Severance Pay in Bangladesh 2026: How to Calculate Retrenchment, Termination, Resignation and Final Settlement Dues

Severance pay Bangladesh law requires: the 2026 position

Severance pay Bangladesh law requires is not one payment but a set of statutory formulas, each tied to the way employment ends. Retrenchment, termination without cause, discharge for ill health, dismissal for misconduct, resignation, retirement and death each carry their own rate, their own service threshold and their own comparison with gratuity. The Bangladesh Labour (Amendment) Act 2026, Act No 43 of 2026, dated 10 April 2026, changed several of those formulas: it moved the wage base to the last monthly wage, introduced compensation on resignation from the first completed year, extended compensation to workers dismissed for most kinds of misconduct and halved the service needed for death benefit.[2]

This guide is about the numbers. It explains how to count continuous service, which wage to use, the rate for every exit route, how gratuity and the provident fund fit into the final settlement, and the deadlines that apply once the money falls due, with worked examples throughout. The notice, enquiry and documentation steps for ending employment are covered in our companion guide to terminating employees in Bangladesh, and we do not repeat them here.

Summary: Under the Bangladesh Labour Act 2006 as amended in April 2026, a worker with a year's service who is retrenched or discharged, and a permanent worker terminated without cause, receives 30 days' wages for each year of service, or gratuity if payable and higher. A worker dismissed or removed for misconduct receives 15 days' wages per completed year unless the misconduct is theft, fraud, dishonesty or violent disorder. A resigning permanent worker receives 7, 15 or 30 days' wages per completed year depending on length of service. All dues must be paid within 30 working days of the exit.

Key point: Since the 2026 Act, every severance calculation for compensation under sections 19, 20 and 23, and for wages under sections 22, 23, 26 and 27, uses the worker's last monthly basic wage plus dearness allowance and any ad hoc or interim wage, not the twelve-month average that applied before. A pay rise shortly before an exit now feeds straight into the severance bill.

At a glance

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Table of Contents

Who is entitled to statutory severance

The Labour Act does not use the word severance. It speaks of compensation (ksatipuran) payable on retrenchment, discharge, dismissal, removal, termination, resignation and death, alongside notice pay, gratuity, provident fund dues and wages for unused leave. Together these make up what employers and workers call the final settlement. Section 3 allows an establishment to adopt its own service rules, but those rules may not be less favourable to a worker than Chapter II of the Act.[1] The statutory formulas are therefore a floor that a contract or policy can raise but never lower.

Workers, managers and the 2026 definition

Statutory severance belongs to a "worker". Before 2026 the definition excluded anyone employed mainly in a managerial, administrative or supervisory capacity.[9] The 2026 Act replaced section 2(65) so that every person doing skilled, unskilled, manual, technical, trade promotional or clerical work is a worker except a person falling within the new section 2(49)(b): someone given managerial, chief executive, administrative or supervisory responsibility for the establishment in writing.[2] The words "in writing" matter. A team leader or supervisor whose appointment letter does not confer that responsibility may now be a worker, entitled to the formulas below.

Those outside the definition, typically senior managers and executives, take their exit package from the contract, service rules and any gratuity or provident fund scheme, and enforce it through civil proceedings or arbitration. Our guides to employment contracts in Bangladesh and employment law for expatriates in Bangladesh deal with negotiated packages.

Permanent, probationary and temporary workers

Most of the severance pay Bangladesh statute provides is reserved for permanent workers. A worker becomes permanent on appointment as such or on satisfactory completion of probation, which is six months for clerical work and three months for other work.[1] Temporary workers can be released on short notice under section 26(2) and do not receive the section 26(4) compensation, while compensation for retrenchment, discharge and misconduct depends on at least one year of continuous service rather than on permanent status.[1] [4] [5] [6]

Severance pay Bangladesh rules after the 2026 amendments

The Bangladesh Labour (Amendment) Bill 2026 was moved by the Labour and Employment Minister, Ariful Haque Chowdhury, and passed by voice vote on 9 April 2026, converting the interim government's Bangladesh Labour (Amendment) Ordinance 2025 into law with amendments.[11] [12] The Act is dated 10 April 2026, took effect immediately, repealed Ordinance No 65 of 2025 and saved anything done under it.[2] The changes that move severance numbers are these.

