Act of 2006 limits the amount of time employees can work in any establishment to eight hours per day and forty-eight hours per week. Every day, an extra two hours of overtime are allowed. 
• A worker’s total hours can’t go over 60 hours in a week. 
• Any employee working in a commercial or industrial organization has the right to one and a half days of rest per working day. Workers in a factory have the privilege of one day. 
• Women are not allowed to be at work between 10 p.m. and 6 a.m. 

Bonuses 

Employees who finished their 12 months of employment must be paid two festival bonuses per year, equal to the standard wage amount. 

Compensation 

• The minimum monthly wage in Bangladesh varies according to industry and employee skill level.  
• In the ready-made clothing sector, the minimum salary for an apprentice is 8,000 taka per month. 
• Apprentices in the Export Processing Zone are paid a minimum of Tk. 4,480. 
• A worker receives 200% of their regular compensation as overtime. 
• Wages must be paid within seven days of the designated payment period. 

Probation 

According to Section 4(8) of the Labour Act, the probationary period’s length is determined by the employee’s profession. Probation lasts for six months for employees in administration and three months for other employees. If the service provided during the first three months of probation is deemed inadequate, the probationary period can be extended. After the probationary period is over, the employee is eligible for a permanent position at the company. 

Termination 

• When terminating permanent employees, employers are required to give 120 days’ notice. For temporary employees, this notice must be 30 days. 
• The employer has thirty days from the date of termination to pay all termination benefits. 
• If an employee wishes to leave, they must give their employer sixty days’ notice. If less time is provided, the employer must be paid for the notice period. When an employee is hired temporarily, they are required to offer thirty days’ notice. 
• When an employee ends their employment, they are entitled to the following benefits: 30 days of pay for every year they have worked over ten years; and 14 days of pay for every year they have worked over five but less than ten. 

Employee Protection 

The labour laws and regulations of Bangladesh establish the framework for the majority of implemented regulations pertaining to the safeguarding of workers’ rights. Additionally, the Bangladeshi constitution guarantees equality for all citizens; therefore, discrimination based on caste, class, or religion is prohibited. A minor under the age of 14 is not permitted to be employed in a factory, per the labor law. Additionally, it provides a thirty-minute break for every five-hour shift and a one-hour break for every six-hour shift. 

Employee Benefits and Paid Leave

Holidays

On eleven holidays, all employees are entitled to full holiday pay. An employee will be compensated with two additional holidays with full pay and an alternate day off if they have to work on a holiday. 

Vacation

• Workers who have worked for a company for a full year are eligible for fully paid annual leave. 
• Employees are allowed to carry forward up to 60 days of unused yearly leave. 
• For every eighteen days of labor, industrial or commercial establishments,  manufacturers, and transport service providers are entitled to one day of leave. 
• Employers in EPZs are subject to different regulations, they are required to provide one day off to their staff for every 22 days of work.
• Tea plantation workers receive one day off for every twenty days of work. 
• Newspaper employees get one day off for every eleven days they work. 
• For workers who are under the age of 18, there is one day off for every fourteen days of work. 

Sick Leave 

All employees, with the exception of newspaper employees, are entitled to 14 days of paid sick leave. For sick leave to be granted, employees must present a medical certificate. For one-eighteenth of their working hours, newspaper employees are eligible for half-paid sick leave. 

Maternity Leave

Female employees who have worked for the company for six months or longer are eligible to receive up to eight weeks of paid leave, both before and after the birth of their child. If they have two or more children, they get more maternity leave but not maternity compensation. Women who have not worked for six months can receive unpaid leave. Additionally, they are not permitted to work for eight weeks following the delivery of their child. 

Employees in EPZs who are pregnant are granted a leave entitlement of six weeks before the due date and an additional six weeks following the delivery of the child. During maternity leave, a regular salary is provided. Employers in EPZs are only permitted to grant maternity benefits to a single employee twice if the leave is not utilized for more than three years. 

Health Coverage Benefits

• • If an employee gets hurt while working, the employer is in charge of overseeing and providing the injured worker’s medical care. According to the Bangladesh Labor Rules 2015, the employee has to report the accident to the Labor Court. After receiving notice, the employee has three days to have a registered medical professional examine them at the employer’s expense. 
  • Unless the employer can demonstrate otherwise, the diagnosis of an occupational sickness that the employee contracted while working for the company for more than six months is to be regarded as a workplace injury by accident. The employee is required to continue receiving paid treatment until the illness is completely cured. 
  • The Labour Act of 2006 gives information about medical care for employees as well as compensation, including the amount and mode of payment. 

