What are Employee Benefits?
Employee benefits refer to non-wage compensations provided to all employees in addition to their salaries. A company cannot function or grow without a workforce. Thus, it is essential to understand their needs at work and keep them satisfied.
Standard employee benefits include medical expenses, overtime compensation, paid vacation, sick leaves, and retirement benefits.
In a developing country like Bangladesh, where labor costs are comparatively low, understanding employee benefits and compensation laws is crucial to hiring the best talent.
Compensation Laws in Bangladesh
The following rules govern employee compensation in Bangladesh:
- ~The Labor Act 2006 stipulates a Wages Board that recommends minimum remuneration for all classes of employees. The Labor Law was amended in January 2019, and the new amendments provide financial benefits to expecting mothers after delivery.
- ~The country also introduced the Bangladesh Labor Rules 2015, making appointment letters mandatory. The letter must contain information regarding the salary, financial benefits, and rules about the service book, leave register, etc. It also includes provisions on guidelines of provident fund.
- ~Bangladesh Labor Policy 2012 ensures a productive-non-discriminatory and healthy work environment for employees. It addresses labor rights and welfare
- ~The National Child Labor Elimination Policy in 2010 overlooks the problem of child labor in the country. It seeks to protect children from risky work.
- ~The Department of Factory Inspection ensures the welfare, safety, and health of valuable human resources in different sectors. They enact labor laws to facilitate a healthy work culture in establishments.
- ~The Ministry of Labor and Employment set up a Central Fund in 2015 to help industrial workers in Bangladesh, jointly funded by the government and private industries.
- ~The National Social Security Strategy 2015 covers sickness, maternity pay and protection, old-age pensions, workplace accidents, and unemployment benefits for workers. There are 114 social protection programs focused on food distribution and cash transfers.
How to Design an Employee Benefits Program For Employees in Bangladesh
A comprehensive employee benefits program is a crucial for boosting morale and attracting new talent to the company. An employee benefits scheme lays out the principle rights of every employee in a company.
Here’s how to form an employee compensation and benefits policy in Bangladesh:
Analyze the scope and budget
All businesses must have a budget in mind and plan things according to the targets set. The HR team needs to be allocated a set figure to make the hiring decisions for employees accordingly.
Assess needs of local employees
To design an employee benefit program, employers must first know what’s expected of a company. They must research the common concerns of local employees and what kind of benefits they expect. It is also crucial to determine what your competitors are offering to create an industry-standard benefits plan.
Conduct legal research
Before drafting a compensation package in Bangladesh, read up on the legal requirements. Gather details such as the mandatory benefits, minimum wage policies, payment cycle, payment mode, festival holidays, etc. Effective legal research will ensure diligence as per the international standards
Develop a Compensation and Benefits Program
Draft an employee compensation and benefits in Bangladesh based on the data collected. Keep in mind the allocated budget, logistics, and outsourcing expenses.
Types of Guaranteed Benefits in Bangladesh
Employee benefits in Bangladesh must include the statutory benefits mentioned in the Bangladesh Labor Act. The guaranteed employee benefits in Bangladesh are:
- ~All workers are entitled to 10 days of paid casual leaves each calendar year.
- ~All workers can claim paid sick leaves for 14 days in a calendar year.
- ~All workers get 11 days of paid festival holiday in a calendar year. Employers can choose these holidays. However, if employees work on one festival holiday, they must be compensated with one day of holiday and monetary compensation for two days.
- ~An adult worker who has completed one year of service is entitled to one day of paid leave -
- ~~for every 18 days of work if working in a factory or commercial/transport sector.
- ~~for every 11 days of work if working in a newspaper company.
- ~~for every 22 days of employment if working in a tea plantation.
- ~Female employees are entitled to a 16-week paid maternity leave divided into eight weeks before and eight weeks after childbirth.
The annual leave benefits in Bangladesh are based on industry type and duration of worker’s employment in the company. The leave schedule depends on the industry:
- ~Employees working in a shop, commercial facility, industrial establishment, factory, or road transport establishment receive one day of paid leave for every 18-day working period. Employees can avail of this after completing one year of employment.
- ~Tea plantation workers get one day of paid vacation for every 22 days of the working period.
- ~Newspaper employees earn one day of paid leave for every 11 days worked.
Additionally, the Bangladesh Labor Act includes the following provisions that you must keep in mind:
- ~Bangladesh follows a weekly payment cycle. So, employers must pay wages within seven days of the last working period. The wage fixation period is one month.
