Payroll in Bangladesh

Payroll Process

Before tackling the actual payroll process, you are going to need to manage an initial phase called “pre-payroll.” This consists of a number of different steps, which can make it confusing and complicated. Teaming up with Skuad ensures that you know exactly how to navigate the requirements of the pre-payroll phase in Bangladesh.

Pre-Payroll Phase

The pre-payroll phase ensures that your main payroll process is managed rapidly, smoothly, and in legal compliance with local laws.

Business Profile

To begin with, you will need to establish a company profile in Bangladesh. Only by doing so will you be able to gather and submit all the payroll documentation to the relevant Bangladeshi authorities.

Work Location

While Bangladesh is not quite as large as its neighbor India, it’s still important to specify exactly where your company will operate, as specific areas might follow specific or different labor laws.

Leave Policy

Leave is one of the main factors that affect the pre-payroll phase. It is essential that you establish and communicate leave and vacation policies to your employees.

Attendance Policy

Knowing when a certain employee is expected to attend the workplace is another crucial element that determines pre-payroll. Therefore, make sure to define and communicate policies relating to work attendance and absence, including start times and tardiness policies.

Statutory Components

Issued and officialized in 2006, the Bangladesh Labour Act contains all the provisions around law and employment in the country. These include relations between employees and employers, wages, leave, and more.

Pay Schedule

Typically, Bangladeshi employees are paid once a month.

Employee Information

Lastly, in order to complete the pre-payroll phase, you’ll need to collect a consistent amount of information about every employee. This information typically includes working hours, sick pay, benefits, and more.

Payroll Calculation Phase

Once you have completed the pre-payroll phase, you can proceed with payroll. At this time, you'll calculate your employees’ salaries, always bearing in mind that compliance with local and national labor laws is of paramount importance.

Post-Payroll Phase

Salary Payments

Paying salaries is, often, one of a business's largest expenditures. The process can be quite complex and lengthy, and everything can quickly get out of hand if you decide to do all the work by yourself.

Payroll Accounting

Because salaries often represent the largest expense for your company, it’s vital that you have a professional, internal accounting department that can keep track of all the wages that you pay out.

Payroll Reporting and Compliance

You will also need to report salary pay-outs to the relevant Bangladeshi authorities, which requires liaising with external agencies, filing and submitting tax returns, and sending invoices.

Payroll Processing

It can be complicated to keep a close eye on how much both your company and your employees owe to the Bangladeshi tax authorities. There are several different taxes, tax brackets, and tax bodies that you will need to consider and memorize, which can be very time-consuming and make your company prone to errors.

Payroll Processing Company in Bangladesh

Navigating the challenging landscape of payroll processing in Bangladesh becomes much simpler if you choose to team up with a global payroll provider like Skuad.

Payroll Management

Companies that operate in Bangladesh have different options when it comes to manage payroll. The most efficient, reliable, and compliant is payroll outsourcing.

Other options to manage payroll in Bangladesh include:

• Internal payroll: By choosing this method, you will pay your employees via your Bangladeshi subsidiary, which ends up being much more expensive as it relies on local, trained HR staff.
• Remote payroll: If you opt for this approach, your parent company in Bangladesh can manage payroll on your behalf. While this can be cheaper compared to internal payroll, it also requires a strong, up-to-date knowledge of all the relevant labor and employment laws on both a local and a national level.
• A Bangladeshi payroll processing company: Selecting this option means having to thoroughly research the Bangladeshi market to identify a trusted, professional, and efficient local agency that can manage payroll for you.

Payroll Components

Generally speaking, payroll in Bangladesh includes both base pay and additions and deductions. However, there are a few other payroll components that you must be aware of if you want to manage payroll in Bangladesh in the best and most efficient way.

Minimum Wage

In Bangladesh, minimum wages often refer to the minimum monthly pay of workers within the garment industry. These should receive at least 8,100 Bangladeshi Taka (BDT) each month, which works out to roughly $92 USD.

