An employment contract in Bangladesh is not just a commercial agreement between employer and employee. For most staff, the Bangladesh Labour Act 2006 requires an appointment letter, fixes minimum terms that cannot be contracted out of, and controls how employment can end. The 2026 amendments make it a good moment to review your templates.
- The Bangladesh Labour Act 2006 requires employers to give every worker an appointment letter and an identity card with a photograph.
- Statutory protections apply to "workers"; staff employed mainly in managerial, administrative or supervisory roles are governed largely by their contract, though some protections still apply.
- The Act sets probation periods, working hours, overtime, leave, termination notice and end-of-service benefits; a contract cannot reduce these minimums.
- The Labour (Amendment) Act 2026 followed an ordinance of November 2025 and made around ninety changes, including to maternity benefits, trade unions and the definition of worker; check templates against the gazetted text.
- Export processing zones have their own labour law, and post-employment non-compete clauses are generally void under section 27 of the Contract Act 1872.
Parliament passed the Personal Data Protection Act 2026 in April 2026, repealing the Personal Data Protection Ordinance 2025. References below to the Ordinance should be read in light of the 2026 Act.
What an employment contract in Bangladesh must do
In Bangladesh, the employment relationship sits at the meeting point of contract law and labour law. The Contract Act 1872 supplies the general principles of offer, acceptance and enforceability. The Bangladesh Labour Act 2006 and the Bangladesh Labour Rules 2015 supply mandatory protections for workers that override inconsistent contract terms.
An employment contract in Bangladesh therefore has two jobs. It must record the commercial bargain, such as role, pay, location and reporting lines. And it must comply with the statutory floor, including probation, hours, leave, termination and benefits. A contract that ignores the second job is not just weak; parts of it will be unenforceable, and the employer may face penalties from the Department of Inspection for Factories and Establishments (DIFE).
The 2026 amendments
The interim government amended the Labour Act by ordinance on 17 November 2025. Parliament then passed the Labour (Amendment) Act 2026, which carried forward roughly ninety changes. Reported changes include longer maternity leave, revised trade union registration thresholds, provident fund provisions and a broader definition of worker. Because the final Act may differ in detail from the ordinance, confirm specific numbers against the gazetted text before updating your contracts.
Worker or manager: who the Labour Act protects
The Labour Act defines "worker" broadly to include anyone employed to do skilled, unskilled, manual, technical, trade promotional or clerical work for hire or reward. It excludes people employed mainly in managerial or administrative capacities. The classification matters, because most of the Act's protections, including termination notice and benefits, are framed around workers.
Many employers label staff as "officers" or "executives" to take them outside the Act. Courts look at the actual duties, not the title. An "executive" who processes invoices without managerial authority is likely to be a worker. For an employment contract in Bangladesh covering a genuinely senior manager, the contract itself carries more weight, and it should deal fully with notice, severance and post-termination terms.
Reported changes in the 2026 amendments broadened the definition of worker. If your contracts relied on job titles to exclude staff from the Act, review those roles now. Misclassification exposes employers to claims for unpaid benefits and unlawful termination.
Categories of employment under the Labour Act
The Labour Act sets out categories of workers, and every employment contract in Bangladesh for a worker should identify the correct one. The table summarises them.
| Category | Meaning | Key point |
|---|---|---|
| Apprentice | Employed for training, with an allowance | Training period and allowance should be set out |
| Substitute (badli) | Replaces a permanent or probationer worker who is absent | Temporary by nature |
| Casual | Employed for casual work | Used for irregular, short-term needs |
| Temporary | Employed for work that is temporary and likely to end within a limited period | Cannot be used for permanent roles indefinitely |
| Probationer | Employed provisionally to fill a permanent vacancy | Probation periods are fixed by the Act |
| Permanent | Employed on a permanent basis, or after satisfactory probation | Strongest statutory protection |
| Seasonal | Employed during a season | Common in agro-processing and similar industries |
Probation
The Act provides for a probation period of six months for clerical workers and three months for other workers, with a possible extension of up to three further months for skilled workers whose skill cannot be assessed in the initial period. A worker who continues after probation without confirmation is treated as permanent. Write the probation period and confirmation process clearly into the employment contract in Bangladesh, consistent with these limits.
Mandatory terms of an employment contract in Bangladesh
Section 5 of the Labour Act requires an employer to give every worker an appointment letter and an identity card with a photograph. The Labour Rules prescribe the matters the appointment letter should cover. In practice, a compliant appointment letter or employment contract in Bangladesh should include the following.
- Parties and start date. Names, addresses, date of joining and place of work.
- Position and category. Job title, duties, grade and the Labour Act category, such as probationer or permanent.
- Wages. Basic wage, allowances, payment date and method, consistent with any applicable minimum wage for the industry.
