Doulah & Doulah

1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

Employment Contracts involving employees who are not workers as per the definition of Labour Act, 2006 are governed by the Bangladesh Contract Act, 1872 and subject to exclusive jurisdiction of local courts unless otherwise opted for in the employment contract e.g. arbitration.

Disputes arising out of employment contracts involving employees who are workers as per the definition of Labour Act, 2006 are subject to the exclusive jurisdiction of the Bangladesh Labour Tribunal. The decision of the Labour Tribunal may be appealed to the Labour Appellate Tribunal within 30 days of that decision. The decision of the Labour Appellate Tribunal on appeal is final.

As for industrial disputes (collective disputes) the Labour Act, 2006 provides the process for such industrial disputes. A dispute brought by a collective bargaining agent (CBA) on behalf of a worker is deemed to be a collective or industrial dispute. If a dispute seems likely between an employer and a worker, the CBA or the employer must communicate the issue to the other party in writing. Within 15 days of receipt of the communication, the parties must try to resolve the dispute by negotiation.

If the negotiation fails to resolve the dispute, any party may report to the conciliator that the negotiation has failed and request in writing for the conciliator to conciliate the dispute. The conciliator must, within ten days of receipt of notice, proceed to conciliate the dispute.

If no settlement is reached between the parties within 30 days of the receipt of the notice, the conciliation will be deemed to have failed. In that event, the conciliator must try to persuade the parties to agree to refer the matter to an arbitrator. If the parties agree to settle the dispute through arbitration, they must make a joint request in writing for referral of the dispute to an arbitrator. Arbitration is a voluntary process which supplements the process of conciliation. A dispute is referred to an arbitrator when conciliation fails and the parties agree to settle the dispute through arbitration. An arbitrator must give his or her decision within 60 days of hearing the dispute (extendable up to a maximum of 90 days) and any award given by the arbitrator is final and binding (with no scope for appeal against the award). The decision of the arbitrator is final and binding.

If the parties do not agree to settlement by arbitration, the parties may go on strike or impose a lockout subject to compliance with the relevant rules. However, the parties to the dispute may, either before or after the commencement of a strike or lockout, make a joint application to the Labour Court for adjudication of the matter. Any proceeding before the Labour Court or under an arbitral tribunal must be adjudicated within 60 days.


The Main Sources Of Employment Law

The key employment law statute is the Labour Act 2006 ( Labour Act) read with the Bangladesh Labour Rules 2015 (Labour Rules) issued under the Labour Act.

Other major pieces of employment related legislation include the following:

  • Private Owned Road Transport Labour Welfare Fund Act 2005;
  • Bangladesh Labour Welfare Foundation Act 2006;
  • Bangladesh EPZ Labour Act 2019;
  • Control of Employment Ordinance 1965;
  • Employment of Labour (Standing Orders) Rules 1968;
  • Industrial Relations Rules 1977;
  • Control of Employment Rules 1965;

National Law And Employees Working For Foreign Companies

All individuals physically working in Bangladesh, regardless of their nationality or the origin of their contract fall under the statutory provisions of same law as stated above.


National Law And Employees Of National Companies Working In Another Jurisdiction

The statutory rights under above laws will usually apply only when the employee is physically working within the territorial jurisdiction of Bangladesh.


Data privacy

Data privacy in Bangladesh is governed by the Digital Security Act, 2018. Employers are permitted to use the employee data as long as those are essential to meet the requirements of labour regulations. However, use beyond that (e.g. transfer of data to third party payroll processor, sharing employee data with group, use of fingerprints for entry (which is not essential under law) etc.) needs consent. As such it is recommended to take the consent at one go. Other than statutory compliance use of any personal data of a data subject i.e. employee can be processed either under an express consent or a contractual use provision under the employment contract.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

Under the Labour Act, 2006 (Labour Act), there is no legal requirement for an employment contract to be in writing. However, the Labour Act does require an employer to issue a letter of appointment when appointing an employee which is required to include the following items at minimum:

  • Name of worker,
  • Father’s Name,
  • Mother’s Name,
  • Spouse Name,
  • Address: Present / Permanent
  • Designation, type of work, date of joining,
  • Class of worker,
  • Wages or pay scale (Wages or salary and the rate of the increase of annual salary, if any),
  • Other payable financial facilities (house rent, medical, education, food, conveyance, festival and attendance allowances and gratuity if any, and
  • It is to be mentioned hereby that all appointment conditions, existing service rules (if any), and Labour Act will be complied with.

The Labour Act, 2006 and Labour Rules, 2015 lists all privileges to be offered to employees under law and no term of the employment can confer less benefit as provided in the Labour Act.


