Provident Fund, Gratuity and Pension in Bangladesh: The 2026 Guide for Employers and Workers

Provident fund gratuity Bangladesh law in 2026: the benefit framework

The provident fund gratuity Bangladesh rules that govern private-sector retirement benefits changed more in 2026 than at any point since the Bangladesh Labour Act 2006 was passed. Act No 43 of 2026, dated 10 April 2026, rewrote section 264 so that an establishment with at least 100 permanent workers must set up a provident fund when two-thirds of them ask for one, unless it enrols them in the state Progoti pension scheme instead. It also changed how the workers' participation fund is distributed.[2] [3]

This guide is about the benefits themselves: how a provident fund is formed, recognised and paid out, how gratuity is calculated, how a provident fund differs from a pension fund, where the Universal Pension Scheme stands in 2026, how the participation fund works, how each benefit is taxed and how unpaid dues are recovered. The exit routes that trigger these payments (termination, dismissal, retrenchment, resignation) are covered in companion TRW guides, which we link rather than repeat.

Summary: Private-sector workers in Bangladesh have no general social insurance. Their long-term benefits come from four sources: a provident fund under section 264 of the Labour Act, a gratuity scheme where the employer has one, the voluntary Universal Pension Scheme, and, in larger companies, the workers' participation fund. Each strand of provident fund gratuity Bangladesh law has its own legal basis and tax treatment. A provident fund or gratuity fund that is not recognised or approved by the tax authorities loses most of its tax advantages.

Key point: Gratuity is defined in the Labour Act, but the exit provisions require it only "if payable", meaning where a contract, service rules or a scheme provides for it. Where it is payable, the employer must compare it with statutory compensation on every exit and pay whichever is higher. Where no scheme exists, statutory compensation applies instead.

At a glance

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Table of Contents

Four benefit streams and where each comes from

Retirement and end-of-service money for a private-sector worker in Bangladesh does not come from one statute. The Labour Act 2006 governs provident funds in Chapter XVII, defines gratuity in section 2(10) and creates the workers' participation and welfare funds in Chapter XV.[1] The Universal Pension Management Act 2023 created the National Pension Authority and the voluntary state pension schemes.[10] The Income Tax Act 2023 decides whether contributions and payouts are taxed, and its Second Schedule sets the conditions for recognised provident funds, approved gratuity funds and approved pension or superannuation funds.[6]

These regimes overlap but do not merge. A provident fund can comply fully with the Labour Act and still be taxable because it has never been recognised by the Commissioner of Taxes. A gratuity scheme can be written into an appointment letter without ever being funded. The table below sets out the main differences; on a phone, scroll it sideways.

For the wider statutory framework, including who counts as a "worker" after the 2026 amendments, see our guide to labour law in Bangladesh. For the rights a worker can enforce day to day, see workers' rights in Bangladesh.

Provident fund rules under section 264 of the Labour Act

Section 264 now carries the heading "provident fund or participation in the universal pension scheme for workers of private-sector establishments", a title added in 2026.[3] A "private-sector establishment" is one not directly owned or managed by the Government or a local authority, and not covered by provident fund rules those bodies have made.[3]

The voluntary fund

Any private-sector establishment may set up a provident fund for its workers. The fund is constituted under rules the establishment makes under section 3, unless the Government has made rules for the purpose, in which case those rules bind.[3] The Labour Rules 2015 fill the gap: an establishment may adopt its own internal provident fund rules provided they do not conflict with Chapter XVII and the Rules, and a fund with no rules of its own runs under the Labour Rules.[5]

The 2026 compulsory trigger

Before 2026, section 264(10) required a fund whenever at least three-fourths of the workers demanded one in writing, whatever the size of the establishment.[4] The substituted subsection now applies only to owners employing at least 100 permanent workers, and lowers the demand threshold to two-thirds of those workers.[3] Once a valid demand is received, the owner must make the necessary rules within six months and put the fund into operation before that period ends.[3]

