Hiring in Bangladesh: A 2026 Guide for Foreign Employers

Hiring in Bangladesh: the 2026 legal framework for foreign employers

Hiring in Bangladesh gives a foreign employer access to one of the largest and youngest workforces in Asia, but on terms set by statute rather than by contract. The Bangladesh Labour Act 2006, rewritten in substance by the Bangladesh Labour (Amendment) Act 2026, fixes probation, hours, leave, festival bonuses, termination pay and union rights for most staff, and a foreign governing-law clause cannot contract out of it. Tax, work permits and foreign exchange add three more regimes, each run by a different authority.

This guide is written for HR directors, general counsel and founders building a team in Dhaka, Chattogram or an export processing zone. It covers contracts, probation, hours, leave, pay, tax, termination, work permits, employee data and unions, then compares the three ways to hire and ends with a compliance calendar.

Summary: A foreign company can hire in Bangladesh through its own subsidiary or branch, through an employer of record that employs staff on its behalf, or by engaging genuine independent contractors. Whichever route it chooses, the Bangladesh Labour Act 2006 as amended in 2026 governs most employees, the Income Tax Act 2023 requires monthly salary withholding, and foreign staff need a work permit from Invest Bangladesh, BEPZA or another competent authority. Statutory costs follow basic wage, so pay structure is the first design decision.

Key point: The 2026 amending Act widened the definition of worker to cover business development staff and anyone engaged through a contractor, raised festival holidays to 13 days and maternity benefit to 120 days, and introduced compensation on resignation from the first completed year of service. Templates drafted before April 2026 are likely to be wrong on each point.

At a glance

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Table of Contents

The labour market behind hiring in Bangladesh

The final Labour Force Survey 2024 of the Bangladesh Bureau of Statistics put the workable population at 71.71 million, of whom 69.09 million were employed and 2.62 million unemployed, an unemployment rate of 3.66 per cent. About 84 per cent of employed people worked informally. Agriculture accounted for 44.67 per cent of employment, services 37.96 per cent and industry 17.37 per cent, and 24.83 million of the workable population were aged 15 to 29.[12]

Those figures explain the shape of the market a foreign employer meets. Graduate talent in software, finance, engineering and customer operations is plentiful and competitively priced, but the formal sector is a minority of the economy, so formal terms are a recruiting advantage as well as a legal requirement. The garment industry and the export processing zones remain the largest organised employers, and their wage settlements set expectations well beyond those sectors.

Which law governs employment when hiring in Bangladesh

The core statute is the Bangladesh Labour Act 2006, read with the Bangladesh Labour Rules 2015. Its current text includes the changes made by Act No 43 of 2026, which converted the interim government's 2025 Ordinance into law with amendments.[1] Our briefing on the Labour Act amendment 2025 explains what moved and what Parliament changed. Industries inside export processing zones follow the Bangladesh EPZ Labour Act 2019, which gives itself overriding effect.[3]

Who is a worker

Section 2(65) now defines a worker as any person, including a trainee, employed directly or through a contractor, by whatever name called, for wages in skilled, unskilled, manual, technical, business development or clerical work, whether the terms are express or implied. The only carve-out is a person appointed in the managerial, administrative or supervisory capacity described in section 2(49)(b).[1] Sales staff and outsourced personnel are therefore inside the Act, and a "manager" title without real authority over hiring, appraisal or discipline will not take someone outside it.

Managers, expatriates and the contract

For staff who genuinely fall outside the definition, the contract and any approved service rules do most of the work. For everyone else the statutory minimums apply whatever the contract says, and a foreign governing-law clause cannot displace them.

Employment contracts and appointment letters

No worker may be engaged without an appointment letter and a photographic identity card under section 5 of the Act and rule 19 of the Labour Rules.[1] [2] In Bangladesh the appointment letter is the primary employment document. It should state the employer's legal name, the worker's classification and designation, the date of joining, probation, the wage grade with the split between basic wage and allowances, working hours and weekly holiday, leave and the notice that applies on termination.

The basic and allowance split deserves the most care, because the statutory costs that follow it are large. Overtime, festival bonuses, provident fund contributions, gratuity and termination compensation are all calculated on basic wage. A package built for a foreign head office, with a single gross figure, has to be broken down before it is issued. Our guide to employment contracts in Bangladesh sets out the clauses we use, including confidentiality, intellectual property assignment and the limits on post-employment restraints.