Mandatory Requirements
  • Trial Period

    • An employer may implement a probationary period in respect of new employees. The maximum probationary period for employees depends on the type of employees:

    • clerical workers – six months' probation; and
    • all other workers – three months' probation, with the possibility of an additional three month extension for skilled workers if the employer has not been able to determine the quality of the employee's work within the initial three-month probationary period.

     

  • Hours Of Work

    • Ordinarily, workers cannot be required or allowed to work more than:

    • eight hours per day; or
    • 48 hours per week.

     

    No female worker may, without her consent, be required by her employer to work between the hours of 10pm and 6am. In addition, certain statutory restrictions apply to working hours of adolescents.

  • Special Rules For Part-time Work

    • Workers may work overtime, but total working hours of such worker shall not exceed ten hours in a day or 60 hours in a week, and on average 56 hours per week over the course of a year.

    Workers are entitled to overtime pay at the rate of 200% their ordinary rate of basic wage and dearness allowance.

  • Earnings

    • Monthly waged must be paid for a month within the seventh day of the following month. Remuneration will consist of wages which may also include additional payments prescribed by statute or payments in accordance with the terms of the employment contract. Additional payments may include:

    • festival bonuses (minimum two in each year)
    • encashment of annual leave
    • other bonuses and additional remuneration payable under the terms of employment;
    • remuneration payable in respect of overtime work, holiday or leave;
    • remuneration payable under any award or settlement between the parties or under a court order;
    • termination payments; and
    • sums payable as a result of lay-off or suspension.

     

    Under the Labour Act, there are no set minimum wages for workers generally. However, the Minimum Wages Board (established under the Labour Act) has the authority to recommend minimum wages to be set for workers in certain industries. In addition, the Government may direct the Minimum Wages Board to recommend a minimum wage rate for any particular class of workers in a certain industry. To determine the appropriate minimum wage, the Minimum Wages Board takes into account a number of factors in relation to the locality concerned, including cost of living, standard of living, cost of production, productivity, business capabilities and economic and social conditions.

    In practice, employers across all business sectors generally follow the national minimum wages that apply to the following industries in Bangladesh. The applicable minimum wages are as follows:

    • private jute mill workers – BDT5,500 a month; and
    • workers employed in ready-made garment factories – BDT8,000 to BDT18,257 a month for workers of different grades (1-7)
    • workers employed in aluminium and enamel factories – BDT8,700 to BDT15,900 a month for workers of different grades
    • workers employed in glass and silicate factories – BDT8,500 to BDT16,500 a month for workers of different grades
    • workers (except apprentices) in the following industries set up in Export Processing Zones:
      • Garments / Garments Accessories / Shoe / Shoe Accessories / Leather Products / Support Accessories / Tent & Tent Accessories / Plastic Products / Toys / Caps & Hats and other related industries - BDT6,250 to 15,950a month
      • Electronic & Electrical products / Software / Lenses & Glass Products / Metal & Metal Casting / Automobile & Auto parts / Bicycle / Heavy Industries / Cosmetics / Boats / Golf Shaft / Fishing Equipment and other related industries - BDT6,250 to 10,750 a month
      • Textile Industry / Chemical / Dyeing / Oil & Refinery / Agro Products / Furniture / Wood & Bamboo Products and other related industries - BDT6,250 to 14,950 a month
      • Terry Towel / Sweater / Wigs and other piece rated industries: BDT6,250 to 8,650 a month

     

  • Holidays/Rest Periods

    • Workers are entitled to the following rest and meal breaks:

    • a one-hour break after six hours of work;
    • a half-hour break after five hours of work; or
    • a one-hour break or two half hour breaks in relation to work performed beyond eight continuous hours.

     

    Workers in shops, commercial establishments and industrial establishments must be provided with at least one and a half days' rest per week. Workers engaged in road transport services must be provided at least one day of rest per week. No worker can be made to work for more than ten consecutive days without a rest day. Following are the leave entitlements granted under the Labour Act, 2006:

