Hire in Bangladesh through our Employer of Record (EOR)

An Employer of Record (EOR) is a third-party organization that takes on the legal and administrative responsibilities of employing workers on behalf of another company. This arrangement allows businesses to hire employees in countries where they don't have a legal entity, effectively expanding their global reach without the need to establish a local subsidiary or branch office.

In the context of Bangladesh, an EOR can be particularly useful for international companies looking to tap into the country's growing economy and skilled workforce without navigating the complexities of local labor laws, payroll, and compliance issues on their own.

How Does EOR Work?

An EOR operates by becoming the legal employer of record for the workers hired by their client companies. The process typically involves the following steps:

1. The client company identifies a candidate they wish to hire in Bangladesh.
2. The EOR enters into an agreement with the client company to employ the worker on their behalf.
3. The EOR handles all legal and administrative tasks, including:
   • Drafting and signing employment contracts
   • Managing payroll and tax withholdings
   • Ensuring compliance with local labor laws and regulations
   • Providing benefits and insurance as required by law
4. The client company maintains day-to-day management and direction of the employee's work.
5. The EOR invoices the client company for the employee's salary plus their service fees.

Benefits of Using an EOR

Utilizing an EOR in Bangladesh offers several advantages for international companies:

1. Rapid Market Entry: Companies can quickly hire employees in Bangladesh without the need to establish a legal entity, significantly reducing time-to-market.

2. Compliance Assurance: EORs are well-versed in local labor laws, tax regulations, and employment practices, ensuring full compliance and minimizing legal risks.

3. Cost-Effective: Setting up a subsidiary in Bangladesh can be expensive and time-consuming. An EOR eliminates these costs and administrative burdens.

4. Flexibility: Companies can easily scale their operations up or down without the long-term commitments associated with maintaining a local entity.

5. Focus on Core Business: By outsourcing HR and payroll functions to the EOR, companies can concentrate on their core business activities and strategic goals.

6. Risk Mitigation: EORs assume much of the legal liability associated with employment, reducing the client company's exposure to potential lawsuits or compliance issues.

7. Local Expertise: EORs provide valuable insights into local business practices, cultural norms, and market conditions, which can be crucial for successful operations in Bangladesh.

8. Employee Benefits Management: EORs handle the complexities of providing locally compliant benefits packages, ensuring employees receive appropriate compensation and perks.

By leveraging an EOR's services, companies can effectively navigate the unique challenges and opportunities presented by Bangladesh's dynamic business environment, allowing them to build a presence in this rapidly growing South Asian market with greater ease and confidence.

Bangladesh's employment landscape is characterized by a young, growing workforce with a significant portion engaged in agriculture and the garment industry. The country has seen an increase in female labor force participation and urban migration. While there's a large pool of unskilled and semi-skilled workers, Bangladesh faces challenges in meeting the evolving demands of its industries.

Overview of Labor Laws

Bangladesh's labor laws aim to protect workers' rights and regulate employment relationships. Key aspects include:

• The Bangladesh Labour Act 2006 (amended in 2013 and 2018) serves as the primary legislation governing labor relations.
• It covers areas such as working hours, leave entitlements, minimum wage, and occupational safety.
• The law mandates a 48-hour workweek with one day off, and overtime pay for additional hours.
• Maternity leave is provided for 16 weeks with full pay.
• Child labor is prohibited, with the minimum working age set at 14 years.
• Workers have the right to form trade unions and engage in collective bargaining.

Cultural Considerations

Understanding Bangladesh's cultural norms is crucial for effective workforce management:

• Family takes precedence, often leading to requests for flexible schedules or absences.
• Indirect communication is preferred to maintain harmony and avoid confrontation.
• There's a strong respect for authority and hierarchical structures.
• Personal relationships and connections play a significant role in professional settings.
• Traditional gender roles can impact women's career advancement opportunities.
• Work-life boundaries may be less defined, with expectations of extended working hours in some sectors.

Challenges of Direct Hiring

Employers face several challenges when directly hiring in Bangladesh:

1. Skills gap: Finding workers with the right skills to meet industry demands can be difficult.

2. Complex labor laws: Navigating the intricacies of local labor regulations can be challenging for foreign employers.

3. Cultural differences: Misunderstandings due to communication styles and work expectations can arise.

4. Bureaucratic processes: Obtaining necessary permits and registrations can be time-consuming and complex.

5. Informal sector prevalence: A large informal workforce can complicate compliance and standardization efforts.

6. Infrastructure limitations: Inadequate transportation and technology infrastructure in some areas can hinder recruitment and remote work arrangements.

