There is no single required ratio for every employer, but the split matters because many statutory entitlements are calculated on basic wage or on wages as the Labour Act defines them. For sectors covered by a minimum wage notification, the notification itself usually sets the structure of basic wage and allowances for each grade. Outside those sectors, employers have more flexibility, but a very low basic can expose them to claims that dues were underpaid. We model the effect of each option on overtime, bonuses, gratuity and termination costs before you decide, and document the reasoning.

For workers covered by the Labour Act, the Labour Rules provide for festival bonuses once a worker has completed a qualifying period of service, and the amount is linked to basic wage. For managerial and administrative staff outside the definition of worker, festival bonuses are usually contractual or customary, but long and consistent practice can make them difficult to withdraw without a dispute. We review your contracts, policies and payment history and advise whether a bonus is a legal obligation, a contractual promise or a discretionary payment that can be changed with proper notice to staff.

The Labour Act contains provisions on provident funds for workers in certain establishments, and on gratuity or service benefits on exit, so many employers need one or both. The detailed position depends on the type of establishment, the number of workers, sector rules and any EPZ framework. Many employers also choose a recognised provident fund for tax efficiency and staff retention even where it is not strictly required. We advise on whether your organisation must establish a scheme, how to design and fund it, how to obtain tax recognition and how trustees should run it properly year after year.

The Labour Act protects workers, and its definition excludes many employees whose main function is managerial, administrative or supervisory. For those staff, compensation and benefits depend mainly on the employment contract, company policies and general contract law, although some statutory protections can still apply. Job titles alone are not decisive, because the Labour Court looks at the duties actually performed. We review role descriptions and contracts to identify which staff are likely to fall outside the definition of worker, and draft compensation terms that work for each group without inviting reclassification disputes or claims for unpaid statutory dues.

Unilateral reductions in wages or benefits are legally and practically risky. Contractual pay cannot normally be reduced without the employee's agreement, wages cannot fall below the applicable minimum wage, and deductions from wages are restricted by the Labour Act. In unionised workplaces, collective agreements and consultation duties also apply. Options may include voluntary agreements, temporary changes to variable pay, layoff with the statutory payments where the legal conditions are met, or a wider restructuring. We help employers choose a lawful approach, prepare clear communications for staff and document consent properly so that changes are not reversed later in litigation.

Share plans offered by an overseas parent are common in multinational groups, but they raise specific Bangladesh issues. Foreign exchange controls administered by Bangladesh Bank affect whether employees can pay for shares abroad and how sale proceeds and dividends are received here. Tax may arise on grant, vesting, exercise or sale depending on the plan, and the local employer may have reporting and withholding duties. We review plan rules and award documents, advise on cash-settled or phantom alternatives where helpful, and coordinate with the parent's legal and tax advisers so the compensation plan works for Bangladeshi employees without regulatory breaches.

Employers must deduct income tax at source from salaries under the Income Tax Act 2023, deposit it on time and file the required returns and statements. Perquisites and benefits may be taxable to the employee, while certain approved funds receive favourable treatment. Expatriate pay, including allowances and amounts paid offshore by a group company, is generally taxable in Bangladesh where the work is performed here. Errors in withholding can lead to demands, interest and penalties against the employer. We work with your tax advisers to align compensation structures, payroll practice and benefits policies with the current rules.

Employers inside export processing zones operate under the Bangladesh EPZ Labour Act 2019, its rules and instructions issued by BEPZA, rather than the general Labour Act for most workforce matters. Minimum wages, bonuses, leave, benefits and worker representation follow that separate framework, and BEPZA monitors compliance closely through its own officials. Employers in economic zones and hi-tech parks may have different arrangements again. We confirm which regime applies to each site and prepare compensation policies and contracts that reflect the correct zone framework rather than a template copied from a factory elsewhere in the country.