Service rules and handbooks

An employer may adopt its own service rules, but they cannot be less favourable to workers than the Act, and under section 3 they take effect only once the Department of Inspection for Factories and Establishments (DIFE) approves them. Since 2026 the Inspector General has 120 days to decide an application.[1] An unapproved global handbook is no defence in a Labour Court claim.

Probation and confirmation

Section 4 sets probation at six months for clerical work and three months for other work. The period for a skilled worker may be extended by a further three months where the employer cannot assess performance in time. If the employer issues no confirmation letter and the worker continues after probation ends, confirmation is deemed.[1] Diary the end date and decide in writing whether to confirm, extend or end the engagement before it passes.

Fixed-term, casual and contractor staff

The Act recognises apprentice, substitute, casual, temporary, probationary, permanent and seasonal workers.[1] Temporary engagement is meant for genuinely temporary work. Rolling a person from contract to contract on a continuing role is the classic misclassification. Section 3A prohibits any contractor agency that supplies workers from operating without government registration, and rule 16 bars the use of supplied staff against a permanent post.[1] [2] Our hiring and firing laws guide covers each class in detail.

Working hours, overtime, leave and holidays

Section 100 provides that an adult worker shall not ordinarily work more than eight hours a day, with up to ten hours permitted subject to the overtime rules. Section 102 sets the ordinary week at 48 hours; with overtime, total hours may not exceed 60 in a week or average more than 56 a week over a year.[1] Overtime is paid at twice the ordinary rate of basic wage plus any dearness or ad hoc allowance under section 108.[1]

Teams that work to European or American time zones need hours designed in advance: night work by women between 10 pm and 6 am requires their written consent, and a working day may not spread over more than ten hours without an exception.[1] [2] Our guide to working hours and overtime in Bangladesh covers shift design and deductions.

Leave entitlements

Every worker receives ten days' casual leave and fourteen days' sick leave each calendar year on full wages, and neither carries forward. After a year's continuous service, adult workers earn annual leave at one day for every eighteen days worked. Festival holidays are now 13 days a year with wages under section 118, up from eleven. A worker asked to work on a festival holiday must receive one substitute day off and two days' compensatory wages.[1] Employers fix the festival dates for their own staff.

Maternity benefit

Section 46 now gives a woman worker maternity benefit for 60 days before the expected date of delivery and 60 days after it, 120 days in all, provided she has at least six months' service and fewer than two surviving children.[1] Inside the zones the EPZ Labour Act still provides eight weeks before and eight weeks after delivery.[3] By comparison, the UK allows up to 52 weeks' maternity leave with statutory pay for up to 39 weeks; Singapore gives 16 weeks of government-paid maternity leave where the child is a Singapore citizen; and the UAE gives 60 days, 45 on full pay and 15 on half pay.[15] [16] [17]

Pay: minimum wages, festival bonus and benefits

Pay is where hiring in Bangladesh differs most from the markets a foreign employer knows. Bonuses, leave, overtime, pension contributions, insurance and termination accruals sit on top of salary. Our overview of employee benefits in Bangladesh prices each line.

Minimum wages by sector

Bangladesh has no single national minimum wage. Under Chapter XI of the Act the government directs the Minimum Wage Board to recommend rates for a particular industry and declares them by gazette, and the declared rates then bind every employer in that industry. Since the 2026 amendment, rates must be re-determined every three years rather than five, and paying below a declared rate carries up to one year's imprisonment, a fine of Tk 20,000 to Tk 50,000, or both.[1]

The most watched rate is the ready-made garment sector's. Its entry-level minimum is Tk 12,500 a month from 1 December 2023, built from a basic wage of Tk 6,700 plus allowances.[13] On a three-year cycle that settlement falls due for revision from December 2026, so manufacturers pricing 2027 contracts should budget for a new scale. Zone enterprises follow wage rates fixed under the EPZ regime.[3] Current rates are tracked in our guide to the minimum wage in Bangladesh.

Festival bonus

The festival bonus is not in the Act itself. Rule 111(5) of the Labour Rules 2015 requires two festival bonuses a year for workers who have completed one year of continuous service, each not exceeding the monthly basic wage and payable in addition to wages.[2] The text sets a ceiling, but the market treats one month's basic wage per bonus as the standard. Employers usually pay before Eid-ul-Fitr and Eid-ul-Adha, or before the principal festival of a worker's faith. Late bonuses before Eid are a common trigger of unrest.