- Working hours and overtime. Daily and weekly hours, rest intervals and overtime rate.
- Leave. Casual, sick, annual, festival and maternity leave as provided by the Act.
- Benefits. Provident fund, gratuity, group insurance and workers' profit participation fund where applicable.
- Termination. Notice periods and procedure consistent with the Act.
- Policies. Reference to service rules, code of conduct and confidentiality.
Service rules
Under the Labour Act, an establishment may have its own service rules, but they must not be less favourable to workers than the Act, and they require approval from the Chief Inspector before they take effect. If your company has approved service rules, the employment contract in Bangladesh should be consistent with them.
Wages, hours and leave
The Act provides that an adult worker shall ordinarily not be required to work more than eight hours a day, with a limit of forty-eight hours a week. Overtime is permitted within limits and must be paid at twice the ordinary rate of basic wage and dearness allowance. Rest and meal intervals and a weekly holiday are mandatory.
Minimum wages are set by the Minimum Wage Board for specific industries, such as ready-made garments, and are revised periodically. Wages must be paid within the time the Act requires after the end of the wage period. An employment contract in Bangladesh that sets lower wages or longer hours than the law allows is unenforceable on those points.
Leave entitlements
The Act provides several types of leave: casual leave, sick leave with wages, annual leave with wages calculated by days worked, festival holidays, and maternity leave with benefit. The 2026 amendments reportedly increased maternity leave to 120 days. Leave policies in contracts and handbooks should reflect the current statutory minimum and may be more generous.
Benefits and funds
Several benefit schemes interact with the employment contract in Bangladesh, and some apply automatically by law.
- Provident fund. The Act requires provident funds in certain establishments when a specified proportion of workers ask for one; many companies run recognised provident funds voluntarily. The 2026 amendments reportedly revised provident fund rules.
- Gratuity. Gratuity schemes are common and, once offered, become contractual. Termination provisions in the Act also link certain payments to years of service.
- Workers' profit participation fund. Companies meeting thresholds in the Act must contribute a share of net profit to participation and welfare funds for workers.
- Group insurance. Required for establishments with a minimum number of permanent workers.
Benefits promised in an offer letter or handbook are generally enforceable even if not required by law. Draft them carefully, including eligibility conditions and vesting periods.
Ending an employment contract in Bangladesh
Termination is the area where disputes most often arise. The Labour Act provides several routes, each with its own procedure.
| Route | Basis | Key requirement |
|---|---|---|
| Resignation | Worker gives notice | Written notice; permanent workers give a longer notice period than temporary workers |
| Termination simpliciter | Employer ends employment without cause | Written notice or pay in lieu and the statutory compensation |
| Discharge | Physical or mental incapacity, or continued ill health | Medical certification and benefit |
| Dismissal for misconduct | Proven misconduct after inquiry | Show-cause notice, inquiry and opportunity to be heard |
| Retrenchment | Redundancy | Notice, compensation and consultation as required |
| Retirement | Reaching the retirement age | Retirement benefits under the Act and contract |
For a permanent worker paid monthly, the Act requires the employer to give 120 days' written notice, or wages in lieu, when terminating otherwise than for misconduct, and a permanent worker resigning must give 60 days' notice. Shorter periods apply to other categories. Our guide to termination of employment in Bangladesh explains each route in detail.
Misconduct and disciplinary procedure
Dismissal for misconduct requires a written charge, an opportunity to respond, an inquiry and a written decision. Skipping steps exposes the employer to a complaint before the Labour Court, which may order reinstatement or compensation. The employment contract in Bangladesh should refer to the disciplinary procedure but cannot replace the statutory steps.
Restrictive covenants and confidentiality
Employers often want to stop departing staff from joining competitors. Under section 27 of the Contract Act 1872, an agreement in restraint of trade is void, with a narrow exception for the sale of goodwill. Courts in Bangladesh therefore generally refuse to enforce post-employment non-compete clauses.
What can be protected is confidential information and trade secrets. Confidentiality clauses, assignment of intellectual property created in the course of employment, and non-solicitation of clients and staff are more likely to be upheld if reasonable. Restrictions that apply during employment, such as exclusivity and conflict-of-interest rules, are generally enforceable. Our intellectual property practice can help with IP assignment wording.
Foreign employees and expatriates
A foreign national needs a work permit and an appropriate visa before starting work in Bangladesh. For most private companies, work permits are now handled by Invest Bangladesh (formerly BIDA); BEPZA handles export processing zones. The employment contract in Bangladesh for an expatriate should be consistent with the job title, salary and term stated in the permit application, because inconsistencies cause problems at renewal.