    • Annual Leave: The general entitlement for most employees is one day of paid annual leave for every 18 days of service the year prior, equalling roughly 17 days of paid vacation based on a six-day workweek, or 14 days for a five-day workweek. Employees of newspapers and tea plantations accrue one day’s leave for every 11 and 22 days of work, respectively. Employees who are minors accrue one day’s leave for every 14 to 18 days of work, depending on the type of establishment. All employees with at least one year of service are entitled to paid annual leave. There is no statutory requirement to provide paid leave pro rata for new employees.
    • Sick Leave: Employees are entitled to 14 working days of paid sick leave per calendar year. Employees must get certification of the illness or incapacity from a registered medical practitioner appointed by the employer or, in the absence of an appointed physician, any other registered medical practitioner from the first day of leave. Sick leaves cannot be accumulated and carried forward to the succeeding year.
    • Maternity Leave: Employee with at least six months of service by the due date are entitled to 16 weeks of paid maternity leave, beginning 8 weeks prior to the due date and extending to 8 weeks after delivery. However, the leave is payable only for the first two children of a mother. Expectant mothers with two or more children are still entitled to leave, but it is unpaid. If a woman entitled to the maternity benefit dies during delivery or within eight months after, the maternity benefit is payable to the person caring for the child or the person nominated by the woman if the child does not survive. No (paid or unpaid) parental leave other than maternity leave is required to be paid by the employer.
    • Casual Leave: Employees are entitled to 10 days of casual leave per calendar year. Unused casual leave is not carried forward to the succeeding year, nor is there any requirement to provide pay in lieu of unused leave on termination.
    • Festival Holidays: In addition, workers are entitled to enjoy eleven festival holidays each year as per his / her religion.

     

  • Minimum/Maximum Age

    • Subject to social weekly maximum hour and rest requirements persons below 19 years of age but older than 14 years may be employed for specific types of works as per the Labour Act, 2006. Across all establishments and industries retirement age of a person as specified under the Labour Act, 2005 is 60 years. After retirement such parson may be employed under fixed term contract.

  • Illness/Disability

    • A worker may be discharged from service for reasons of physical or mental incapacity or continued ill-health certified by a registered medical practitioner. If a discharged worker completes not less than one year of continuous service he shall be entitled to Gratuity (as defined below).

  • Location Of Work/Mobility

    • Every employer in an industrial or commercial establishment is required to issue a formal appointment letter. It is required to stipulate the place of work in each labour agreement. Employers cannot request the employees to move to a different location unless it is set out in the labour agreement or done as follows.

    In case of shifting the factory or the firm: (a) If the factory is shifted within 40 km, and the workers aren’t willing to go to the shifted place, the workers will get benefits as granted for retrenchment; (b) If the factory is shifted more than 40 km of the existing factory and the workers aren’t willing to go to the shifted place, the workers will get benefits as applicable to voluntary termination by employer.

  • Pension Plans

    • Except for public sector there are no statutory requirements for either employers or employees to make any pension contributions. However, employers must set up a provident fund for their employees upon being so requested by 75% of their employees, into which equal contributions (minimum 7% of base salary) from the employer and employee are deposited. There are no other mandatory pension requirements.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • Only mothers are mandatorily entitled to maternity leave with pay, as stated above. There is no statutory entitlement to paternity leave for male workers. During the ten weeks preceding expected delivery, employers must not require pregnant workers to engage in any work:

    • of an arduous nature; or
    • that involves standing for a sustained period of time (eg a few hours at a time).

     

    However, female workers who perform physical duties in tea plantations may be required to undertake light duties if a medical practitioner certifies that the worker is physically fit to do so. Statutory maternity benefits are payable at the rate of daily, weekly or monthly average wages (as applicable). The benefits are calculated by dividing the total wages earned by the female worker during the three months immediately preceding the date on which she gives her employer notice of her pregnancy by the number of days she actually worked during that period. All maternity benefits must be paid in cash.

    If notice or an order of termination is given by the employer to a female worker within a period of six months before and eight weeks after her delivery, and if such notice or order is given without sufficient cause, the female worker must not be deprived of any statutory maternity benefit to which she would otherwise have become entitled.

    No other parental leave exists.

  • Compulsory Terms

    • The Labour Act, 2006 and Labour Rules, 2015 lists the general terms of employment of the employees and under no circumstances any term of the employment can confer less benefit as provided in the Labour Act.

  • Non-Compulsory Terms

    • Any terms that conflict with the substance of the labour laws will be considered void. Otherwise the employer and employee enjoy the freedom to enter into terms at their own discretion.


Types Of Agreement

Both continuous and fixed term/limited employment contracts are recognised. The Labour Act classifies employment contracts into the following categories:

  • apprentice;
  • substitute;
  • casual;
  • temporary;
  • probationer;
  • permanent; and
  • seasonal worker.

Continuous employment: A worker in continuous employment is employed on an indefinite basis and has successfully completed his or her probationary period.

Substitute workers: Substitute workers are workers who substitute a permanent or probationary worker on a temporary basis. However, a worker whose name is borne on the muster rolls of an establishment will cease to be regarded as a substitute worker for the purposes of any entitlement to termination pay, if they have completed at least one year of continuous service with the employer.

Casual and part time workers: Casual workers are workers who undertake work of a casual nature, as and when required. However, if a casual worker has remained employed for a continuous period of at least six months (which is the maximum probationary period), they may be deemed to be employed on a permanent basis.

