Overview
Bangladesh employer costs run 10–18% above gross once you accrue two mandatory Eid festival bonuses (market standard: one month’s basic each). Gratuity of 30 days’ wages per year hits at 5+ years of service. Dhaka mid-level developers cost BDT 60,000–120,000/month. EOR solves Bangladesh Bank FX friction and NBR withholding for foreign-funded payroll.
Employer contributions are minimal compared with most Asian markets. There is no mandatory provident fund for private sector employers unless the company has 10+ employees and a fund is established. No universal employer-funded health insurance. Primary statutory costs: festival bonuses (at least one month’s basic per year; market practice is two Eids), gratuity after 5+ years continuous service, and workers’ welfare fund contributions in applicable industries. Total employer cost above gross, excluding gratuity accrual, often runs ~10–20%.
The Bangladesh Labour Act 2006 (amended 2013 and 2018) and Labour Rules 2015 form the framework. Private limited company formation via RJSC takes 2–6 weeks and costs roughly $1,500–$4,000 in professional fees. The regulatory environment is opaque, enforcement is uneven, and banking creates friction for foreign companies moving money in and out. EOR removes much of the operational headache around payroll disbursement, tax withholding, and Bangladesh Bank foreign exchange rules.
Dhaka and Chattogram are the primary hiring hubs. Internet reliability and power backup have improved, but still lag Singapore or Bangalore for always-on customer support roles. The strongest EOR use cases are engineering, QA, and back-office teams with clear specifications. Client-facing consulting with heavy accent-sensitive work is usually a weaker fit than India or Philippines. Treat Bangladesh as a cost-optimized second market once you already know how to manage distributed delivery, not as your first offshore experiment.
Key Employment Facts
| Item | Detail |
|---|---|
| Minimum wage | Varies by sector (wage board); garment sector ~BDT 12,500/month (2023 revision); no universal private sector minimum |
| Working hours | 48 hrs/week (8 hrs/day, 6 days/week); overtime premium 100% of basic wage; maximum ~60 hrs/week including overtime |
| Probation period | 3 months (clerical), 6 months (other workers); extendable by an additional period equal to the original |
| Notice period | 60 days (permanent workers, employer-initiated); 30 days (temporary); 60 days (employee resignation for permanent workers) |
| Severance/retrenchment | 30 days’ wages per year (retrenchment); 14 days’ wages per year (termination without cause under Section 26) |
| Gratuity | 30 days’ wages per year of service, payable after 5+ years continuous service |
| Paid leave | ~1 day per 18 days worked (~18 working days/year on a 6-day week); 10 days casual leave; 14 days sick leave (half pay) |
| Public holidays | 11 days with pay minimum |
| Festival bonus | Minimum 1 month’s basic/year; market practice 2 × 1 month basic |
Employer Cost
| Contribution | Employer Rate | Notes |
|---|---|---|
| Festival bonus | ~8.33–16.67% of annual basic | 1–2 months’ basic/year; at least one festival bonus is mandatory |
| Gratuity accrual | ~8.33% of basic (annualized) | Payable after 5+ years; smart employers accrue from day 1 |
| Provident fund (if applicable) | 7–10% of basic | Mandatory for establishments with 10+ workers where a fund exists; employer matches |
| Workers’ Welfare Fund | ~0.5% of profits | Certain industries; not universal for IT/services |
| Group insurance | Varies | Not always statutory; increasingly expected in IT/BPO |
| Total employer cost | ~10–25% | Varies by size, sector, and benefits; IT often on the lower end |
Concrete monthly scenario: mid-level developer at BDT 80,000/month basic. Accrue two festival bonuses (2 ÷ 12 ≈ 16.7% of basic) ≈ BDT 13,360/month. Accrue gratuity (~8.33% of basic) ≈ BDT 6,664/month even before year 5. Statutory-ish monthly load ≈ BDT 100,000 before EOR fee. At ~BDT 110/USD, that is roughly $900–$950 all-in before platform fees; an EOR fee of $399–$599 can exceed 50% of salary. Model both paths in the EOR cost calculator. Compare with India (EPF/ESIC/gratuity) and Philippines (13th month + SSS).
