Is a provident fund mandatory in Bangladesh?

Not by default. Under the Bangladesh Labour Act, a private employer must set up a provident fund once at least three-quarters of its workers ask for one in writing. Both sides then contribute 7%–8% of wages. Many multinationals offer a fund from day one to stay competitive.

What bonuses do employees in Bangladesh expect?

Workers with at least one year of service get two festival bonuses a year, usually paid before the two Eids. There's no 13th-month salary rule, so treat the festival bonuses as a fixed cost when you set pay.

What does it cost to end an employment contract in Bangladesh?

For a permanent monthly-paid worker, the employer gives 120 days' written notice or pay in lieu, plus 30 days' wages per year of service. That makes headcount changes expensive. As your Employer of Record (EOR), Good Balance Global calculates notice and compensation under local labor law before any exit.

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Payroll and benefits guide

Bangladesh

CapitalDhaka

Fiscal Year1 July - 30 June

Date Formatdd/mm/yyyy

CurrencyBDT (Bangladeshi Taka)

Payroll FrequencyMonthly

Employer Taxes0% – 8%

Employee Costs0% – 8%

Overview

Languages: Bengali
Income tax: 0% – 30%
VAT: 15%; Reduced rates: 10%, 7.5%, 5%. Value Added Tax (VAT); further reduced rates and supplementary duty apply to listed goods and services

Contributions

Employer

7% – 8%

Provident fund (employer match)Required only when at least three-quarters of workers request a fund in writing; common at larger employers

5% of net profit

Workers' Profit Participation FundApplies to qualifying companies only; not calculated on payroll

0% – 8%

Total employer costPayroll-based contributions only

Employee

7% – 8%

Provident fundMatched by the employer where a fund exists

0% – 8%

Total employee costExcludes income tax

Authority Payments

Authority PaymentPaid ToDue DateMethod

Authority Payment

National Board of Revenue (NBR)

Paid To

Income tax withheld from salaries

Due Date

Within 2 weeks after the end of the month of deduction

Method

Treasury challan or online payment, with periodic withholding returns

Authority Payment

Provident fund trustees

Paid To

Employer and employee provident fund contributions

Due Date

Monthly

Method

Deposit to the recognized fund account

Minimum Wage & Working Hours

Minimum wage: Set by sector / Monthly; No single national minimum wage. The Minimum Wage Board sets rates by industry; entry-grade ready-made garment workers have a floor of BDT 12,500 per month, set in December 2023
Standard working hours: 8 hours per day, 48 hours per week
Overtime: 200% of the ordinary basic wage and dearness allowance; total hours generally capped at 10 per day and 60 per week

Leave

Annual leave1 day for every 18 days workedFor adult workers in shops, commercial, and industrial establishments after 12 months of service; plus 10 days of paid casual leave
Sick leave14 days per yearFull pay, with a medical certificate
Maternity leave120 daysRaised from 16 weeks by the 2025–2026 Labour Act amendments; employer-paid, subject to service conditions
Public holidays13 festival holidays per yearRaised from 11 by the same amendments; workers called in earn compensatory paid days off

Leave type	Duration	Notes
Annual leave	1 day for every 18 days worked	For adult workers in shops, commercial, and industrial establishments after 12 months of service; plus 10 days of paid casual leave
Sick leave	14 days per year	Full pay, with a medical certificate
Maternity leave	120 days	Raised from 16 weeks by the 2025–2026 Labour Act amendments; employer-paid, subject to service conditions
Public holidays	13 festival holidays per year	Raised from 11 by the same amendments; workers called in earn compensatory paid days off

Termination

Probation period: 6 months for clerical roles and 3 months for other workers; skilled workers can be extended by 3 months
Notice period: 120 days for monthly-paid permanent workers and 60 days for others, or pay in lieu
Severance pay: 30 days' wages per completed year of service when the employer ends the contract for reasons other than misconduct
13th salary: Not mandatory; workers with 1+ year of service receive two festival bonuses a year under the Labour Rules
Notes: Permanent workers who resign give 60 days' notice; dismissal for misconduct requires a documented inquiry

Benefits

Festival bonusesMandatory
Two bonuses a year, usually tied to Eid, each capped at one month's basic wage
Provident fundCommon
Matched savings fund, often offered even where not legally triggered
GratuityCommon
Lump sum on leaving based on years of service, under company policy or fund rules
Group health insuranceCommon
Private medical cover, common at multinationals

Visas & Work Permits

E-type visa with work permit
Requirements
Work permit from the Bangladesh Investment Development Authority (BIDA), or BEPZA or BEZA for zone-based companies, sponsored by the local employer
Foreign employees are taxed on local salary through payroll withholding

FAQ

Sources

Last updated: November 1, 2026

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