Although the term "part time employee" is not specifically defined under the Labour Act, a part time worker may also be entitled to some of the benefits that permanent workers are entitled to after they have been employed for a continuous period of six months.

Temporary workers: A temporary worker is a worker who undertakes work of a temporary nature which is likely to be finished within a limited period (including seasonal work).


Secrecy/Confidentiality

It is the duty of the employee to respect the confidentiality of the employer’s commercial and business information, without any specific covenant. After employment finishes, only trade secrets are protected by the implied duty of confidentiality. Trade secrets include information which is of a sufficiently high degree of confidentiality to remain confidential after employment. In addition to the implied duties, employers will often include in the employment contract an express term specifying the type of information that is a trade secret, and therefore protected, to prevent future disclosure. They may also include restrictive covenants as a means of protecting future confidentiality.


Ownership of Inventions/Other Intellectual Property (IP) Rights

Under most of the intellectual property laws of Bangladesh employers are the owners of any invention or intellectual property right developed by the employee during the course of his / her employment unless otherwise specified in the employment contract.


Pre-Employment Considerations

Employers can attach certain representations, e.g. correctness of the experience and genuineness of the certificates etc. on part of a prospective employee to negotiate an employment agreement with his / her. If the employers want to store the applicants application in its database for future opportunities, then it requires consent from the candidate.


Hiring Non-Nationals

Expatriates must have a work permit to work in Bangladesh, with separate residency permits required for family members. For service sector maximum expatriate to local worker ratio allowed is 1:5 (includes EPC and O&M Contractors)) and for industry sector it is 1:20. The following conditions apply in relation to issuing a work permit:

  • Nationals of countries recognised by Bangladesh are considered for employment (that is, only nationals of those countries are able to apply for a work permit).
  • Employment must be in establishments registered by the appropriate authority (that is, the Registrar of Joint Stock Companies and/or the Bangladesh Investment Development Authority).
  • Local experts/technicians are not available .
  • Persons below 18 years of age are not eligible for a work permit.
  • The number of expatriates should not exceed 5% in the industrial sector and 20% in the commercial sector.
  • The initial work permit is for two years, extendable on a case-by-case basis.
  • Security clearance is required from the Ministry of Home Affairs.

To obtain a work permit, an application is filed with the BIDA for an e-visa recommendation. On receipt of the recommendation, the Bangladesh Embassy provides the employee with an e-visa that is valid for three months. On arrival in Bangladesh, the employee must apply to the BIDA for the work permit. The applications are filed by the employer and the application stage takes about two weeks.


Hiring Specified Categories Of Individuals

There are restrictions on who can be employed to carry out certain hazardous activities and restrictions on the type of work that vulnerable groups like children and pregnant women can be required to undertake. Other then these there are no requirement on hiring specified categories of individuals. However, for employment of disabled persons certain incentives are being planned for offering.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

Bangladesh legislation does not prohibit or specifically restrict outsourcing/subcontracting. However, the Labour Act contains some rules with reference to contractors providing workers under contract (Contracting Agency) , in particular stating that the principal and the Contracting Agency are jointly and severally liable to pay the salary for the workmen supplied by the Contracting Agency. Contracting Agencies must procure valid license to operate its Bangladesh.

Bangladesh law distinguishes between a contract of service (an employer-employee relationship) and a contract for services (a principal-independent contractor relationship). The courts have set out a number of indicia that must be taken into account in determining whether a person is an employee or is more accurately classified as an independent contractor:

  • the intention of the parties as to the nature of the relationship;
  • the degree of control that the employer can exercise over the person carrying out the work. An employee is generally instructed as to the manner in which a task is carried out, while a contractor's instructions generally only relate to the end result required;
  • the mode of remuneration. An employee is generally paid hourly, daily or piece rates and a contractor is usually paid for the performance of a particular task or the achievement of a particular result, generally upon presentation of an invoice;
  • the provision and maintenance of equipment. Employees' equipment is provided while contractors are required to provide and maintain their own equipment;
  • the hours of work and provision for holidays. Employees' hours are set and they may receive holiday and sick leave. Independent contractors generally work their own hours and do not receive paid leave; and
  • the delegation of work by the employee. Employees are not able to delegate their work, while contractors can delegate to another suitably qualified person.

The application of these indicia is a balancing exercise, in which no one factor is determinative, and all relevant factors must be considered and weighed in reaching a conclusion. Thus, even where parties may have intended to create an independent contractor relationship and express such intention in a written signed contract, if the other factors point toward an employment relationship then a court will find that the worker is in fact an employee.

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

The contractual nature of the employment relationship means that the employer is restricted from making any amendments to the terms of the contract without the consent of the employee; the change may either be express or implied.