Basic vs gross matters in Bangladesh. Festival bonus and many allowances are calculated on basic salary, which is often 50–70% of total cash. If your offer letter quotes a high gross with a low basic, festival bonus cash drops, but candidates notice and attrition rises. Competitive IT offers keep basic high enough that two Eid bonuses feel real. Your EOR should show basic, house rent, medical, and conveyance lines clearly so accrual math matches the Labour Act base.
Choosing an EOR for Bangladesh
Provider fees, entity models, and onboarding SLAs change frequently. See our ranked shortlist: Best EOR for Bangladesh.
When to Set Up Your Own Entity
| Factor | Detail |
|---|---|
| Entity type | Private Limited Company (minimum 2 shareholders, 2 directors) |
| Formation time | 2–6 weeks (RJSC, TIN, VAT BIN, trade license) |
| Formation cost | $1,500–$4,000 in professional fees; practical capital above the nominal BDT 1,000 minimum |
| Ongoing compliance | Monthly TDS filing, annual tax return, audited financials, trade license renewal, RJSC annual return |
| Breakeven vs. EOR | ~8–15 employees (low salaries make EOR fees proportionally large) |
An EOR fee of $399–$599/month on a $700/month salary adds 57–86% to employment cost. For 3 employees, EOR fees can exceed salaries. Entity formation makes financial sense earlier than in high-salary markets, but remote management of a Bangladeshi entity still needs a local accountant ($200–$400/month) or operations partner. See EOR vs entity.
Statutory Benefits
Annual leave: 1 day per 18 days worked (~18 working days/year on a 6-day week). Unused leave can carry forward up to ~40 days.
Festival bonus: Labour Act mandates at least one festival bonus equal to one month’s basic salary per year. IT market practice: two bonuses (one per Eid). Skipping them triggers legal exposure and attrition.
Casual leave: 10 days/year at full pay.
Sick leave: 14 days/year at half pay.
Gratuity: 30 days’ wages per year of service after 5+ years continuous service. No statutory cap. Accrue from day one.
Provident fund: For establishments with 10+ workers where a fund is established, employer and employee each contribute ~7–10% of basic. Many IT employers establish a fund voluntarily.
Public holidays: 11 days minimum; most IT employers observe 12–14 including both Eids, Independence Day, and Victory Day.
Working hours: Legal baseline 48 hours/week. IT employers often run 5-day schedules by written agreement; overtime math still references the Labour Act framework.
Termination Rules
Termination without cause (Section 26): Pay 30 days’ wages in lieu of the 60-day notice period, plus 14 days’ wages per completed year of service. Example: BDT 80,000/month basic, 3 years’ service: notice in lieu ≈ BDT 80,000; compensation ≈ 3 × 14 × (BDT 80,000 ÷ 26) ≈ BDT 129,000. Total ≈ BDT 210,000 (~$1,900 at typical FX).
Retrenchment (Section 20): 30 days’ notice (or pay in lieu) plus 30 days’ wages per year of service. Last-in-first-out applies unless skills-based selection is documented.
Gratuity on separation: After 5+ years, gratuity (30 days’ wages per year) is also payable. Gratuity and retrenchment compensation do not offset each other.
Protected categories: Pregnant employees, employees on maternity leave, and trade union representatives cannot be terminated except for gross misconduct or liquidation.
Probation: Either party can terminate with 7 days’ notice (clerical) or 14 days’ notice (other workers) with no severance. Lowest-risk exit window.
Work Visas and Immigration
Bangladesh is primarily an outsourcing destination. Most EOR hiring targets local talent. Foreign specialists go through BIDA.
| Visa/Permit Type | Who It’s For | Duration | Processing Time |
|---|---|---|---|
| BIDA Work Permit | Foreign nationals employed by a Bangladesh-registered entity | 1–2 years, renewable | ~30–90 days |
| Project Work Permit | Foreign specialists on defined project assignments | Duration of project | ~30–60 days |
Applications must justify why a Bangladeshi candidate was unavailable. Foreign workers’ salaries are typically expected to be funded from a foreign source, not local BDT payroll alone. Permits are employer-specific. Budget 2–3 months from application to first working day; timelines are unpredictable and denials often lack detail.