7. Retention issues: High turnover rates in certain industries can make it difficult to maintain a stable workforce.

8. Language barriers: While English is widely used in business, proficiency levels vary, potentially causing communication challenges.

Understanding these aspects of Bangladesh's employment landscape is crucial for companies looking to engage with the local workforce effectively and compliantly.

Bangladesh's payroll and tax system is a complex framework that governs the financial responsibilities of both employers and employees. This system is designed to ensure fair compensation, support social welfare programs, and contribute to the country's economic development. Understanding the intricacies of payroll and taxes in Bangladesh is crucial for businesses operating in the country and for employees to comprehend their financial obligations.

In Bangladesh, the payroll process involves calculating employee salaries, making necessary deductions, and ensuring compliance with tax regulations. The tax system is progressive, meaning that higher earners pay a larger percentage of their income in taxes. Both employers and employees have specific roles and responsibilities within this system, which we'll explore in more detail.

Employer Contributions

Employers in Bangladesh are required to make several contributions as part of their payroll and tax obligations. These contributions are essential for maintaining employee benefits and supporting various government initiatives.

Income Tax Withholding

One of the primary responsibilities of employers is to withhold income tax from their employees' salaries. This system, known as Pay-As-You-Earn (PAYE), requires employers to deduct the appropriate amount of tax based on each employee's income bracket. The withheld taxes must be remitted to the National Board of Revenue (NBR) by the 15th of the following month.

Provident Fund Contributions

Many employers in Bangladesh are required to contribute to a Provident Fund for their employees. This retirement savings plan is mandatory for certain industries and businesses above a specific size. The contribution rates can vary depending on the industry and applicable regulations. These contributions are typically made monthly alongside salary disbursements.

Skills Development Levy

Some employers may be subject to a Skills Development Levy, which funds vocational training programs. This levy helps to enhance the skills of the workforce and promote economic growth.

Reporting and Record-Keeping

Employers must maintain accurate payroll records and submit periodic reports to the NBR. These reports detail employee information and tax deductions, ensuring transparency and compliance with tax regulations.

Employee Contributions

Employees in Bangladesh also have financial obligations within the payroll and tax system. Understanding these responsibilities is crucial for managing personal finances and planning for the future.

Income Tax Deductions

The primary contribution from employees comes in the form of income tax deductions. Employers are required to deduct income tax at source (TDS) from their employees' salaries based on the progressive tax slab system outlined by the NBR. The amount of tax deducted increases as the taxable income level rises.

Calculating Taxable Income

To determine the amount of tax to be deducted, employers follow a specific process:

1. Calculate the gross salary, including basic pay, allowances, and bonuses.
2. Apply allowable deductions as per the Income Tax Ordinance 1984.
3. Determine the taxable income by subtracting allowable deductions from the gross salary.
4. Apply the appropriate tax rates based on the NBR's tax slabs.
5. Consider any applicable investment tax rebates.
6. Calculate the final TDS amount to be deducted from the employee's salary.

Provident Fund Contributions

In addition to employer contributions, employees may also be required to contribute to their Provident Fund. This serves as a long-term savings mechanism for retirement.

Investment Tax Rebates

Employees can reduce their tax liability by making qualifying investments, such as life insurance premiums, contributions to provident funds, or purchases of government savings certificates. The NBR stipulates a maximum limit for these investment tax rebates.

Understanding the intricacies of payroll and taxes in Bangladesh is essential for both employers and employees. By fulfilling their respective obligations, they contribute to the country's economic growth while ensuring fair compensation and financial security for the workforce. As regulations may change, it's crucial to stay informed about the latest updates in Bangladesh's payroll and tax system.

Navigating the complex landscape of employee benefits in Bangladesh can be challenging for international companies. This is where an Employer of Record (EOR) service like Rivermate proves invaluable. By partnering with an EOR, businesses can ensure compliance with local labor laws and seamlessly manage both mandatory and optional benefits for their workforce in Bangladesh. An EOR takes on the responsibility of administering these benefits, allowing companies to focus on their core operations while providing a comprehensive and attractive benefits package to their employees.