Change In Ownership Of The Business

Although employees generally have the discretion to choose if they want to work for the new owner, when there is a change in the ownership of the business the employees also commonly pass under the change as the employment contract is between the employee and entity, not with its owners.


Social Security Contributions

Employers that satisfy either of the following conditions are required to establish a Workers Profit Participation Fund ( WPPF) and to contribute 5% of their annual profit to their WPPF, Welfare Fund (maintained by the company), and Workers' Welfare Foundation (maintained by the Government) in the ratio of 80:10:10 before September each year:

  • the paid-up capital of the company on the last day of its accounting year is one crore taka or more; or
  • the value of the fixed assets of the company on the last day of the accounting year is at least two crore taka.

Mandatory implementation of WPPF currently does not apply to 100% foreign invested companies or 100% export oriented pending the enactment of relevant rules by the Government of Bangladesh.


Accidents At Work

The main acts regulating workplace health and safety in Bangladesh is Labour Act read with Labour Rules. The Labour Act read with Labour Rules covers all workplaces in Bangladesh except Export Processing Zones which are regulated by Bangladesh EPZ Labour Act, 2019 and:

  • imposes general duties of care on various stakeholders (eg employers, principals and employees);
  • requires employers, in particular, to proactively identify and mitigate risks and hazards at the workplace;
  • report work-related accidents, certain incidents qualifying as dangerous occurrences and certain specified occupational diseases;
  • require employers to compensate for work-related injuries or diseases; and
  • imposes penalties to reflect the cost of poor safety management.

Discipline And Grievance

The law lays out what instances may be considered as misconduct, which may justify dismissal without advance notice or compensation in lieu of notice. They are:

  • Wilful insubordination or failure to obey, whether alone or in combination with others, any lawful or reasonable order of a superior;
  • Theft, fraud or dishonesty in connection with the employer’s business or property;
  • Taking or giving a bribe in connection with one’s own or any other worker’s employment under the employer;
  • Habitual late attendance;
  • Habitual breach of any law or rule or regulation applicable to the establishment;
  • Riotous or disorderly behaviour in the establishment, or any act subversive of discipline;
  • Habitual negligent work;
  • Habitual breach of any rule of employment, including conduct or discipline, approved by the Chief Inspector of Factories and Establishments;
  • Falsifying, tampering with, damaging, or causing loss of the employer’s official records; and
  • Conviction for any criminal offense.

A worker found guilty of misconduct may, instead of being dismissed, under any extenuating circumstances, be awarded any of the following punishments, namely: (a) removal; (b) reduction to a lower post, grade or scale of pay for a period not exceeding one year; (c) stoppage of promotion for a period not exceeding one year; (d) withholding of increment for a period not exceeding one year; (e) fine; (f) suspension without wages or without subsistence allowance for a period not exceeding seven days; (g) censure and warning.

Any worker who has a grievance in relation to any employment matter (including in relation to the termination of his or her employment) and intends to seek redress must inform his or her employer in writing within 30 days from the date on which the grievance arose. Within 30 days of receiving information in relation to a grievance, the employer must:

  • inquire into the matter;
  • provide the worker an opportunity to be heard; and
  • communicate its decision to the worker.

If the employer fails to come to a decision or if the worker is dissatisfied with the employer's decision regarding the grievance, the worker may lodge a complaint in writing to the Labour Court within 30 days (ie either from the date of the employer's failure to provide the decision or the date of the employer's decision, as applicable).


Harassment/Discrimination/Equal pay

The Constitution of Bangladesh provides all citizens with fundamental rights that provide protection against discrimination on grounds of religion, sex, caste, race, or place of birth, and guarantees equality in matters of public employment. The Constitution prohibits all forms of forced labour and using forced labour is a punishable offence. In addition, the Constitution provides women with equal rights in all spheres of State and public life.

The Labour Act prohibits employers from discriminating against any person in relation to any employment, promotion, conditions of employment or working conditions on the ground that such person is (or is not) a member or officer of a trade union. The Labour Act, 2006 also imposes equal ay for equal amount of work allowing no discrimination to be made in this respect on the ground of being male, female or handicapped.

In addition, the Labour Act prohibits employers from refusing to employ, terminating or threatening to terminate, injuring or threatening to injure, workers in respect of their employment by reason that the worker proposes to become (or seeks to persuade any other person to become) a member or officer of a trade union. The Labour Act provides that in determining wages or fixing minimum rates of wages for any worker, the principle of equal wages for male and female workers for work of equal nature and value must be applied.

In addition, the Labour Act contains a prohibition on any conduct towards a female worker which may seem to be indecent or repugnant to the modesty or honour of that female worker.