The same subsection gives the owner a way out. It is exempt from the obligation if it ensures, on an institutional basis, that workers who express written interest can join the Universal Pension Scheme's Progoti scheme run by the National Pension Authority. Under that route the owner pays 50 per cent of the contribution and the worker pays 50 per cent, and the owner owes nothing for a worker who declares in writing that he or she is not interested.[3]

Contributions

Where a fund exists, every permanent worker who has completed one year of service contributes each month, unless otherwise agreed, between 7 and 8 per cent of monthly basic wage, and the owner contributes at the same rate.[3] Employer contributions to a provident or pension fund are not "wages" under section 2(45), so they do not feed into calculations based on wages.[1] Under the Labour Rules, all persons who have completed a year of service are members except the owner, partners and members of the management board, and approved leave, lawful strikes and lay-off do not break continuity.[5]

Trustees, investment and audit

The fund is run by a board of trustees with equal numbers of owner and worker representatives and a Government nominee as chairman. Worker trustees are nominated by the collective bargaining agent, failing which by the participation committee, failing which they are elected under the supervision of the Director General. Trustees serve two-year terms.[3] The owner bears administrative costs, the fund is audited annually at the establishment's expense, and the accounts and audit report must be sent to the labour authorities within one month of the report.[3]

The 2026 Act replaced the old investment list, which named ICB mutual fund and unit certificates and government securities, with a rule that at least half the accumulated money may be invested in a government-owned sector open to investment.[3] [4] It also omitted subsection (16), which had allowed the Government to exempt an establishment whose fund was working satisfactorily.[3] An establishment that constitutes a fund under section 264 is treated as a government establishment for the purposes of the Provident Funds Act 1925.[3]

Vesting and payout

Rule 263 of the Labour Rules sets the default vesting schedule. A member whose employment ends after two years is entitled to everything in the account, including the employer's share. A member with less than two years' employment, or less than one year's membership, receives only his or her own contributions, except on death or closure of the establishment, when both portions are paid regardless of service.[5] An establishment's own rules may be more generous, but should not be less so.

Statutory protection of the balance

Section 29 provides that a member cannot be deprived of benefits due under the fund rules, including the employer's contribution, because of retrenchment, discharge, dismissal, retirement, removal, termination or death.[1] Section 270 protects the balance from assignment, charge and attachment under any decree, and vests it in the nominee on death free of the worker's debts. Section 271 gives unpaid subscriptions priority in an employer's insolvency or winding up, and section 272 bars an employer from cutting wages or other benefits because of its contribution liability.[4]

Recognising a provident fund under the Income Tax Act 2023

A Labour Act fund and a tax-recognised fund are different things. Recognition is governed by Part 3 of the Second Schedule to the Income Tax Act 2023, and it is what makes contributions and payouts tax-efficient.[6] Part 3 does not apply to a fund governed by the Provident Funds Act 1925, a point that should be considered alongside the deeming rule in section 264(17), but in practice most private employers seek recognition from the Commissioner.[6]

Conditions for a recognised provident fund

The main conditions are that employees work in Bangladesh, or for an employer whose principal place of business is in Bangladesh; employee contributions are a definite proportion of salary deducted at each payment; employer contributions do not exceed the employee's in the year; the fund is vested in two or more trustees under an irrevocable trust; and the accumulated balance is payable on the day the employee leaves.[6] The employer may recover its own contributions only where the employee is dismissed for misconduct or leaves voluntarily, other than for ill health or other unavoidable cause, before the period set in the fund regulations.[6]

The recognition process

The employer applies to the Commissioner of Taxes under whom it is assessed. The Commissioner must decide within 60 days, failing which the fund is deemed approved. The approval order states its conditions, effective date and duration, and the effective date cannot be later than the last day of the financial year in which the decision issues.[6] Recognition can be withdrawn after a hearing, and an employer may appeal a refusal or withdrawal to the National Board of Revenue within 60 days.[6] Where the fund regulations conflict with Part 3, the regulations are of no effect to that extent.[6]

Converting an existing fund

Where an existing fund is recognised, the trustees must prepare accounts up to the day before recognition. Half of any non-contributory portion transferred into the recognised fund is treated as the employee's income in the year of recognition, and the employee may withdraw money to pay that tax.[6] Balances not transferred stay outside the recognised fund and are taxed under the general rules. Employers converting a long-running unrecognised fund should model this charge before applying.