Benefits that switch on with size

Section 99 makes group insurance compulsory where at least 100 permanent workers are employed. A company whose paid-up capital is at least Tk 1 crore, or whose fixed assets are worth at least Tk 2 crore, must pay 5 per cent of net profit to the workers' participation fund, the welfare fund and the Bangladesh Workers Welfare Foundation Fund in the ratio 80:10:10, within nine months of each year end.[1] Under replaced section 264, an employer with at least 100 permanent workers must establish a provident fund if two-thirds of them apply in writing, unless it enrols interested workers in the Progoti universal pension scheme with a 50 per cent employer share.[1]

Social security is not mandatory in Bangladesh, so there is no general social insurance payroll contribution.[14] Our guide to the provident fund and gratuity in Bangladesh explains fund rules, trustees and tax recognition.

Payroll tax and remitting salaries

An employer must deduct tax from salary under section 86 of the Income Tax Act 2023, at the average rate applicable to the employee's estimated total income for the year, adjusting over- or under-deductions through later payments.[4] For assessment year 2026-27 the general tax-free threshold is Tk 400,000, with bands of 10, 15, 20 and 25 per cent above it and 30 per cent on the balance, and a non-resident individual other than a non-resident Bangladeshi is taxed at 30 per cent.[5] Our guide to income tax rates in Bangladesh sets out the full table.

Residence and the foreign payroll

An individual is resident for an income year if present in Bangladesh for 183 days or more in that year, or for 90 days or more having spent 365 days in the country over the four preceding years. Employment income earned in Bangladesh is deemed to accrue there wherever it is paid.[4] Salary paid offshore for work done in Dhaka is therefore taxable in Bangladesh.

Payment by bank and perquisites

The Act disallows, as a business expense, a payment of employment income made other than by bank transfer.[4] The Finance Act 2026 raised the threshold above which perquisites paid to an employee are disallowed from Tk 20 lakh to Tk 25 lakh, and replaced expense disallowance for a business that fails to withhold with additional tax of 150 per cent of the default.[5] Deposit, certificate and return mechanics are covered in our guide to withholding tax in Bangladesh.

Remitting expatriate salaries

Bangladesh Bank's FEPD-1 Circular No. 40 of 30 September 2026 consolidates the rules on outward current account remittances. Authorised dealer banks may remit up to 80 per cent of a foreign national's net income during the year, and the remaining 20 per cent once the income tax assessment is complete. Savings on final departure may be transferred only where they derive from salary and benefits stated in an employment contract approved by the competent authority.[9] The contract and permit file must therefore match the payroll.

Termination and severance

Ending employment is where foreign employers most often go wrong by applying at-will habits. Each exit route under the Act carries its own notice, procedure and compensation. Our guide to severance pay in Bangladesh works through the numbers.

Termination without cause

Section 26 allows an employer to end a permanent worker's employment otherwise than for misconduct on 120 days' written notice for a monthly-rated worker, or 60 days for others, or wages in lieu, with compensation of 30 days' wages for each completed year of service or gratuity if higher.[1] The wage base is now the last monthly basic wage plus dearness and any ad hoc or interim wage.[1] A pay rise shortly before an exit therefore feeds straight into the bill.

Retrenchment, misconduct and resignation

Retrenchment under section 20 requires one month's written notice stating the reason, or wages in lieu, a copy to the Chief Inspector and to any collective bargaining agent, and compensation of 30 days' wages for every year of service or gratuity if higher.[1] Dismissal for misconduct requires a written charge, an opportunity to respond and an inquiry, and since 2026 a worker dismissed with at least a year's service still receives 15 days' wages per completed year unless the misconduct was theft, embezzlement, fraud or dishonesty, or disorderly conduct, rioting, arson or vandalism.[1]

A permanent worker may resign on 60 days' notice. Replaced section 27(4) now pays a resigning worker 7 days' wages per completed year for service of up to three years, 15 days for more than three but less than ten years, and 30 days or gratuity, whichever is higher, from ten years.[1] Every amount due on separation must be paid within 30 working days of the date employment ends.[1] India's labour codes, in force since 21 November 2025, likewise give fixed-term workers gratuity after one year, so a South Asia budget should accrue for exits from the first anniversary in both countries.[18]

Work permits for foreign staff through Invest Bangladesh and BEPZA

A foreign national may work in Bangladesh only on an employment-type visa backed by a work permit. The Visa Policy 2026 requires the holder of an E1, E2, E3, J, P, PI or N1 visa to apply for a work permit to the competent authority within 15 working days of first entry, and the employment visa is then extended for the term of the permit plus 15 days.[8] Business and dependant visas carry the condition that employment in Bangladesh is prohibited.[8]