Compulsory Training Obligations

There are no compulsory training obligations placed on either the employers or employees.


Offsetting Earnings

Following deductions are allowed under the Labour Act, 2006:

  • fines imposed under the Labour Act;
  • deductions for unauthorised absence from duty;
  • deductions for damage to or loss of any goods under the custody of a worker or for loss of money for which he or she is liable to account, where such damage or loss is directly attributable to his or her neglect or default;
  • deductions for accommodation provided by the employer;
  • deductions for facilities and services approved by the Government and provided by the employer, other than the raw materials and equipment used for the requirement of employment;
  • deductions for recovery of advances or loans, or adjustment of overpayments of wages;
  • deductions of income tax payable by the worker;
  • deductions by order of a court or any authority competent to make such an order;
  • deductions for subscriptions to, and payment of advances from, any recognised provident fund;
  • deductions for payment to any co-operative society approved by the Government or to an insurance scheme maintained by the Bangladesh Postal Department or any Government Insurance Company;
  • deductions made with the written consent of the worker for contribution to any fund or scheme constituted by the employer with the approval of the Government for the welfare of workers or their family members; and
  • deduction of subscription to the Collective Bargaining Agent Union through a check-off system.

Payments For Maternity And Disability Leave

Except for maternity leave and sick leave with pay, there are no mandatory payment granted for Maternity and Disability Leave.


Compulsory Insurance

Group medical insurance is mandatory for industries employing over 100 workers to meet payment liability for bodily harm or disease contracted by the employees during the course of employment.


Absence For Military Or Public Service Duties

If an employee is required to participate in compulsory military or public service, the employee is generally entitled to return to the same position following the completion of such service, but they are not paid while they are on such leave.


Works Councils or Trade Unions

The entitlement of workers to join any trade union is based on the fundamental right of freedom of association guaranteed by the Constitution of Bangladesh. The primary role of trade unions in the workplace is to regulate relations between:

  • workers and employers;
  • workers and workers; and
  • employers and employers.

The Labour Act provides that workers have the right to:

  • form trade unions, primarily for the purposes of regulating relations between workers and employers and workers amongst themselves; and
  • join a trade union of their choice (subject to the constitution of the union concerned).

Workers may form a trade union if minimum 20% workers in that company becomes members of such a prospective union. Relevant prospective union may apply to the Department of Inspection of Factories & Establishment (Ministry pf Labour) for its recognition as a union. If there are more than one union in a company, the company is required to arrange a vote to nominate a collective bargaining agent (CBA).

If a company does not have any trade union but have minimum fifty workers, then such company is required to form a participation committee with equal participation from the employer and workers. The participation committee does not have any bargaining power but it acts as a bridge between employer and workers to maintain cooperation, standardization, skill development and increase productivity. Participation committee can provide non-binding recommendation to the employers for the wellbeing of the workers.

In general, trade unions play the role of advancing the social and economic wellbeing of workers. Trade unions may participate in collective bargaining and the settlement of disputes between workers and employers. Trade unions may participate in collective bargaining, and collective agreements may be implemented in Bangladesh.


Employees’ Right To Strike

The right of workers to strike and the right of employers to lock-out employees are guaranteed under the Labour Act provided certain conditions are met. Upon institution of an industrial dispute, if conciliation fails and if the parties do not agree to settlement by arbitration, the parties may go on strike or impose a lockout subject to compliance with the relevant rules.


Employees On Strike

The party which raises any industrial dispute may, within 15 (fifteen) days of receipt of the certificate of failure of the conciliation process give a notice to the other party, of strike or lockout, as the case may be, in which the date of commencement of such strike or lockout shall be mentioned, which shall not be earlier than seven days and later than 14 (fourteen) days of the date of giving such notice, or the party raising such dispute may make an application to the Labour Court for adjudication of the dispute.

A collective bargaining agent cannot serve any notice of strike, unless two-thirds of its members give their consent to it through a secret ballot, specially held for that purpose, under the supervision of the Conciliator. If a strike or lock-out begins, either of the parties to the dispute may make an application to the Labour Tribunal for adjudication of the dispute.

If any strike or lock-out lasts for more than 30 (thirty) days, the Government may, by order in writing, prohibit it. The Government may, by order in writing, also prohibit a strike or look-out at any time before the expiry of 30 (thirty) days if it is satisfied that the continuance of such strike or lock-out is causing serious hardship to the public life or is prejudicial to the national interest.


Employers’ Responsibility For Actions Of Their Employees

Employers are generally liable under the doctrine of vicarious liability for negligent misconduct of its employees performed during the course of employment.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

According to the Labour Act, employers may terminate employees without cause. Employment may be terminated with notice under certain circumstances, such as: a) Mutual agreement; b) For reasons of misconduct or disciplinary infractions; c) Resignation; d) Termination without cause; e) Retirement; and f) Discharge (due to physical or mental incapacity or continued ill-health).