Other Benefits 

Workers in Bangladesh are eligible for a pension, supported by government tax revenues as well as workers’ compensation ensured by mandatory employer insurance. A significant proportion of employee benefits are covered by employee social costs.

Employer Taxation in Bangladesh 

• In Bangladesh, the fiscal year starts on 30th June every year.
• Corporations are obligated to pay a corporate tax of 32.5% in Bangladesh. 
• Withholding Tax (For Non-Residents)
• Dividends- 20%
• Interest Income- 20%
• Employers in Bangladesh are subject to a progressive payroll tax that ranges from 10% to 30%.
• While social security is not a recognized concept in Bangladesh, specific companies are obligated to contribute 5% of their profits to the Workers Profit Fund. 
• Reimbursement is not feasible due to the absence of the requisite legislation. 

Employee Taxation in Bangladesh 

The following table summarizes the income tax rates in Bangladesh. 

However, foreign residents are obliged to pay income tax at a 30% flat rate.

Also, Bangladesh lacks a functioning social security system; consequently, Bangladeshi employees do not remit any social security contributions to the government. Furthermore, consumers must remit a sales tax of 15% when acquiring goods and services in Bangladesh. 

Standard Employer of Record Service

Employer of Record in Bangladesh streamlines and accelerates the business expansion process in the country. Collaborating with an EOR facilitates the efficient administration of employee compensation, employment contracts, tax information, and work permits. The following are some of the standard terms of employer of record service in Bangladesh. 

• Any business operating in Bangladesh is required to pay a 15% GST to the government. 
• The only accepted currency is the Bangladeshi Taka (BDT).
• For desk employment, the minimum length of service is six months. For all other positions, it is three months.
• The essential information and documents include critical personal information, a copy of the passport, bank account information, a NIC card, and if applicable, a TIN. 
• The essential information and documents for outsiders are personal information, organizational duties, technical and academic credentials, curriculum vitae, copy of passport, bank information, passport-sized photographs, medical report, and police verification.   

Meteors is the ideal collaborator for international business expansion, as it guarantees complete adherence to local legal requirements while optimizing operational activities. Collaborating with a regional EOR, such as Meteors’ EOR solution, to employ and manage personnel without a local presence will be a beneficial move for you. We can streamline the onboarding process of your Bangladeshi employee along with helping you with other responsibilities with our EOR solution. 

Summary

An Employer of Record in Bangladesh grants you a competitive advantage in expanding your business in Bangladesh. An EOR service facilitates the rapid recruitment of local personnel, manages their payroll, and undertakes an array of human resources obligations in your place. This blog first explores what an EOR entails and why you should hire in Bangladesh using an EOR service. Then it covers employment contracts, employee benefits and paid leave, and taxation for employers and employees in Bangladesh. Finally, it describes the standard employer of record services. Now, if you are looking for an expert EOR service provider in Bangladesh, Meteors will be the right choice for you! 

Frequently Asked Questions (FAQs)

Why an Employer of Record be necessary for a company expanding in Bangladesh?

The direct employment of employees in a foreign nation such as Bangladesh may present complexities stemming from distinct labor legislation, tax policies, and administrative obligations. By streamlining this procedure, an EOR mitigates legal risks and ensures compliance with local laws.

What services does an Employer of Record offer?

EOR services generally comprise HR administration, payroll processing, benefits administration, and conformance with local labor legislation, amongst other tasks pertinent to the employment of Bangladeshi employees.   

Is using an Employer of Record in Bangladesh financially advantageous?

Due to the lack of necessity for a local presence, complicated legal processes, and hiring local HR personnel, using an EOR can frequently be less expensive than creating a legal corporation or subsidiary in Bangladesh. 

How can I select the best Employer of Record in Bangladesh?

You should consider the EOR’s reputation, range of services provided, track record, customer support, and cost-effectiveness when making your selection. Before making a final decision, it is also a good idea to request references and carefully review the terms of the service agreement.