• Section 14(1), continuous service: one year means at least 240 days actually worked in the preceding 12 calendar months, and six months means at least 120 days actually worked in 6 calendar months. The counted maternity leave rises from sixteen weeks to 120 days.[3]
• Section 14(3), wage base: the last monthly basic wage, dearness allowance and ad hoc or interim wage replace the average of the previous 12 months.[3] [9]
• Section 16, lay-off: lay-off compensation is payable to a registered worker, other than a badli or casual worker, after 3 months' service.[2]
• Section 19, death: the service threshold falls from more than two years to more than one year.[2]
• Section 23(3), misconduct: the words "dismissed or" are inserted, bringing dismissed workers within the 15-day compensation.[5]
• Section 27(4), resignation: a new three-band scale replaces the old rule that paid nothing below five years.[7]
• Section 32, housing: a former worker now has 6 months, not 60 days, to vacate employer accommodation.[2]
• Section 264(10), provident fund: the employer may meet a workers' demand for a provident fund by enrolling willing staff in the Progoti universal pension scheme on a 50:50 contribution basis.[8]

Section 2(10), which defines gratuity, and the core rates in sections 20, 22 and 26 were not changed.[1] [2] Exits that took place before 10 April 2026 should be checked against the law in force on the exit date, including the Ordinance period that began in November 2025.

The two inputs: continuous service and the wage base

Every severance pay Bangladesh formula multiplies a number of days' wages by a number of years. Both inputs are defined by statute, and most disputes start with one of them.

Counting continuous service

Section 14(1) deems a worker to have completed one year of continuous service if he or she actually worked at least 240 days in the preceding 12 calendar months. In counting days actually worked, section 14(2) includes days of lay-off, days of leave with or without wages due to sickness or accident, days lost to a legal strike or an illegal lock-out and, for women, up to 120 days of maternity leave.[3] A long sickness or a lock-out therefore does not break service, and an employer cannot reduce the count by pointing to them.

Completed years and part-years

The wording of each section decides whether a part-year counts. Sections 23, 26 and 27 pay for each completed year, so a worker with 7 years and 9 months is paid for 7. The gratuity definition in section 2(10) and the death benefit in section 19 count any part of a year exceeding six months as a full year, so the same worker would be credited with 8.[1] Sections 20 and 22 refer to "every year of service"; we calculate on completed years and treat the gratuity comparison as the mechanism that rewards the part-year.

Which wage counts

For compensation under sections 19, 20 and 23, and for wages under sections 22, 23, 26 and 27, section 14(3) now defines wages as the last monthly basic wage and dearness allowance, plus any ad hoc or interim wage, immediately before the retrenchment, dismissal, removal, discharge, retirement or termination.[3] House rent, medical, conveyance and food allowances are not part of that base. In a typical garment-sector pay structure, where basic wage is a little over half of gross pay, that distinction roughly halves the statutory figure compared with a calculation on gross salary.

The Act does not prescribe a daily divisor. The common and defensible practice, which we use in every example below, is to divide the monthly wage by 30. Where a contract or service rule uses gross salary or a better divisor, the higher figure is payable.[1]

Retrenchment compensation under section 20

Retrenchment is termination for redundancy, and section 20 is the severance pay Bangladesh route most often used when a factory loses orders or a business restructures. For a worker with at least one year of continuous service, the employer must give one month's written notice stating the reason or pay wages in lieu, send a copy of the notice to the Chief Inspector or an officer he designates and another to the collective bargaining agent, if any, and pay compensation of 30 days' wages for every year of service, or gratuity if payable, whichever is higher.[4]