- ~All establishments must consider factors for good employee health and hygiene.
The law states hefty penalties for unfair labor practices and non-compliance to the payment of wages. The fines can exceed 10,000 BDT to two-year imprisonment or both.
Employee Benefits for Expatriates
Expat workers could enjoy certain additional benefits in Bangladesh, such as -
Visa and work permit costs: An employer bears the cost of making an expat worker’s work visa and obtaining a work permit.
Relocation package: Companies hiring expats should have a separate relocation package that helps the foreign employee with accommodation in the country. It is a free accommodation service or stays within company quarters for initial few months.
Some companies also provide additional help to expats, such as travel allowances or educational assistance for their children.
How are Employee Benefits Taxed in Bangladesh?
Most remunerations and benefits provided to the employees are fully taxable except for medical allowance. Here are some critical points about taxation on employee benefits in Bangladesh:
- ~Employees’ salary incomes with all other benefits are subject to tax as per the Income Tax Rules, 1984
- ~If the house rent allowance is received in cash, the amount that exceeds 50% of the basic salary or 25,000 BDT per month, whichever is higher, is part of taxable income
- ~For medical allowance, a basic salary of 120,000 BDT per annum or 10% of the basic wage (whichever is lower) is exempted from the tax
- ~All other allowances, such as overtime, festival bonus, etc., are fully taxable
- ~The income tax slabs are changeable every year per the fiscal budget
- ~Personal income taxes range from 10 to 30%
The individual income tax rates are as under:
Restrictions for Bangladesh Benefits and Compensation
Employers must be well-versed with the workers' compensation in Bangladesh since it includes certain restrictions concerning working hours, discrimination, conducting layoffs, and termination of women.
- ~If an employer terminates the employment contract of a female employee - six months before and eight weeks after childbirth - without offering sufficient cause, the employee will still be entitled to the company’s maternity benefit
- ~An employee cannot work for more than one establishment unless there is written permission allowing them to do so
- ~There must be no discrimination on the grounds of gender, employment, promotion, or working condition
- ~There are specific restrictions on asking questions/making statements incriminating an employee
Supplemental Benefits for Employees in Bangladesh
Besides the Labor Act’s guaranteed compensation and benefits in Bangladesh, employers may offer supplementary benefits as they deem fit. These essentially contribute to boosting employee morale and thus your company's overall growth.
Some potential supplementary employee benefits could be:
- ~Flexible working hours
- ~Performance-based awards and bonuses
- ~Since the Bangladesh Labor Law has no provision for paternity leaves, it is a good focus point for additional benefits.
- ~Medical benefits for employees in Bangladesh under the public/private health care system, like health insurance.
- ~Pension plans
- ~Workplace wellness programs or counseling sessions
- ~Discounts on certain goods and services
Note: Private establishments may also constitute a provident fund for workers’ benefit. In such a scenario, permanent employees who have completed one year of service are liable to pay 7% of their monthly wages to this fund. The employer contributes an equal share.
How Multiplier Can Help With Benefits Management in Bangladesh?
Compliance with national laws is crucial to doing business and offering employee benefits and compensation in Bangladesh. It is easier to draft an employee benefit plan with the help of an expert.
This is where Multiplier can help you. With expertise in the local laws of over 150 countries, you can entrust us with employee payroll, taxation, and legal compliance. Our SaaS-based platform can seamlessly manage your payroll needs for full-time employees and freelancers.
Frequently Asked Questions
Is an employment contract mandatory for appointing employees?
Yes, an employer must issue an appointment letter for hiring an employee - full-time or part-time. It should contain all details about the employee, including names of family members, designation, wages, and other financial benefits.
What is a typical work week and overtime in Bangladesh?
As per the labor law, an adult worker should not work more than 48 hours a week, roughly eight hours for six days. Overtime in Bangladesh can not exceed more than 60 hours in a week.
Are social security and provident funds mandatory in Bangladesh?
No. Companies must pay 5% of their profits to a Workers Profit Participation Fund that provides monetary benefits to employees. A provident fund is not mandatory, but some employers may choose to set it up for their employees. The Labor Act 2006 states about establishing a provident fund in the private sector. However, companies can make their own rules about maintaining such a fund.
Is gratuity mandatory in Bangladesh?
The Bangladesh labor law does not have a mandatory provision of gratuity. However, a company can introduce a fund for their employee benefits.