Gratuity calculation under the Labour Act

Section 2(10) defines gratuity as the amount payable to a worker on termination of service of at least 30 days' wages at the last wage rate for each completed year of service, or part exceeding six months, and 45 days' wages for service of more than ten years.[1] The 2013 amendment substituted the clause and the 2018 amendment deleted words that had made gratuity payable in addition to termination compensation and notice pay.[1] The 2026 Act did not change the definition.[2]

Is gratuity compulsory?

This is the most common question on provident fund gratuity Bangladesh matters, and the statute answers it indirectly. Every exit provision that mentions gratuity uses the words "gratuity, if payable": termination by the employer under section 26(4), discharge under section 22, and resignation after ten years under section 27(4).[1] [4] Section 132 refers to "gratuity payable under any rule", and the Labour Rules list gratuity among the benefits an appointment letter states "if any".[4] [5]

TRW's reading is that section 2(10) fixes the minimum content of a gratuity where one exists, while the obligation to have a gratuity scheme comes from the contract, service rules or a settlement. Once a scheme exists, the employer cannot pay less than the section 2(10) floor and must compare gratuity with statutory compensation on every exit. Employers should not assume that silence in the appointment letter ends the matter: a long-standing practice of paying gratuity, or a reference in service rules, can make it payable.

How gratuity interacts with exit compensation

The comparison is built into each exit route. A permanent worker terminated under section 26 receives 30 days' wages for every completed year or gratuity, if payable, whichever is higher, in addition to notice.[4] A retiring worker at 60 is paid under section 26(4) or the establishment's service rules, and voluntary retirement after 25 years' service counts as retirement.[1] Since the 2026 Act, a resigning permanent worker receives 7 days' wages per year for up to three years, 15 days for more than three and under ten years, and 30 days or gratuity, whichever is greater, for ten years or more.[1] The mechanics of each exit are covered in our guide to terminating employees in Bangladesh.

Which wage counts

Section 2(10) uses the "last wage rate". Section 14(3), replaced in 2026, defines the wage for compensation under sections 19, 20 and 23 and for calculations under sections 22, 23, 26 and 27 as the last monthly basic wage plus dearness allowance and any ad hoc or interim wage, immediately before the exit.[1] Section 14(1) now counts a year of continuous service as at least 240 days actually worked in the previous 12 months, with lay-off, sick leave, lawful strike days and up to 120 days of maternity leave included.[1] Scheme documents should state the wage base expressly, so that a dispute about allowances does not arise at the exit.

A worked example

Take a permanent worker with a last basic wage of Tk 30,000 a month who has served 12 years and 8 months under a scheme that mirrors section 2(10). The eight months exceed six months and count as a year, giving 13 years. Because service exceeds ten years, the 45-day rate applies, giving 45 days' wages for each of 13 years. On a 30-day month that is Tk 1,000 a day, so the gratuity is Tk 5,85,000.

Two points need care. First, the definition can be read as applying the 45-day rate to every year once service exceeds ten years, or only to the years after the tenth; the scheme should say which. Second, if the same worker is terminated under section 26, statutory compensation is 30 days for each of 12 completed years, Tk 3,60,000, so the gratuity, being higher, is paid instead, alongside notice pay and the provident fund balance.[4]

Approved gratuity funds

An unfunded gratuity is simply a future liability on the balance sheet. A funded scheme approved under Part 2 of the Second Schedule must be held under an irrevocable trust for a trade carried on in Bangladesh, with at least 90 per cent of employees in Bangladesh; its sole purpose must be gratuity on retirement, incapacity, termination after a minimum service period or death; the employer must contribute; and benefits must be payable only in Bangladesh.[6] A trustee applies to the Commissioner, who must decide within 180 days or the fund is deemed approved.[6] Employer contributions to an approved gratuity fund are deductible.[6]

Provident fund gratuity Bangladesh comparison: provident fund versus pension fund

A provident fund is a defined-contribution savings fund. Worker and employer each contribute a percentage of basic wage, the money is held by trustees and invested, and the member receives a lump sum on leaving, subject to the vesting rules.[3] [5] The balance is portable in value but not in form: it is paid out and the relationship ends.