Lay-off converted to retrenchment

Where a worker has already been laid off for 45 days in a calendar year and a further continuous lay-off of 15 days or more is needed, section 16(7) allows the employer to retrench instead. No notice is then required, but the worker receives an extra 15 days' wages on top of the compensation or gratuity.[1] [4] Section 20(4) applies last in, first out within the affected category unless an agreement provides otherwise, and section 21 gives retrenched workers a preference if the employer recruits again within one year.[1] [4]

Worked example: retrenchment

A machine operator earns basic wage of Tk 18,000 within a gross of Tk 30,000 and has 7 years and 9 months of continuous service. Her daily rate on the section 14(3) base is Tk 600. Statutory compensation is 30 days for each of 7 years, 210 days, or Tk 1,26,000. If the employer runs a gratuity scheme at the section 2(10) minimum, the 9 months count as a year and gratuity is 30 days for each of 8 years, 240 days, or Tk 1,44,000, which is higher and is paid instead.

Notice pay in lieu of the one month's notice is added. Section 14(3) does not list notice pay under section 20, so the general definition of wages applies, and we advise paying a full month's wage, here Tk 30,000. Her retrenchment package is therefore Tk 1,74,000 with the gratuity scheme, or Tk 1,56,000 without it, before unpaid wages, leave encashment and provident fund money.

Retrenchment remains the dominant exit route in 2026. In August 2026 Alliance Knit Composite in Ashulia retrenched 565 workers under section 20, stating that all statutory dues and length-of-service compensation would be paid within the legal timeframe and that section 21 re-employment priority would apply.[13]

Termination without cause under section 26

Section 26 lets an employer end a permanent worker's employment without alleging misconduct or redundancy. The notice is 120 days for a monthly-rated worker and 60 days for others, and the employer may pay wages for the notice period instead. The worker also receives compensation of 30 days' wages for each completed year of service, or gratuity if payable, whichever is higher, and that compensation is in addition to every other benefit under the Act.[6] A temporary worker may be released on 30 days' notice if monthly-rated or 14 days otherwise, without section 26(4) compensation.[6]

Worked example: termination by notice pay

A monthly-rated quality supervisor with no written managerial delegation has a basic wage of Tk 40,000 and 12 years and 4 months of service. His daily rate is Tk 1,333.33. Notice pay for 120 days is Tk 1,60,000 on the basic-wage base. Compensation is 30 days for each of 12 completed years, 360 days, or Tk 4,80,000.

If the employer has a gratuity scheme at the section 2(10) minimum, service of more than ten years attracts 45 days' wages per year. The 4 months do not exceed six months, so 12 years count, giving 540 days, or Tk 7,20,000. That figure is higher than compensation and replaces it, so the package is Tk 8,80,000 before other dues. Whether the 45-day rate applies to every year or only those after the tenth is a drafting question for the scheme, discussed in our guide to provident fund and gratuity in Bangladesh.

Once notice pay is added, section 26 is the most expensive severance pay Bangladesh route per year of service, and the one most often challenged as a disguised dismissal.

Discharge for ill health under section 22

A worker may be discharged for physical or mental incapacity or continued ill health certified by a registered medical practitioner. A discharged worker with at least one year of continuous service receives 30 days' wages for every year of service, or gratuity if payable, whichever is higher.[1] Section 23(5) uses the same rate as the measure of compensation for a worker dismissed on conviction who is acquitted on appeal and cannot be reinstated.[5]

Worked example. A packer with a basic wage of Tk 15,000 and 4 years and 11 months of service is discharged on a doctor's certificate of continued ill health. Her daily rate is Tk 500 and compensation is 30 days for each of 4 completed years, 120 days, or Tk 60,000. Because 11 months exceed six months, a gratuity scheme at the statutory minimum would credit 5 years, 150 days, or Tk 75,000, and would be paid instead. Without the medical certificate, the exit risks being treated as a section 26 termination, with notice pay added.