The law lays out what instances may be considered as misconduct, as described in paragraph 3 above. In circumstances other than criminal offence where the worker is considered to have engaged in misconduct, the employer must first issue a charge sheet clearly defining and specifically mentioning the nature of the commission or omission on the part of the delinquent employee. The employee has seven days to provide a suitable explanation or reason for his or her actions. Thereafter an investigation committee is formed with equal participation from the employer and nominees of the alleged employee. The employee must be given ample opportunity to defend himself or herself before a hearing. Upon conclusion of the inquiry, the employer is required to consider the inquiry report and decide whether the employee is guilty of the alleged misconduct and, if so, when punishment should be given. Possible punishments include: censure or warning, a reduction in pay or employee grade for up to one year, or dismissal with immediate effect.

A worker charged with misconduct may be suspended pending the inquiry into the charges against him or her and, unless the matter is pending before any court, the period of such suspension shall not exceed 60 days. If, on inquiry, a worker is found guilty and is punished, he or she shall not be entitled to his or her wages for any period of suspension but shall be entitled to the subsistence allowance (half of the basic wages, dearness allowance and adhoc or interim wages, if any) for such period. If the charges against the worker are not proved in the inquiry, he or she shall be deemed to have been on duty for the period of suspension for inquiry, if any, and shall be entitled to his or her wages for such period of suspension and the subsistence allowance shall be adjusted accordingly.


Instant Dismissal

Instant dismissal is permitted only for convictions of a criminal offense. Employment may be terminated with or without notice during the period of probation if the employee’s performance during that period is found to be unsatisfactory. No notice is required unless the terms of the employment or appointment letter specifically mention otherwise.


Employee's Resignation

In the absence of provisions to the contrary in the agreement, fixed-term contracts can be terminated with 30 days’ notice. Persons employed under an indefinite-term contract may provide 60 days’ notice of resignation. Temporary workers paid on a monthly basis must provide 30 days’ notice.


Termination On Notice

Employers must give 120 days’ notice to permanent employees and 30 days’ notice to temporary employees for termination without cause. In case of redundancies, employees can also be retrenched under notice as described below.


Termination By Reason Of The Employee's Age

Across all establishments and industries retirement age of a person as specified under the Labour Act, 2006 is 60 years achieving which employment ends automatically.


Automatic Termination In Cases Of Force Majeure

There is no such express automatic termination process. The Labor Act includes provisions for layoffs of a temporary nature, defined as the failure, refusal or inability of an employer to provide employment to workers due to shortages of coal, power or raw material, the accumulation of stock, or the breakdown of machinery.

Workers (excluding badli and casual workers) with a year of more of service who are laid off are entitled to compensation from the employer equal to 50% of basic wages and dearness allowance and the full housing allowance (if any) for the first 45 working days. From day 46, the benefit is reduced to 25% of basic wages and dearness allowance and 100% of the housing allowance. After 60 days, the company may initiate redundancies. An employee is not entitled to compensation if he or she refuses to accept suitable alternative employment with the employer with no loss of pay at or near his or her former workplace or if he or she fails to come to work during normal working hours at least once a day if so required by the employer.


Collective Dismissals

Workers may be collectively retrenched due to redundancy. For redundancy dismissals employers are required to notify the Ministry of Labor and Employment as well as the local bargaining agent (if any) of the redundancy plans. Employers must provide workers with 30 days’ written notice or pay in lieu of notice outlining the reasons for redundancies. There is no notice requirement for employees who had been previously laid off and were receiving compensation from the employer. In the absence of a separate agreement with the employee or employees to the contrary, the selection of employees for redundancy from a particular category of workers should be arranged so that the most recently hired workers are first in line for redundancy.

Similarly, in the event that the employer proposes to hire new employees within one year of redundancies, the company must notify retrenched workers for the category of employee concerned to see if they are interested in returning to work. Re-employment of redundant workers who express interest must observe the same priority for length of service. All employees with a year or more of service are entitled to 30 days’ wages per year of service and with ten year or more of service are entitled to 45 days’ wages per year of service.


Termination By Parties’ Agreement

Parties are free to agree on any terms agreed between them as long as such terms are not less favorable to those granted in favour of the employee by law.


Directors Or Other Senior Officers

The major factor in determining whether an employee is a "worker" or manager is whether he or she has independent hiring and firing power. For non-worker directors or other senior officers such termination of employment contract is required to be conducted as per the terms of the employment contract and the Contract Act, 1872.