A pension fund pays a periodic income after retirement. In the private sector that means an approved superannuation or pension fund under Part 1 of the Second Schedule, which few employers operate, or the state Universal Pension Scheme.[6] [10] Pension from the Government or an approved pension fund is excluded from total income, and since 2023 so is pension under the Universal Pension Scheme.[6]

Gratuity is neither. It is a service-linked lump sum, usually funded entirely by the employer, and it is compared against statutory compensation rather than added to it.[1] In practice the three work together: the provident fund builds capital, gratuity rewards long service, and a pension turns savings into lifetime income. Section 264(10) now lets an employer substitute Progoti for a provident fund, which converts a lump-sum benefit into a pension benefit for the workers who choose it.[3]

• Who pays: provident fund, worker and employer equally; gratuity, the employer; Progoti, 50:50 where used under section 264(10).[3]
• What is paid: provident fund and gratuity, a lump sum on exit; Progoti, a monthly pension from 60, with a partial lump sum.[10] [13]
• When it vests: provident fund, under rule 263 or the fund rules; gratuity, under the scheme and section 2(10); Progoti, after at least ten years' contributions.[5] [10]
• Who holds the money: provident fund and approved gratuity fund, a board of trustees; Progoti, the National Pension Authority.[3] [10]

The Universal Pension Scheme and Progoti in 2026

The Universal Pension Management Act 2023, Act No 4 of 2023, set up the National Pension Authority and the legal framework for a contributory state pension.[10] The scheme was launched on 17 August 2023.[12] Bangladeshi citizens aged 18 to 50 may join with a national identity card, and older applicants may join under a special provision. A pension requires at least ten years of continuous contributions and starts at 60, or for late joiners after ten years of contributions.[10]

If a pensioner dies before 75, the nominee receives the monthly pension for the remainder of the period up to the pensioner's 75th birthday. If a contributor dies before completing ten years, deposits are returned to the nominee with profit. A contributor may withdraw up to 50 per cent of deposits once as a loan, repayable with fees.[10] Participation is voluntary until the Government makes it compulsory by gazette notification, and employees of government, semi-government and autonomous bodies are excluded until a notification provides otherwise.[10]

The four schemes

The scheme runs in four categories: Probash for expatriate Bangladeshis, Progoti for employees of private and non-government institutions, Surokkha for the self-employed, and Samata for very poor self-employed citizens.[11] Samata, for those earning under Tk 60,000 a year, has a Tk 500 monthly member contribution matched by the Government and accounts for nearly three-quarters of enrolment.[12]

Changes since 2025

In May 2025 the Authority's governing board decided that contributors reaching pensionable age may withdraw up to 30 per cent of their deposits as a one-time benefit, cut the minimum monthly contribution to Probash and Progoti from Tk 2,000 to Tk 1,000, raised the Progoti maximum from Tk 10,000 to Tk 15,000 and brought outsourced service workers into Progoti.[11] A June 2026 report described Progoti as offering contributions of Tk 1,000 to Tk 15,000 a month, split 50:50 between employer and worker, with tax benefits on contributions, tax-free pension income and the 30 per cent lump sum after 60.[13]

Where enrolment stands

Enrolment has stalled. More than three lakh people joined in the first ten months, but only 38,034 in the following twenty. On 28 February 2026, 3,76,965 people were enrolled across the four schemes, with Tk 242 crore deposited, and new registrations were averaging about 150 a month.[12] By 30 May 2026 the figure was 377,930, with nearly Tk 260 crore in deposits.[13] Economists cite low trust, irregular incomes and procedural friction; political change after August 2024 left many people unsure of the scheme's future.[12]