Invest Bangladesh replaces BIDA and BEZA

The Invest Bangladesh Act 2026, Act No. 104 of 2026, dissolved the Bangladesh Investment Development Authority, the Bangladesh Economic Zones Authority and the Public-Private Partnership Authority, and lists among the new authority's functions recommending visas and issuing work permits for foreign staff of industries and of branch, liaison, representative and project offices.[6] Invest Bangladesh has operated since 23 August 2026.[7] Earlier BIDA and BEZA permits continue under the Act's saving clause, but every new application, extension and cancellation now runs through Invest Bangladesh.[6]

BEPZA and other competent authorities

The Act did not repeal the export processing zones statute, so the Bangladesh Export Processing Zones Authority (BEPZA) remains a separate body and issues permits for zone enterprises. Companies in hi-tech parks apply to the Bangladesh Hi-Tech Park Authority, and registered NGOs to the NGO Affairs Bureau.[6] [8] A permit is tied to the employing entity and does not authorise work for an affiliate.

The Visa Policy also puts the risk on the sponsor. If a foreign national who arrives for employment conceals information or breaches a visa condition, the appointing organisation is fined Tk 1,00,000 per person for a first violation and Tk 2,00,000 for each later one.[8] Our employment law for expatriates guide covers permits, tax and exits, and our global mobility and business immigration practice runs the process.

Employee data protection

The Personal Data Protection Act 2026, Act No. 63 of 2026, dated 10 April 2026, replaced the 2025 Ordinance and is deemed to have taken effect on 6 November 2025, except section 23 and sections 31 to 35, which start on a later notified date.[11] Those deferred sections cover Chief Data Officers, complaints, fines and compensation. The substantive duties already apply to HR data, including candidate files, payroll, attendance and health records.

Consent is the primary lawful basis under section 5 and must be free, specific, clear and withdrawable, with disclosure of purpose, retention, transfer and the withdrawal process; the data fiduciary bears the burden of proving it. Section 29 sets conditions for transferring personal data out of Bangladesh.[11] An HR system hosted abroad therefore needs a local privacy notice, a documented transfer basis and processor terms. Our Bangladesh data protection law guide explains the Act section by section.

Unions inside and outside the EPZs

Outside the zones, the 2026 reforms made union registration easier. At least 20 workers may apply, membership must meet a tiered minimum starting at 20 members, and no more than three unions may be registered in an establishment or group. Blacklisting a worker or union member is now an unfair labour practice, punishable by a fine of Tk 50,000 to Tk 1 lakh.[1] Our guide to trade union law in Bangladesh covers bargaining agents and disputes.

Inside export processing zones, workers organise through workers' welfare associations under the EPZ Labour Act 2019 rather than through trade unions, under procedures administered by BEPZA.[3] A group with a plant inside a zone and an office outside runs two labour regimes, and one group policy will be wrong for one of them.

Ways of hiring in Bangladesh: entity, employer of record or contractor

The choice of route decides speed, cost, tax exposure and who carries the employer's statutory duties. Our international remote work and employer of record governance page sets out how we structure each.

Your own entity

A private limited company or a branch or liaison office gives full control and is the natural home for a large or long-term team, a regulated activity or a manufacturing operation. It also brings company, investment, tax and VAT registration, a bank account, DIFE registers and every benefit threshold, and takes months rather than weeks. Our Invest Bangladesh Act guide explains the registration framework after the 2026 merger.

Employer of record

Under an employer of record arrangement, a Bangladeshi entity employs the staff on the client's behalf, issues the appointment letters, runs payroll and statutory filings, and handles work permits and terminations, while the client directs the day-to-day work. It is the fastest compliant route for a first hire or small team. The employer of record carries the Labour Act duties as the legal employer, so the commercial agreement must allocate cost, indemnities, intellectual property and data responsibilities clearly.

Two risks need managing. The first is permanent establishment: if local staff habitually conclude contracts for the foreign client, the client may be treated as having a taxable presence in Bangladesh regardless of who employs them. The second is the section 3A rule on registered contractor agencies supplying workers to an establishment, which matters where the client already has its own Bangladeshi operation.[1]

Independent contractors

Engaging individuals as contractors is quick and suits genuine project work. Bangladesh Bank's FEPD-1 Circular No. 22 of 22 July 2026 lets a freelancer receive up to USD 20,000 per inward remittance without Form-C, permits online payment gateway receipts of up to USD 10,000 per transaction, and allows banks to rely on electronic evidence such as contracts, invoices and platform statements.[10] The Finance Act 2026 exempted income from freelancing and content creation and cut the rate deducted on inward service remittances from 7.5 to 5 per cent.[5]

The risk is misclassification. Because the 2026 definition of worker covers anyone employed for wages "by whatever name called", whether the terms are express or implied, a full-time contractor who works only for the client, under its direction and on its systems, can be held to be a worker with the Act's full entitlements.[1] Convert such arrangements through an entity or employer of record before they harden into employment.