Dismissal and removal for misconduct under section 23

Section 23(1) allows dismissal without notice or notice pay for a criminal conviction or for misconduct proved under section 24. Section 23(2) allows lesser penalties, including removal, demotion, stoppage of promotion or increment, fine, suspension without wages for up to seven days, and censure or warning.[5]

The 2026 change: compensation on dismissal

Before 2026, section 23(3) gave 15 days' wages per completed year only to a worker removed under section 23(2)(a). The 2026 Act inserted the words "dismissed or", so a worker who is dismissed or removed and has at least one year of continuous service now receives 15 days' wages for every completed year.[2] [5] The proviso is unchanged: no compensation is payable where the misconduct is theft, embezzlement, fraud or dishonesty in connection with the employer's business or property under section 23(4)(b), or disorderly behaviour, riot, arson or vandalism under section 23(4)(g). Even then the worker keeps all other lawful dues.[5]

The inserted words sit within a sub-section that still refers to section 23(2)(a), which deals with removal, while dismissal itself is imposed under section 23(1). Read literally that creates an argument that the change does nothing. We do not advise relying on it: the amendment's purpose is plain, and an employer that withholds the 15 days on a drafting point invites a Labour Court claim it is likely to lose.

Worked example: dismissal

A worker with a basic wage of Tk 21,000 and 6 years and 2 months of service is dismissed after an enquiry finds habitual absence without leave under section 23(4)(d). His daily rate is Tk 700 and compensation is 15 days for each of 6 completed years, 90 days, or Tk 63,000. Had the finding been theft under section 23(4)(b), compensation would be nil, but unpaid wages, leave encashment and his provident fund entitlement would still be payable. A dismissal procedure that fails is expensive; our guide to wrongful dismissal in Bangladesh explains reinstatement and back wages.

Resignation compensation under section 27

A permanent worker resigns on 60 days' written notice; a temporary worker gives 30 days if monthly-rated or 14 days otherwise. A worker who leaves without notice may pay the employer wages for the notice period instead.[7] Under section 27(3A), a worker absent for more than ten days without notice or permission must be given ten days to explain and return, then a further seven days to defend himself, after which he is deemed to have resigned from the first day of absence.[7]

The new three-band scale

The 2026 Act replaced section 27(4). A resigning permanent worker now receives, for every completed year of service:

• 7 days' wages, if continuous service is up to 3 years;
• 15 days' wages, if continuous service is more than 3 but less than 10 years;
• 30 days' wages, or gratuity if payable, whichever is greater, if continuous service is 10 years or more.

The compensation is in addition to every other benefit under the Act.[7] Before the amendment, nothing was payable below five years, 14 days per year was payable from five to ten years and 30 days or gratuity from ten years.[9] For a workforce with high turnover in the first five years, this is the largest severance pay Bangladesh cost increase in the 2026 Act.

Worked examples: resignation

For a worker on a basic wage of Tk 24,000, a daily rate of Tk 800:

• 2 years and 10 months: 7 days for each of 2 completed years, 14 days, or Tk 11,200. Under the old law: nil.
• 6 years and 3 months: 15 days for each of 6 completed years, 90 days, or Tk 72,000. Under the old law: 84 days, or Tk 67,200.
• 11 years: 30 days for each of 11 years, 330 days, or Tk 2,64,000, unless gratuity is payable and higher.