Working Hours in Bangladesh

Every week, Bangladeshi employees are expected to work a standard schedule of 48 hours, normally divided into six days of eight hours each. Employees on a full-time contract can take daily breaks of up to one hour.

Overtime in Bangladesh

Overtime is allowed in Bangladesh, the details of which can be found below:

• Over Time Calculation:  Basic/208*2 = OT Rate , i.e twice the regular hourly pay
• The maximum amount of overtime work that an employee can do is 10 hours per day and 60 hours per week and on the average 56 hours per week in any year
• Employees are entitled to a 30-minute break for every 4 hours of work.

Termination

In Bangladesh, termination of employment works a bit differently compared to the laws in many other countries. Here, in fact, employees can be terminated not just for serious issues such as misconduct or criminal offenses, but also because because of a physical or mental condition — including chronic issues.

Employees who are terminated for physical or mental conditions must receive 30 days of wages for every year that they have spent with their company.

Notice Period

If a full-time, permanent Bangladeshi employee wants to leave their company, they must provide at least 60 days of notice. Employees on temporary contracts who are considered "skilled workers" need only give 30 days notice, while "unskilled workers" need only give 14 days notice.

When an employer decides to terminate an employee, they need to provide at least 120 days of notice (for workers paid a monthly rate) or 60 days of notice (for all other workers). Payment in lieu of a notice period can also be offered as an alternative.

Severance Package

Once an employee has worked with the same company for at least one year, they are entitled to receive severance pay. This amounts to 30 days of wages for every year spent with the company.

Sick Leave

All employees in Bangladesh can receive a total of 14 days of fully-paid sick leave per year. However, newspaper workers are only entitled to half pay. In all cases, employees must provide a medical certificate in order to receive their sick leave allowance and pay.

National Holidays

Despite observing a total of 21 national holidays every year, Bangladeshi employees are only allowed to take 11 days as paid holidays. These days are, typically, chosen by the employer.

The full list of Bangladeshi national holidays includes:

21 Feb: Shaheed Day

17 Mar: Sheikh Mujibur Rahman's Birthday

18 Mar: Shab e-Barat

26 Mar: Independence Day

14 Apr: Bengali New Year

28 Apr: Laylat al-Qadr

29 Apr: Jumatul Bidah

1 May: May Day

2 May: Eid ul-Fitr Holiday

3 May: Eid ul-Fitr

4 May: Eid ul-Fitr Holiday

16 May: Buddha Purnima

9 Jul: Eid ul-Adha Holiday

10 Jul: Eid ul-Adha

11 Jul: Eid ul-Adha Holiday

9 Aug: Ashura

15 Aug: National Mourning Day

19 Aug: Shuba Janmashtami

5 Oct: Vijaya Dashami

9 Oct: Eid-e-Milad un-Nabi

16 Dec: Victory Day

25 Dec: Christmas Day

Maternity and Paternity Leave

In Bangladesh, mothers are entitled to receive 16 weeks of maternity leave, with 8 weeks on either side of their baby’s due date. Maternity leave is paid in full.

At the moment, there is no paid paternity leave in Bangladesh.

Annual Leave

Vacation and annual leave in Bangladesh work following an accrual model. Every 18 working days, an employee earns one day of paid annual leave. However, this can change significantly according to the industry.

Tea plantation workers, for instance, have to work 22 days to receive their first day of leave, and all the other annual leave days accrue every 22 working days.

Find the Best Bangladeshi Talent for Your Business Today

Ensuring that payroll in Bangladesh is performed in an easy, fast, and compliant way is no easy feat. Not only does the country have a different language and currency, but many of its labor and employment laws are very different compared to those of countries in the West.

This, however, shouldn’t deter you from pursuing your business expansion in Bangladesh. Simply choose the right payroll provider in Bangladesh — a company like Skuad. Take a look at our free demo to find out how we work and how we can help you manage payroll in Bangladesh in the best possible way. Our goal is to support the success of your business and help you grow.