Expatriate contracts often combine a local contract with a home-country assignment letter. Tax on salary for work in Bangladesh is due in Bangladesh whether paid locally or abroad, and the local employer must withhold it. Make sure the documents allocate tax, housing, schooling and repatriation costs clearly.
Export processing zones
Employers in export processing zones are governed by the Bangladesh EPZ Labour Act 2019 rather than the Bangladesh Labour Act 2006 for most purposes. The EPZ regime has its own rules on worker welfare associations, wages and dispute resolution, administered by BEPZA. An employment contract in Bangladesh for an EPZ enterprise should be drafted against that law, not the general Act. See the BEPZA website for current instructions.
Fixed-term, part-time and remote arrangements
Modern workplaces in Bangladesh increasingly use fixed-term contracts, part-time roles, consultants and remote staff. The Labour Act was designed around factories and offices, so these arrangements need careful drafting to stay within it.
Fixed-term and project contracts
A fixed-term contract is lawful where the work is genuinely temporary, such as a project with a defined end date. Repeatedly renewing short contracts for work that is in fact permanent invites the argument that the worker is permanent and entitled to full termination protection. Record the project or reason for the fixed term and review renewals carefully.
Consultants and independent contractors
Companies often engage individuals as consultants to avoid employment obligations. Labour Courts look at the substance: control over how and when work is done, integration into the business, exclusivity and the method of payment. A consultant who works fixed hours under supervision, uses company equipment and has no other clients may be found to be a worker. A consultancy agreement should reflect a genuinely independent relationship, and withholding tax must be deducted from consultancy fees.
Remote and hybrid work
The Labour Act does not regulate remote work in detail. Employers allowing remote or hybrid work should set out working hours, availability, equipment, expense reimbursement, data security and the place of work for legal purposes. These points belong in the employment contract in Bangladesh or a written remote-work policy that forms part of it. Personal data handled at home also raises data protection considerations, now governed by the Personal Data Protection Act 2026.
Changing terms later
Terms cannot generally be changed unilaterally to the employee's detriment. Changes to pay, hours, location or benefits should be agreed in writing, and changes to service rules need the Chief Inspector's approval. Keep a signed copy of every variation on the personnel file.
Checklist for employers
- Classify each role correctly as worker or managerial, based on actual duties.
- Issue appointment letters and photo identity cards to all workers.
- Align probation, hours, leave and notice with the Act as amended in 2026.
- Get service rules approved before relying on them.
- Remove unenforceable non-compete clauses and strengthen confidentiality and IP terms.
- Keep personnel files, wage records and leave registers as the Labour Rules require.
- Review templates whenever the law or minimum wage changes.
A short annual review of your standard employment contract in Bangladesh, handbook and service rules costs far less than defending a Labour Court case.
Frequently asked questions about employment contract in bangladesh
Is a written appointment letter mandatory?
Yes. Section 5 of the Bangladesh Labour Act 2006 requires every employer to give each worker an appointment letter and an identity card with a photograph.
How long can probation last?
Six months for clerical workers and three months for others, with a possible three-month extension for skilled workers whose skill could not be assessed. Continuing after probation without confirmation makes the worker permanent.
Do managers have Labour Act protection?
Staff employed mainly in managerial or administrative roles fall largely outside the definition of worker, so their contracts carry more weight. Courts look at actual duties, not job titles.
What notice must an employer give to end a permanent worker's employment?
For a permanent worker paid monthly, 120 days' written notice or wages in lieu, plus statutory compensation, where termination is not for misconduct.
Are non-compete clauses enforceable?
Generally not after employment ends, because section 27 of the Contract Act 1872 makes agreements in restraint of trade void. Confidentiality and non-solicitation clauses are more likely to be upheld.
What changed in 2026?
The Labour (Amendment) Act 2026 carried forward around ninety changes from the November 2025 ordinance, including maternity leave, trade unions, provident fund and the definition of worker. Check the gazetted text for exact figures.
How we can help
We draft and review every type of employment contract in Bangladesh: appointment letters, executive agreements, service rules, handbooks and expatriate packages, and we advise on terminations, disciplinary inquiries and Labour Court claims. Learn more about our employment and labour practice.
Need compliant employment documents?
We update your templates for the 2026 amendments and make sure they hold up if a dispute arises.
Book a consultationEmployment practicePrimary sources: the Bangladesh Labour Act 2006, Bangladesh Labour Rules 2015, Bangladesh EPZ Labour Act 2019 and Contract Act 1872 on the Laws of Bangladesh portal; inspection and service rule approvals by the Department of Inspection for Factories and Establishments; policy updates from the Ministry of Labour and Employment.
This article is general information about Bangladeshi employment law as of October 2026 and is not legal advice. The 2026 amendments and minimum wage orders change specific entitlements; confirm current requirements with DIFE or a qualified lawyer before acting.
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