Two questions recur. First, the bands turn on total continuous service, so a worker with 3 years and 2 months falls in the 15-day band and is paid 15 days for each of 3 completed years. Second, section 27(4) applies where a worker "resigns under this section", and deemed resignation is in the same section, so the safer view is that compensation is also payable on a section 27(3A) deemed resignation.[7]

Retirement, death and lay-off

Retirement at 60

A worker retires on reaching 60, with the date of birth in the service book as proof. Dues are paid under section 26(4) or the establishment's service rules, so the retiring worker receives at least 30 days' wages per completed year or gratuity, whichever is higher. A retired worker may be re-engaged on contract.[1]

Death in service

If a worker dies after more than one year of continuous service, the employer pays the nominee, or a dependant if there is no nominee, 30 days' wages for every completed year or part exceeding six months, or 45 days' wages where death occurs while working in the establishment or later results from a work accident, or gratuity, whichever is higher. The payment is in addition to the retirement benefit the worker would have received.[1] The 2026 Act reduced the threshold from two years to one.[2]

Worked example. A worker with a basic wage of Tk 20,000 dies after 1 year and 8 months. The 8 months exceed six months, so 2 years count. The benefit is 60 days' wages, Tk 40,000, or 90 days', Tk 60,000, if death followed a workplace accident. Before April 2026 the family would have received nothing under section 19.

Lay-off compensation

A laid-off worker on the register, other than a badli or casual worker, with at least 3 months' service is compensated for every day of lay-off except weekly holidays. The rate is half of basic wage, dearness allowance and any ad hoc or interim wage, plus the full housing allowance.[1] [2] A worker on a basic wage of Tk 12,000 and housing allowance of Tk 6,000 therefore receives Tk 12,000 a month, or Tk 400 a day.

After 45 days of lay-off in a calendar year, further compensation is payable for each later block of 15 days or more unless the parties agree otherwise.[1] Closures strain the same budget: in July 2026 around 2,500 workers at five Lithi Group units in Gazipur, one shut under section 13(1), were still awaiting unpaid wages and other dues.[14]

Gratuity and the "whichever is higher" test

Section 2(10) defines gratuity as at least 30 days' wages at the last wage rate for every completed year of service or part exceeding six months, or 45 days' wages for service of more than ten years, payable on termination.[1] The exit provisions in sections 19, 20, 22, 26 and 27 each require the employer to pay statutory compensation or gratuity, "if payable", whichever is higher.[1] The two are alternatives, not cumulative: since the 2018 amendment deleted words that made gratuity additional to termination compensation, the worker takes the larger figure, not both.[1]

Run the comparison on every exit. Gratuity usually wins for long-serving workers because it credits part-years over six months and, after ten years, rises to 45 days. Whether a gratuity is "payable" at all depends on the contract, service rules, a settlement or established practice; our provident fund and gratuity guide analyses that question and the funding and tax rules in depth.

Provident fund, leave encashment and other dues

Statutory compensation is only part of the final settlement. The other severance pay Bangladesh components are fixed by separate provisions.

• Provident fund: a member entitled under the fund rules to benefits including the employer's contribution may not be deprived of them because of retrenchment, discharge, dismissal, retirement, removal, termination or death.[1] Under section 264, each permanent member contributes 7 to 8 per cent of monthly basic wage after one year of service, matched by the employer.[8] The fund balance is paid by the trustees under the fund rules, not out of the employer's payroll.
• Progoti instead of a provident fund: where at least two-thirds of workers in an establishment with 100 or more permanent workers demand a fund, the employer is now exempt if it enrols willing staff in the Progoti universal pension scheme, contributing 50 per cent of the premium.[8]
• Unused annual leave: section 11 requires wages for any annual leave due on exit, whatever the reason for it, including dismissal and resignation.[1] Adult workers in shops, commercial and industrial establishments and factories earn one day for every 18 days worked.[1]
• Unpaid wages and overtime to the last working day, and any festival bonus or other benefit already earned under the contract or rules.
• Service certificate: every worker other than a casual or badli worker is entitled to one on exit.[1]
• Housing: a worker must vacate employer accommodation within 6 months of the exit, and may not be evicted without being paid all dues.[1] [2]

Workers' participation fund entitlements in eligible companies are paid separately under Chapter XV; our guide to employee benefits in Bangladesh explains them.

