Bangladesh offers a business-friendly climate, a competitive market, and a young and talented workforce. Moreover, the strategic location of Bangladesh with India and China as neighbors makes the country an attractive destination for foreign investors looking to access the ASEAN markets.
Bangladesh has one of the most liberal FDI regimes in South Asia, characterized by 100% foreign ownership, hassle-free repatriation of incomes and profits, and an unrestricted exit policy. In addition, the country offers robust logistics support and infrastructural facilities to foreign investors, especially in the export-oriented readymade garment and apparel sector.
However, hiring staff in Bangladesh can be a lengthy and challenging task.
Things to Know Before Hiring in Bangladesh
Since the hiring process in Bangladesh gives preference to its citizens; employers must understand how to recruit employees in Bangladesh. If you want to know the details of hiring employees in Bangladesh, take note of the following aspects of the country’s labor laws and recruitment process.
All foreigners seeking paid employment in Bangladesh must have a valid work permit. The Bangladeshi Embassy provides the e-visa that lasts for three months. Moreover, employers must register with the relevant government authority before employing expats in Bangladesh.
Three government authorities are primarily concerned with issuing work permits to non-residents in Bangladesh:
- The Bangladesh Export Processing Zones Authority (BEPZA) deals with the employment of foreigners in the export promotion zones.
- The Board of Investment (BOI) issues work permits to foreigners employed in industrial enterprises outside the processing zone, including liaison and branch offices.
- Bangladesh’s NGO Affairs Bureau (NGOAB) issues work permits for expats looking to work in non-governmental organizations.
To obtain a work permit for foreign employees, the prospective employer must supply a letter of employment and a confirmation letter of concurrence from the pertinent government body (BEPZA, BOI, or NGOAB) to the Bangladeshi embassy. For employees that fall under the ambit of BOI, prospective employers must also apply for an e-visa recommendation to the BOI on behalf of their foreign employees.
Employment contracts are a crucial part of the hiring process in Bangladesh. A contractual agreement between the employer and employee regulates the terms of employment. Its terms must align with the Bangladesh Labor Act 2006 and the Bangladesh Labor Rules 2015. A letter of appointment may be used where a written employment contract is unavailable. Employment contracts issued during the hiring process in Bangladesh include:
- Working hours
- Nature of work
- Job title
- Leave and working time
- Termination procedures.
The Minimum Wages Board of Bangladesh fixes the minimum wages for workers engaged in trade and industry in the private sector. On the other hand, the government and the Pay Service Commission regulate the minimum wages for employees in Bangladesh’s public sector. The minimum salary in Bangladesh is 1,500 BDT (17.46 USD) per month for all economic sectors beyond the ambit of industry-specific salaries. For the garment industry, the minimum wage is 8,000 BDT (93.08 USD). If you are hiring staff in Bangladesh and minimum wage applies to your organization, you must comply with the labor law and industry guidelines.
Working hours and rest days
The Bangladesh Labor Act 2006 mandates a maximum of eight working hours in a day and 48 hours in any week. If an employee works for hours more than that fixed by the Labor Act, they must be compensated with an overtime allowance. Such allowance must be at twice the ordinary rate of their basic wage, dearness allowance, and interim pay (if applicable). Moreover, women are not allowed to work in any establishment between 10 PM and 6 AM unless she gives consent in a prescribed form as per the Bangladesh Labor Rules 2015.
The Bangladesh Labor Act 2006 also lays down rules regarding employees’ rest days. Employees in commercial or industrial establishments or shops are entitled to one and a half days of rest every working week. Factory workers are entitled to a day of rest in a working week. Lastly, employees engaged in road transport services get 24 consecutive hours of rest every week.
The Bangladesh Labor Act 2006 stipulates that adults who have completed one year of continuous service at the workplace are entitled to fully paid annual leaves. However, the leave duration varies according to the sector.
Employee benefits are an indispensable part of the hiring process in Bangladesh. Such benefits typically include health insurance, subsidized meals, car facilities, compensation for injuries in fieldwork, etc. Also, Bangladeshi companies provide gratuity and other benefits to employees under the provisions of the Bangladesh Labor Act 2006.
In addition, female employees in Bangladesh who have worked for a minimum of six months are entitled to a maternity leave of eight weeks before and an additional eight weeks after delivery. However, the employee will not get the maternity benefits if they already have two or more children. Employees in Bangladesh also get eleven paid festival holidays every year and compensatory day-offs if an organization requires an employee to work on any official holiday.
Taxes and social security
Bangladesh does not have any mandatory social security program for employees. However, the Bangladesh Labor Act 2006 sets out criteria for certain organizations to pay 5% of their profits into a Workers Profit Participation Fund. All employees benefit from the fund, except the owners, partners, and directors who have been employed for at least nine months.
While Bangladeshi employees are liable to pay income tax on their global income, foreign nationals in Bangladesh must pay tax on the income earned in the country only. Bangladesh has progressive income tax slabs ranging from 10% to 30%. There is no major distinction is made between Bangladeshi-owned and foreign-owned companies in corporate income tax. The Corporate Income Tax rate in Bangladesh varies with the company’s nature.