Mandatory Benefits

Bangladesh's Labor Act outlines several mandatory benefits that employers must provide:

• Annual Leave: Varies by industry, ranging from 1 day per 11-22 days worked
• Festival Holidays: 11 paid days for national holidays annually
• Casual Leave: 10 paid days per calendar year
• Sick Leave: 14 paid days annually, with medical certification required
• Maternity Leave: 16 weeks (4 months) of fully paid leave for female employees
• Overtime Compensation: Additional pay for work beyond standard hours, as per legal requirements

Optional Benefits

To attract and retain top talent, many employers in Bangladesh offer additional benefits:

• Health and Wellness:

  • Health insurance coverage
  • Dental and vision insurance plans
  • Employee Assistance Programs (EAPs)

• Financial Security:

  • Provident funds
  • Gratuity payments

• Work-Life Balance:

  • Flexible work arrangements
  • Childcare assistance

• Additional Perks:

  • Transportation allowances
  • Meal vouchers or subsidized meals
  • Employee discounts
  • Training and development opportunities

By offering a mix of mandatory and optional benefits, employers can create a competitive and attractive package for their workforce in Bangladesh. An EOR partner like Rivermate can help navigate these complexities, ensuring compliance and employee satisfaction.

The process of termination and offboarding in Bangladesh is governed by specific legal requirements and best practices to ensure fairness and compliance. Understanding these procedures is crucial for both employers and employees to navigate the end of an employment relationship smoothly.

Notice Requirements

In Bangladesh, employers must provide written notice before terminating an employee's service. The duration of this notice period varies depending on the worker's status:

• Permanent workers:
  • Monthly-paid: 120 days' notice
  • Others: 60 days' notice
• Temporary workers:
  • Monthly-paid: 30 days' notice
  • Others: 14 days' notice

It's important to note that in cases of severe misconduct, an employer may dismiss an employee without notice. However, they must still pay the wages for the notice period.

Grounds for Termination

According to Section 26 of the Bangladesh Labour Act, 2006, an employer may lawfully terminate an employee's service on the following grounds:

1. Misconduct (e.g., serious breaches of discipline, insubordination, theft, fraud)
2. Physical or mental incapacity
3. Redundancy

Severance Pay

The Bangladesh Labor Act of 2006 mandates severance pay in certain situations:

• Workers with at least one year of continuous service are entitled to severance pay equivalent to 30 days' wages for each completed year of service if terminated due to redundancy.
• If an employer terminates an employment contract without valid grounds, they must provide severance as described above.

It's important to note that these severance pay rules do not replace other benefits that an employee might be entitled to.

Employee Resignation

Employees are also required to provide advance notice when resigning. The notice periods for resignation are the same as those for termination, varying based on the worker's status.

Dispute Resolution

In cases of wrongful termination, employees have the right to dispute the decision through labor courts in Bangladesh.

Offboarding Best Practices

To ensure a smooth transition during the termination and offboarding process, consider the following best practices:

1. Communicate clearly and professionally with the departing employee
2. Conduct an exit interview to gather feedback
3. Retrieve company property and revoke access to systems
4. Process final payments, including any severance or outstanding benefits
5. Provide necessary documentation, such as service certificates or recommendation letters
6. Update internal records and inform relevant departments

By following these guidelines and adhering to the legal requirements, employers in Bangladesh can manage the termination and offboarding process effectively while minimizing potential disputes and ensuring compliance with local labor laws.

Bangladesh, a rapidly developing South Asian nation, has been attracting an increasing number of foreign workers in recent years. As the country's economy grows, so does the need for skilled professionals from abroad. However, working in Bangladesh requires proper documentation and adherence to local regulations. Here's a concise overview of the visa and work permit requirements for foreign workers in Bangladesh.

Entry Visa

Foreign nationals planning to work in Bangladesh must first obtain an entry visa. This is typically a business visa, which can be applied for at Bangladeshi embassies or consulates in the applicant's home country. The business visa allows entry into Bangladesh and is usually valid for multiple entries over a period of 3 to 12 months.

Work Permit

Once in Bangladesh, foreign workers need to obtain a work permit. This process involves:

1. Employer sponsorship: The Bangladeshi employer must apply for the work permit on behalf of the foreign employee.

2. Documentation: Required documents include a copy of the passport, visa, educational certificates, and a letter of appointment from the employer.

3. Application submission: The employer submits the application to the Bangladesh Investment Development Authority (BIDA).

4. Processing time: Work permit processing typically takes 2-4 weeks.

5. Validity: Work permits are usually issued for 1-2 years and can be renewed.

Security Clearance

In some cases, particularly for long-term employment, foreign workers may need to obtain security clearance from the Ministry of Home Affairs. This process can take several weeks to complete.

Important Considerations

• Overstaying a visa or working without proper documentation can result in fines, deportation, and future entry bans.
• Some sectors may have specific requirements or restrictions for foreign workers.
• It's advisable to start the visa and work permit process well in advance of the intended start date of employment.

By understanding and following these requirements, foreign workers can ensure a smooth transition into their new roles in Bangladesh. Employers should also be well-versed in these procedures to facilitate the hiring process and maintain compliance with local labor laws.