Building the final settlement: a full worked example

The quality supervisor from the section 26 example has a gross monthly salary of Tk 64,000: basic Tk 40,000, house rent Tk 20,000 and other allowances Tk 4,000. His contract states that notice is paid on gross salary, the employer runs a gratuity scheme at the statutory minimum, he has 25 days of unused annual leave, 18 days of the final month are unpaid, and he owes Tk 50,000 on a salary advance.

• Notice pay, 120 days at gross under the contract: Tk 2,56,000.
• Gratuity, 45 days for each of 12 years on basic, higher than 30 days' compensation: Tk 7,20,000.
• Unpaid wages, 18 days at Tk 2,133.33: Tk 38,400.
• Leave encashment, 25 days at the gross daily rate: Tk 53,333.
• Less recovery of the salary advance: Tk 50,000.

The employer's final settlement payment is Tk 10,17,733, due within 30 working days of the exit. Separately, the provident fund trustees pay his own and the employer's contributions with profit in accordance with the fund rules. Without the contractual uplift, notice pay on the section 14(3) base would have been Tk 1,60,000; that difference of Tk 96,000 is why the appointment letter must be read before any figure is quoted.

Tax on severance payments

Under section 32 of the Income Tax Act 2023, compensation received on termination of employment, by whatever name, is income from employment, as is gratuity. Gratuity of up to Tk 2.5 crore received from an approved gratuity fund or the Government Gratuity Fund is exempt under the Sixth Schedule; gratuity paid directly by an employer without an approved fund does not attract that exemption.[10] Settlement statements should show each component separately so that the employer withholds correctly and the worker can file accurately.

The sequence we use to prepare and pay a final settlement is below.

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Comparing severance pay Bangladesh entitlements by exit route

The table brings the rates together, on the section 14(3) wage base. On a phone, scroll it sideways.

Deadlines, disputes and recovery

The 30-working-day rule

Section 30 requires the employer to pay all amounts due within a maximum of 30 working days after employment ends, whatever the reason.[1] The clock does not wait for a handover, a clearance certificate or the worker's signature on a release, and an employer that holds back the whole settlement over a disputed item is in breach for the undisputed balance.

Challenging the calculation

A worker who disputes the basis of the exit, such as a dismissal or a discharge, must send a written grievance to the employer by registered post within 30 days of learning of the cause. The employer must enquire, hear the worker and decide within 30 days, and the worker may complain to the Labour Court within 30 days after that; no court fee is payable.[1]

Where the dispute is about money only, section 132 allows a claim in the Labour Court for unpaid wages, gratuity payable under any rule or delayed provident fund dues within 12 months of the date the money fell due, with discretion to admit a late claim; since 2026 an inspector may also apply. The court may add compensation of 25 per cent of the wages, except where the delay resulted from a genuine dispute, an emergency or the worker's own failure to collect.[1] [2] Our guide to the labour court in Bangladesh explains filing and execution.

Settlement agreements and releases

A release can settle genuine disputes, but because service rules cannot be less favourable than Chapter II, a release paying less than the statutory formulas is vulnerable.[1] A final settlement statement that shows the statutory calculation, any ex gratia amount and the provident fund position line by line proves the floor has been met.

Severance pay Bangladesh mistakes to avoid

• Using the old twelve-month average. Since 10 April 2026 the base is the last monthly wage. Payroll templates built before the amendment understate settlements after a pay rise.
• Paying nothing on short-service resignations. A permanent worker resigning after one completed year now receives 7 days' wages per year.
• Withholding all compensation on dismissal. Only misconduct under section 23(4)(b) or (g) removes the 15 days; habitual absence, lateness or negligence do not.
• Adding gratuity to compensation, or forgetting it. The worker takes whichever is higher, and the comparison must be documented on every exit.
• Treating supervisors as managers. Without written managerial or supervisory responsibility, a supervisor may be a worker entitled to the statutory formulas.
• Counting part-years wrongly. Completed years drive compensation; part-years over six months count for gratuity and death benefit.
• Missing the 30-working-day deadline. Delay exposes the employer to a section 132 claim with 25 per cent compensation added.
• Deducting what the Act does not allow. Section 125 permits recovery of advances and loans, but every deduction must fall within the Act and be documented.[9]