The 2026 government push

The elected government has made private-sector pensions a policy priority. At a Finance Ministry meeting in June 2026, Bangladesh Bank and the scheduled banks agreed to bring their employees into Progoti, and the meeting supported a target of at least one pension participant in each of the country's 40 million families by 2030. Proposals for an equity-based option and lifetime benefits for nominees were under consideration.[13] In August 2026 Professor Rashed Al Mahmud Titumir, Adviser to the Prime Minister on Finance and Planning, urged NGOs to enrol their staff and linked the push to the 2026 manifesto commitment to pension funds for private-sector employees.[14]

What Progoti means for employers

For an employer with 100 or more permanent workers, Progoti is now a statutory alternative to a section 264 provident fund rather than an optional extra.[3] It removes trustee administration, investment decisions and audit, but the benefit is a pension rather than a lump sum, and the worker must opt in in writing. The cost is predictable: half of a chosen flat monthly contribution per enrolled worker, instead of 7 to 8 per cent of basic wage. Employers should document each worker's written choice, because a worker who declines removes the employer's 50 per cent obligation for that worker.[3]

The workers' participation fund under Chapter XV

Chapter XV applies to a company or establishment whose paid-up capital is at least Tk 1 crore, or whose fixed assets are worth at least Tk 2 crore, on the last day of an accounting year, and to others the Government notifies.[1] For 100 per cent export-oriented or foreign-exchange-earning sectors, the Government may instead create a central sector fund financed by buyers and owners.[1]

The 5 per cent payment

A covered company must establish a Workers' Participation Fund and a Workers' Welfare Fund within one month of the chapter applying. Within nine months of the end of each year, the owner must pay 5 per cent of the previous year's net profit, divided 80:10:10 between the participation fund, the welfare fund and the Bangladesh Workers' Welfare Foundation Fund.[1] The participation fund is administered by a trustee board of two worker and two management members, at least one of the latter from the accounts section, with a chairman rotating annually.[1]

What changed in 2026

Two changes matter. First, section 242(1) previously required two-thirds of the participation fund to be distributed equally in cash and one-third invested, with the profit also distributed.[4] The substituted subsection now requires the total money deposited each year to be distributed equally among all beneficiaries.[1] [2] Second, worker trustees may now be nominated by the participation committee as well as the collective bargaining agent.[1]

Who benefits

A beneficiary is any person, including a probationer, employed for at least nine months, whatever the rank, except the employer, partners and management board members. A beneficiary must complete six months' service in an accounting year to share in that year's fund.[4] A beneficiary who resigns keeps accrued benefits, one whose service ends otherwise than by dismissal is treated as retiring, and a dismissed beneficiary forfeits his or her share.[1] That forfeiture makes the label on an exit, dismissal or termination, financially significant.

Tax treatment of provident fund gratuity Bangladesh benefits

The Income Tax Act 2023 treats each benefit differently, and recognition or approval usually decides the outcome.[6] The main rules are these.

• Employer contributions to approved funds are not perquisites: contributions to recognised provident funds and approved pension, gratuity and superannuation funds are excluded from the definition of perquisite. Contributions to an unrecognised fund fall outside that exclusion.[6]
• Employer deductions: contributions to a recognised provident fund are deductible subject to the Act's limits, and contributions to an approved gratuity fund are deductible.[6]
• Recognised provident fund payouts: the accumulated balance is exempt where the employee has at least five years' continuous service, or less where service ended through ill health, contraction of the business or another cause beyond the employee's control; otherwise the tax that would have been due is recovered.[6]
• Gratuity: gratuity is employment income, but up to Tk 2.5 crore received from the Government Gratuity Fund or an approved gratuity fund is exempt.[6] Gratuity paid directly by an employer without an approved fund does not have that exemption.
• Termination compensation: compensation on termination, by whatever name, is taxable as profit in lieu of salary.[6]
• Pensions: pension from the Government, an approved pension fund or the Universal Pension Scheme is excluded from total income.[6]
• Investment rebate: the employee's and employer's contributions to a recognised provident fund, and contributions to the Universal Pension Scheme, count as eligible investments.[6] After the Finance Act 2026 the rebate is the lowest of 3 per cent of taxable income, 10 per cent of eligible investment and Tk 7,50,000, and recognition of the fund is required for the rebate on provident fund contributions.[7] [8]
• Participation fund: a company may deduct payments to the three Chapter XV funds up to 5 per cent of disclosed net profit, and tax at 10 per cent is withheld from amounts paid to fund beneficiaries.[6] [9]