Procedure for dismissal
As part of the recruitment process in Bangladesh, it is vital to understand the employee termination process. Discretionary termination, disciplinary termination, discharge, or collective redundancies can terminate employment contracts in Bangladesh.
In case of unilateral termination of a permanent employment contract, the employer and employee must give a notice period of 120 days and 60 days. The duration of the notice period is 30 days in the case of temporary workers. Disciplinary termination on the grounds of a criminal offense does not require a notice period. However, employees are typically given seven days to justify their misconduct for other disciplinary reasons such as theft, fraud, negligence, etc.
The Cost of Hiring an Employee in Bangladesh
Recruitment process expenses or the recruitment fees in Bangladesh generally differ with industries and specific company policies. Therefore, it is impractical to state a definite figure. Most companies offer several additional benefits to employees, including festival bonuses, private health insurance, transportation allowances, education subsidies, etc. In addition, companies have to bear additional costs during the hiring process in Bangladesh, including job advertisements, interviews, employee training, and onboarding.
Overall, make sure to factor in the following direct and indirect expenses while chalking out your budget for the recruitment process:
- Job advertisements
- Application reviewing and interviewing
- Employee training
- Benefits and allowances
- Workplace integration
What Does a Company Need to Hire Employees in Bangladesh?
If you are a foreign investor, you must first set up a subsidiary in Bangladesh before hiring employees. Setting up a subsidiary in Bangladesh is one of the best options for foreign investors to hire employees and establish a business presence in the country. A subsidiary is a company that operates overseas as part of a larger organization whose headquarters are located in another country.
However, hiring and paying employees in Bangladesh must align with its employment and payroll standards, further complicating the process for overseas companies. They must learn about the local payroll and tax system, exchange rates, and employment laws in Bangladesh.
Suppose you are an overseas investor hiring staff in Bangladesh. In that case, you must fulfill the following requirements:
- Register your business/company name
- Designate your directors and shareholders
- Obtain a memorandum of association and articles of association
- Obtain a clearance certificate from the Registrar of Joint Stock Companies and Firms
- Open a Bangladeshi bank account
- Set up a local payroll system
- Obtain encashment certificates (proof of currency exchange)
- Deposit a minimum paid-up share capital of 1 USD
- Submit audited annual financial reports to the Bangladesh Income Tax Authority
Setting up a subsidiary in Bangladesh can take anything between a few weeks to even a year. Alternatively, you can choose a reliable EOR service to hire and manage your international workforce without setting up a business entity.
Various Options for Hiring Employees in Bangladesh
Overseas businesses mainly have two options for hiring staff in Bangladesh:
Establish a legal entity
You can establish a foreign subsidiary in the form of a limited liability company in Bangladesh. In that case, the subsidiary will be in complete charge of the recruitment process, including legal and administrative compliance. However, setting up a subsidiary can be a time-consuming and tedious process.
Partner with a global EOR
An Employer of Record (EOR) like Multiplier acts as the primary employer of your international employees without you having to set up a business entity. Hiring an EOR solution has manifold benefits since the EOR will take care of your employees’ payroll, benefits, taxes, benefits, and other HR duties while ensuring compliance with local labor and tax laws. Partnering with a global EOR relieves you of hiring hassles.
Note: Workers in Bangladesh can be of the following types depending on the type and condition of employment:
The Steps to Hiring in Bangladesh
Before hiring employees, companies must follow a stepwise process to hire the best candidates. While there is no set way to go about the recruitment process in Bangladesh, the following steps cover the standard hiring procedures:
1. Identify the hiring need: Job positions may be recently vacated or newly formed. In either case, companies must first chalk out the job requirements, including candidate eligibility, desirable qualifications, required experience, etc.
2. Advertise open positions: Online posting on career sites and company networking are the most common ways of advertising job positions in Bangladesh. Additionally, companies also advertise the job listings internally so that existing employees can make referrals.
3. Screen applicants: Review resumes/CVs to screen candidates once you receive job applications via email or a dedicated tracking system. Inform qualified candidates of the following screening steps and eliminate unqualified candidates from the application pool.
4. Conduct interviews: Call the shortlisted applicants for interviews to further narrow down the candidate pool. Initial interviews are typically conducted through phone calls. Additional screening stages may include assessing the applicants’ talents and abilities through various standardized tests.
5. Run background checks: Running background checks is essential to ensure your organization’s safety and verify the prospective employees’ credentials. Background checks typically precede the final job offer and review the candidate’s employment and education history, criminal record, and credit reports.
6. Take the final decision: The final step of the hiring process in Bangladesh involves evaluating candidates based on interviews, screening tests, skills, recommendations, and other relevant information. Hence, identify a top choice(s) and select a backup candidate. Start over the hiring process if no candidate meets the required criteria.
Let Multiplier be Your EOR Platform in Bangladesh
Multiplier will act as the legal employer of your foreign employees without you needing to set up a business entity. From payroll and taxes to drafting employment contracts and international employee management, we will take care of all your HR-related activities while ensuring compliance with local labor laws.