What to watch in 2026 and 2027

Three developments will shape severance calculations over the next year. First, the Bangladesh Labour Rules 2015 will need amending to reflect the 2026 Act, and the new rules may settle points the Act leaves open, including the daily divisor and the treatment of deemed resignation. Second, the Alternative Dispute Resolution Authority created by the 2026 Act under section 348C will, once constituted, offer a new forum for settling exit disputes outside the Labour Court.[2] Third, continuing closures and retrenchment in the export sector will test whether employers in difficulty can meet the 30-working-day rule.[13] [14]

Establishments in export processing zones follow a separate EPZ labour statute and should check its exit provisions instead. For everyone else, severance pay Bangladesh calculators should be rebuilt around the 2026 rules before the next exit. If you need a calculation checked, a retrenchment planned or a claim assessed, contact TRW; our workforce terminations and dismissals practice and compensation and benefits practice handle both sides of the table.

Frequently asked questions

How is severance pay calculated in Bangladesh?

Multiply the daily wage, usually the last monthly basic wage plus dearness allowance and any ad hoc wage divided by 30, by the statutory number of days for the exit route and by the years of service. Retrenchment, discharge and termination without cause use 30 days per year; misconduct uses 15 days; resignation uses 7, 15 or 30 days. Then compare with gratuity, if payable, and pay the higher amount.[3] [4] [7]

Is severance pay calculated on basic or gross salary?

The statutory floor uses the last monthly basic wage, dearness allowance and any ad hoc or interim wage, not house rent or other allowances. A contract or service rule that uses gross salary prevails because it is more favourable.[1] [3]

What changed for severance under the Labour (Amendment) Act 2026?

Act No 43 of 2026 moved the wage base to the last monthly wage, introduced a 7, 15 and 30-day resignation scale, extended 15 days' compensation to dismissed workers, cut the death-benefit threshold to one year and extended the time to vacate employer housing to 6 months.[2]

Does an employee who resigns get compensation in Bangladesh?

Yes, a permanent worker does. Since April 2026 the rate is 7 days' wages per completed year for service up to three years, 15 days for more than three but under ten years, and 30 days or gratuity, whichever is greater, from ten years.[7]

Is a worker dismissed for misconduct entitled to anything?

A dismissed or removed worker with at least one year's continuous service receives 15 days' wages per completed year, except where the misconduct is theft, embezzlement, fraud or dishonesty, or riot, arson or vandalism. Other lawful dues remain payable in every case.[5]

Are gratuity and severance compensation both payable?

No. The exit provisions require statutory compensation or gratuity, if payable, whichever is higher. Notice pay, unpaid wages, leave encashment and provident fund dues are paid in addition.[1] [6]

How much notice must an employer give to terminate a permanent worker?

Under section 26, 120 days for a monthly-rated worker and 60 days for others, or wages in lieu. Retrenchment under section 20 requires one month's notice or wages in lieu.[4] [6]

How quickly must the final settlement be paid?

Within a maximum of 30 working days after employment ends, whatever the reason for the exit.[1]

Do managers receive statutory severance?

Not if they have been given managerial, chief executive, administrative or supervisory responsibility in writing, because they fall outside the definition of worker. Their entitlements come from the contract, service rules and any benefit scheme.[2]

Is severance pay taxable in Bangladesh?

Termination compensation and gratuity are income from employment under the Income Tax Act 2023, but gratuity of up to Tk 2.5 crore from an approved gratuity fund or the Government Gratuity Fund is exempt.[10]