Regulators and institutions

A foreign employer hiring in Bangladesh will deal with several public bodies, each with its own portal and deadlines.

Steps to start hiring in Bangladesh

The order below is the one we use for clients building a first Bangladesh team, whether through an entity or an employer of record.

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Compliance calendar summary

Most failures are missed dates rather than misunderstood law. The calendar below summarises the core cycle for an employer outside the zones; our labour law compliance checklist lists every register and return.

• Every wage period: pay wages within seven working days after the period ends, with a wage slip, by bank transfer.[1] [4]
• Monthly: deduct tax under section 86 and deposit it within the prescribed window, issuing certificates to employees.[4]
• Each return period: file the withholding tax return under section 177 covering salary and other deductions.[4]
• Before each major festival: pay the festival bonus to workers with a year's service and publish festival holiday dates.[2]
• 15 July and 15 February: file the half-yearly and annual returns required by the Labour Rules.[2]
• Within nine months of year end: pay the participation and welfare fund contributions where the thresholds apply.[1]
• Each permit anniversary: renew work permits and visas for foreign staff, with current tax certificates.[8]
• Every three years: expect a revised minimum wage declaration for gazetted industries.[1]

How TRW helps with hiring in Bangladesh

TRW is headquartered in Dhaka, with offices in London, Dubai, Singapore, Mumbai and Bengaluru. Our employer of record service employs staff in Bangladesh on a client's behalf, runs payroll and statutory filings, and handles contracts, work permits and terminations under Bangladesh law. We also run payroll for clients with their own entity, engage and manage contractors, review and fix worker misclassification, sponsor visas and manage relocation, and provide ongoing employment compliance, from service rules approval to Labour Court defence.

For Bangladeshi companies hiring abroad, the same team works through our network offices. Speak to our employment and labour practice about the route that fits your plans.

Frequently asked questions

Can a foreign company hire in Bangladesh without a local entity?

Yes. It can use an employer of record that employs staff on its behalf, or engage genuine independent contractors. Both avoid setting up a subsidiary, but the Labour Act still protects anyone who is in substance a worker.[1]

Is an appointment letter mandatory in Bangladesh?

Yes. Section 5 of the Labour Act and rule 19 of the Labour Rules require an appointment letter and a photographic identity card for every worker.[1] [2]

How long is probation in Bangladesh?

Six months for clerical work and three months for other work, with a possible three-month extension for skilled workers. Confirmation is deemed if no letter is issued and the worker continues.[1]

How many festival holidays do workers get in 2026?

Thirteen days a year with wages under section 118 as amended in 2026. Working on one earns a substitute day and two days' compensatory wages.[1]

Is the festival bonus compulsory?

Yes, for workers with one year's continuous service. Rule 111(5) requires two festival bonuses a year, each not more than the monthly basic wage.[2]

How long is maternity leave in Bangladesh?

120 days of paid maternity benefit, 60 before and 60 after delivery, for a worker with six months' service and fewer than two surviving children. EPZ units still apply eight weeks on each side.[1] [3]

Who issues work permits now that BIDA no longer exists?

Invest Bangladesh issues most permits under the Invest Bangladesh Act 2026. BEPZA issues them for export processing zone enterprises, and other competent authorities cover hi-tech parks and NGOs.[6] [8]

How is salary taxed for foreign employees?

A resident pays slab rates from 10 to 30 per cent above the Tk 400,000 threshold; a non-resident foreigner pays 30 per cent. The employer withholds monthly under section 86.[4] [5]

What severance is due when terminating without cause?

Under section 26, 120 days' notice for a monthly-rated permanent worker, or 60 days for others, or pay in lieu, plus 30 days' wages per completed year or gratuity if higher.[1]

Can foreign employers pay Bangladeshi contractors from abroad?

Yes, through the banking channel or approved payment gateways. Bangladesh Bank allows freelancers to receive up to USD 20,000 per remittance without Form-C, but a contractor who works like an employee may be a worker under the Labour Act.[10] [1]