Special Rules For Categories Of Employee

The Labour Act prescribes minimum terms and conditions of employment and governs the rights and obligations in relation to employers and "workers". Under the Labour Act, a "worker" is defined as any person, including an apprentice, employed in any establishment or industry (either directly or through a contractor) to do any skilled, unskilled, manual, technical, trade, promotional or clerical work, for hire or reward. Employees working in administrative, managerial or supervisory positions are regarded as "non-workers" and their employment is not regulated by the Labour Act. References to "workers" throughout this chapter refer only to workers who are covered by the Labour Act.

The distinction between workers and managers under Bangladeshi legislation has been clarified by relevant case law. The Supreme Court of Bangladesh has opined that "what is important in determining whether a person is a worker or not is to see the main nature of the job done by him and not so much his designation" (M.R. Chowdhury, General Manager, Shields Limited v 1st Labour Court (1997) 2 BLC 366). In Muhammad Yousaf v Punjab Textile Mills Ltd [1973] PLC 358; [1974] LLC 16, it was held that a supervisor, merely performing supervisory duties and having no power to hire or to dismiss, or to take disciplinary actions against other workers by his or her own authority, is within the definition of a "worker".

This has also been clearly acknowledged in Order No. 5 issued in Labour Appeal No. 397 on 31 December 2013. Therefore, the major factor in determining whether an employee is a "worker" or manager is whether he or she has independent hiring and firing power, not his or her designation. There are no minimum statutory obligations in relation to non-workers. The terms and conditions of non-workers are determined entirely in accordance with their employment contract and work rules or policies (if any).


Specific Rules For Companies in Financial Difficulties

There are no special rules which apply if a company is in financial difficulty. In case of financial difficulty the company can retrench employees on the basis of redundancy. If a company goes into liquidation, all employees are automatically dismissed. Any claims by the employees against an insolvent company are considered as unsecured creditors and rank behind secured debt, tax and similar due to the Govt. with bank debt and other unsecured debts satisfied on 2:1 basis.


Restricting Future Activities

Clauses that attempt to restrict the future activities of an employee are generally contrary to public policy and therefore unenforceable. However, the courts will uphold restrictions if they are drafted sufficiently narrowly. Such restrictions must be designed to protect a ‘legitimate business interest’ of the employer and they should be no broader than is necessary to protect those interests. Further, they must be clear and reasonable in time and area. Typical clauses include those designed to restrict an employee from joining a competitor (or setting up in competition) that may result in exposure of trade secret, from soliciting business from/dealing with certain customers or from enticing other employees to leave.


Whistleblower Laws

The relevant law on whistleblowing is the Disclosure of Public Interest Information (Protection) Act 2011. It encourages individuals to disclose information and protects the identity of the whistle-blower. This law covers disclosures made to any Government agency or statutory organisation but will not apply in relation to internal complaints within a private company or organisation.

As there is no specific legislative protection for whistle-blowers in private sector entities, employers are free to implement whistle-blower policies as necessary.


Special Rules For Garden Leave

Garden leaves are not statutorily recognized in Bangladesh. However, as this is not in conflict of local regulations, employers may exercise such option.


Severance Payments

An employee's entitlement to severance pay varies depending on the ground of termination:


    Ground of Termination Severance Pay
    Termination for cause on the basis of theft, misappropriation, fraud or dishonesty in connection with the business or property of the employer, or disorderliness, riot, arson or breakage in the establishment No entitlement to severance pay
    Termination for cause on the basis of misconduct other than those set out above 15 days' wages for every completed year of service
    Termination without cause and retrenchment (workers on permanent employment contract) 30 days' wages for every completed year of service where the length of service is less than 10 years or 45 days' wages for every completed year of service where the length of service is equal to or more than 10 years
    Termination without cause (workers on fixed term contract) No entitlement to severance pay

Apart from severance pay, a worker may be entitled to other benefits under the Labour Act such as provident fund.


Special Tax Provisions And Severance Payments

Severance pay is tax exempt if such severance payment is provisioned by the employer in form of a gratuity fund duly registered with the National Board of Revenue. Any investment earning from such gratuity fund is also tax exempt.


Allowances Payable To Employees After Termination

Employers are not required to contribute to any allowances payable to employees after termination.


Time Limits For Claims Following Termination

Under the Limitations Act, the time limit for claims following termination is restricted to three years from the occurrence of the cause of action.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

Children below the age of 14 years old are prohibited to work in any establishment



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Amina Khatoon
Doulah & Doulah
Bangladesh


A B M Nasirud Doulah
Doulah & Doulah
Bangladesh


Disclaimer:

© 2021, Doulah & Doulah . All rights reserved by Doulah & Doulah as author and the owner of the copyright in this chapter. Doulah & Doulah has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021