Our guide to income tax rates in Bangladesh explains the slabs these benefits fall into when they are taxable.

Recovering unpaid provident fund gratuity Bangladesh dues

Unpaid end-of-service money is the commonest employment claim in Bangladesh. The recovery route depends on who owes the money and whether the claimant is a "worker" under the Labour Act.

The 30-working-day deadline

Section 30 requires an employer to pay all dues within 30 working days after employment ends, whatever the reason.[1] Gratuity and the employer's share of provident fund money are dues for this purpose. A written demand that cites section 30 and itemises each amount usually comes first, because it fixes the date the claim fell due.

A section 132 claim in the Labour Court

Section 132 lets a worker apply to the Labour Court where wages are unlawfully deducted or unpaid, or where gratuity or provident fund dues are delayed. An heir or legal representative may apply if the worker has died and, since 2026, so may an inspector.[1] [2] The claim must be filed within twelve months of the date the money fell due, though the court may admit a late claim for sufficient cause. The court may order payment and, in addition, compensation of 25 per cent of the wages, except where delay was due to a genuine dispute, an emergency or the worker's own failure to collect.[1] Our guide to the labour court in Bangladesh covers filing, timelines and execution.

Disputes inside the provident fund

Disputes over membership or its start date go first to the board of trustees. A worker aggrieved by the board's decision may appeal to the Inspector General of the Department of Inspection for Factories and Establishments within 30 days, and the appeal should be decided within 30 days.[5] Undisputed portions of a payout must be paid immediately, with only the disputed part held back.[5]

Criminal liability for withheld contributions

Section 298 punishes misappropriation of a workers' provident fund with up to three years' imprisonment and a fine up to the amount misappropriated, which the court pays back into the fund. An employer that fails without reasonable cause to deposit its own contribution, or money deducted from wages, for more than three months is deemed to have misappropriated it.[1] That deeming rule turns a late deposit into a criminal exposure for those running the business.

Officers and managers

Staff who are not "workers", typically managers and officers, cannot use section 132. Their gratuity and provident fund claims rest on the contract, service rules and fund rules, and are pursued through a civil suit or an arbitration clause, with the trust deed of any recognised fund as a key document. Our guide to wrongful dismissal in Bangladesh explains how to tell the two categories apart and which limitation periods apply.

The sequence we follow to recover unpaid benefits, or to defend a claim, is below.

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Employer compliance: a defensible provident fund gratuity Bangladesh structure

Each benefit has its own institution and its own paperwork. The bodies an employer deals with are set out below.

A compliance sequence

Start with headcount. An establishment approaching 100 permanent workers should decide in advance whether it will answer a two-thirds demand with a provident fund or with Progoti, because the six-month clock runs from receipt of the demand.[3] Then align the documents: fund rules that match section 264 and the Labour Rules, a trust deed and regulations that satisfy Part 3 of the Second Schedule, and an application for recognition early in the financial year, since recognition cannot take effect later than the year in which it is granted.[6]

For gratuity, decide whether the scheme exists, write it down, define the wage base and the treatment of service over ten years, and fund it through an approved gratuity fund if tax-free payouts matter to senior staff.[6] For the participation fund, test the Chapter XV thresholds on the last day of each accounting year and diary the nine-month payment deadline.[1] Our guide to hiring and firing laws in Bangladesh shows how these payments fit into a final settlement.