Practical Cost and Timeline Scenario
Hiring one Dhaka mid-level developer at BDT 80,000/month basic through an EOR:
- Week 0: Split the offer into basic vs allowances. Festival bonuses and many statutory calculations ride on basic. Keep basic high enough that two Eid bonuses feel real to candidates.
- Onboarding: Local hires are operationally straightforward; the friction is BDT payroll rails, NBR withholding, and Bangladesh Bank FX for foreign-funded companies. This is where EOR earns its fee even when salaries are low.
- Monthly cash: Accrue two festival bonuses (~16.7% of basic) ≈ BDT 13,360 and gratuity (~8.33%) ≈ BDT 6,664 even before year 5. Loaded monthly ≈ BDT 100,000 before EOR. At ~BDT 110/USD that is ~$900–$950. An EOR fee of $399–$599 can exceed 50% of salary.
- Entity math: Three EOR seats at $499 is ~$1,500/month in platform fees. A local accountant at $200–$400/month plus RJSC entity often wins earlier than in Western Europe. See EOR vs entity.
- Exit math: Section 26 without-cause example at 3 years: ~BDT 80,000 notice in lieu + ~BDT 129,000 compensation ≈ BDT 210,000. After 5 years, add gratuity (30 days/year) on top; it does not offset retrenchment compensation.
Foreign specialists via BIDA: budget 2–3 months and a justification that local talent could not fill the role. Most teams should hire locally instead. Use the Choosing an EOR section above for the ranked shortlist.
Compliance Watchouts
Quote and accrue on basic salary, not headline gross. Festival bonuses, gratuity, and many Labour Act formulas use basic, so a low-basic / high-allowance structure underpays statutory cash and angers candidates. Accrue gratuity from day one even though cash hits at 5+ years, and treat Bangladesh Bank FX plus NBR withholding as first-class operational risks, not afterthoughts.
Frequently Asked Questions
Is Bangladesh’s IT sector competitive with India on cost?
On pure cost, Dhaka developers often run 30–60% below Bangalore equivalents for junior and mid-level roles. The gap narrows for senior specialists because the talent pool is smaller (~100,000–150,000 IT professionals versus India’s millions). English is adequate for technical work; client-facing polish usually trails India. Strongest use case: well-scoped development with clear specs, not ambiguous consulting.
Are two festival bonuses legally required?
The Labour Act mandates at least one festival bonus equal to one month’s basic per year. IT market practice is two (one per Eid). Confirm your EOR accrues both in monthly quotes.
Why do EOR fees look expensive relative to salary?
Because salaries are low. A $499 fee on a $700 salary is a ~70% markup. That is why entity economics arrive earlier here than in Western Europe. Run the headcount math in the EOR cost calculator and EOR vs entity.
When does gratuity actually hit cash?
After 5+ years continuous service on separation. Accrue from day one anyway; a long-tenured exit plus retrenchment compensation is a double cash event that surprises foreign finance teams.
Can I pay salaries from a foreign account in USD?
Payroll for local employees is typically BDT through local banking rails. Foreign-funded remittances still need Bangladesh Bank compliance. This FX and remittance friction is a primary reason companies use EOR for early hires.
Sources
- Bangladesh Labour Act (Labour Wing)
- National Board of Revenue
- Rate verification: eorHQ methodology
Related Decision Pages
- EOR cost calculator - Model festival bonus + gratuity + EOR fee
- Hiring in India - EPF, ESIC, and gratuity comparison
- Hiring in Philippines - 13th-month and SSS comparison
- Hiring in Malaysia - Higher process maturity, EPF-driven costs
- EOR vs PEO - When EOR is the better fit
- Hiring your first international employee
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