Provident fund gratuity Bangladesh mistakes to avoid

• Running an unrecognised fund: a fund that satisfies the Labour Act but has never been recognised loses the perquisite exclusion, the payout exemption and, since 2026, the investment rebate on contributions.[6] [7]
• Depositing contributions late: more than three months' delay in depositing deductions or the employer share is deemed misappropriation under section 298.[1]
• Paying the wrong amount on exit: where gratuity is payable, the statute requires the higher of gratuity and statutory compensation, not both and not the lower.[4]
• Ignoring the vesting rules: fund rules that strip the employer share from members with more than two years' employment conflict with rule 263.[5]
• Treating Progoti as automatic: the exemption depends on institutional arrangements and each worker's written choice, which must be kept on file.[3]
• Mislabelling exits: a dismissal forfeits a participation fund share, so a termination wrongly recorded as dismissal creates a claim.[1]
• Missing the twelve-month window: a worker who waits more than a year after dues fall due must persuade the Labour Court there was sufficient cause.[1]

What to watch in 2026 and 2027

Three developments will shape provident fund gratuity Bangladesh practice over the next year. First, whether the Government makes rules under section 264(3) for private-sector provident funds or updates the Labour Rules to reflect the 2026 changes, since rule 237(5) still refers to the old three-fourths threshold.[3] [5] Second, whether the push to enrol bank, NGO and corporate staff in Progoti revives enrolment, and whether the equity option and lifetime nominee benefit are adopted.[13] [14] Third, whether the Government uses its power to make the Universal Pension Scheme compulsory for any group.[10]

The money in a retirement benefit dispute is often larger than the wage claim that accompanies it, and the documents that decide it, fund rules, trust deeds and recognition orders, are usually drafted years before anyone reads them closely. TRW's compensation and benefits practice structures provident funds, gratuity schemes and Progoti arrangements, and our employment litigation team recovers and defends end-of-service claims. You can also contact TRW directly.

Frequently asked questions

Is a provident fund compulsory in Bangladesh?

Not generally. Since the 2026 amendment, an owner employing at least 100 permanent workers must set one up within six months if two-thirds of those workers demand it in writing, unless it arranges Progoti membership for interested workers instead.[3]

How much do workers and employers contribute to a provident fund?

Unless otherwise agreed, each permanent worker contributes 7 to 8 per cent of monthly basic wage after one year's service, and the owner contributes the same.[3]

How is gratuity calculated under the Labour Act?

At least 30 days' wages at the last wage rate for each completed year, counting a part over six months as a year, and 45 days' wages where service exceeds ten years.[1]

Do I get gratuity and termination compensation together?

No. The exit provisions require the employer to pay statutory compensation or gratuity, if payable, whichever is higher, in addition to notice and other benefits.[4]

When can I withdraw the employer's share of my provident fund?

Under the default Labour Rules, after two years' employment. With less, you receive only your own contributions, except on death or closure of the establishment.[5]

Is gratuity taxable in Bangladesh?

Gratuity is employment income, but up to Tk 2.5 crore received from the Government Gratuity Fund or an NBR-approved gratuity fund is exempt.[6]

What is the difference between a provident fund and a pension fund?

A provident fund pays a lump sum built from worker and employer contributions; a pension fund, such as the Universal Pension Scheme, pays a monthly income after retirement.[3] [10]

Who can join the Universal Pension Scheme?

Bangladeshi citizens aged 18 to 50 with a national identity card, and older applicants under a special provision. Government and autonomous-body employees are excluded unless the Government notifies otherwise.[10]

How long do I have to claim unpaid gratuity or provident fund dues?

A worker should apply to the Labour Court under section 132 within twelve months of the date the money fell due; a late claim needs sufficient cause.[1]

What changed in the workers' participation fund in 2026?

Section 242(1) now requires the total amount deposited each year to be distributed equally among all beneficiaries, replacing the two-thirds cash and one-third investment split.[1] [4]