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Global Payroll Team
Written by Global Payroll Team
Last updated May 1, 2026
Expert Reviewed
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Mercans offers complete payroll, PEO and HR services in Bangladesh

Mercans provides comprehensive payroll, PEO, and HR solutions to businesses operating in Bangladesh, helping employers manage local payroll, employment administration, and compliance requirements efficiently. By outsourcing payroll and HR functions to Mercans, businesses can save time, reduce administrative burden, and focus on core operations while staying aligned with Bangladesh labor, tax, and immigration requirements. With Mercans’ experienced team of experts, businesses can benefit from reliable payroll support and strong local compliance guidance.

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Doing Business in Bangladesh

Doing business in Bangladesh can present practical challenges such as bureaucracy, infrastructure gaps, and evolving compliance requirements. At the same time, Bangladesh remains an important destination for foreign investment because of its large domestic market, strategic location, and strong industrial base, especially in garments, textiles, pharmaceuticals, shipbuilding, and light manufacturing.

Entity Registration and Incorporation Requirements

In Bangladesh, businesses are generally required to register with the Registrar of Joint Stock Companies and Firms and complete the relevant incorporation, tax, employment, and sector-specific registrations before commencing operations.

Banking

Banking hours vary by institution and branch. Local confirmation is recommended before scheduling payroll and treasury activities.

Working Week

The standard legal working time is generally up to 48 hours per week, subject to sector-specific scheduling and overtime rules. In practice, office schedules and weekly rest days vary by employer and industry.

Labor Law

The labor law in Bangladesh is governed primarily by the Bangladesh Labour Act, 2006, as amended, together with the Bangladesh Labour Rules, 2015. The framework regulates employment relationships, working conditions, wages, leave, occupational safety, and dispute resolution.

Main Industries

Textiles and garments, pharmaceutical products, electronics, shipbuilding, automotive components, bicycles and agriculture-based industries

GDP Growth

4.2%

Dates & Numbers

dd/mm/yyyy

Official State Name

People’s Republic of Bangladesh

Population

173.6 million

Capital

Dhaka

Major Languages

Bengali

Currency

Bangladeshi Taka (BDT)

Internet Domain

.bd

International Dialing Code

+880

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Bangladesh
Dhaka, BD
9:18 pm, May 1, 2026
24°C
haze
83 %
Wind Gust: 0 mph
Clouds: 40%
Sunrise: 5:24 am
Sunset: 6:26 pm

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Payroll

Payroll in Bangladesh involves calculating and processing employee salaries, wages, leave pay, bonuses, and other benefits in compliance with local labor laws and tax regulations. Employers should manage payroll carefully because statutory entitlements can vary by worker category and sector, and there are important compliance considerations around income tax withholding, working time, overtime, leave, and termination payments. Mercans offers payroll services in Bangladesh that help employers navigate these requirements accurately and efficiently.

It is acceptable to provide employees with online payslips

Payslip

Payroll reports should be retained in line with applicable tax and employment recordkeeping requirements

Reports

Annual leave generally accrues at 1 day for every 18 days worked in factories, shops, and establishments

Annual Leave

Employees generally receive 14 days of paid sick leave subject to medical certification requirements

Sick Leave

16 weeks of paid maternity leave and no general statutory paternity leave entitlement

Maternity & Paternity Leave

Notice depends on worker category and termination reason, with 120 days applying in some cases for monthly-rated permanent workers

Employee Termination

There are no provisions mandated by law regarding the 13th-month salary

13th-month salary

There is no single statutory national minimum wage across all sectors, and minimum wages are generally set by sector-specific wage boards

Minimum Wage

Overtime is regulated by law and working more than 10 hours per day is not permitted under the Labour Act framework

Overtime

In retrenchment and certain termination cases, workers may be entitled to 30 days’ wages for each completed year of service or part in excess of 6 months

Severance Pay

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Tax and Social Security

Taxation in Bangladesh is regulated by the National Board of Revenue and includes corporate income tax, value-added tax, personal income tax, and other taxes. Bangladesh does not operate a broad, universal payroll social security contribution model in the same way as many other jurisdictions. Instead, employers should focus on tax withholding, mandatory employment law benefits, and any sector-specific or scheme-specific obligations that may apply.

Tax

Employers in Bangladesh are generally required to deduct income tax from employees’ salaries where applicable and deposit it with the government. Tax rates vary depending on the taxpayer type. Corporate income tax rates are not uniform across all companies, and the standard VAT rate in Bangladesh remains 15%.

≤ 27%

Corporate Income Tax

25%

Personal Income Tax

15%

Sales Tax

15%

VAT

Social Security

Bangladesh does not generally impose a standard national employer and employee social security contribution rate through payroll in the same way as some other countries. Employers should instead review applicable statutory benefits, compensation obligations, gratuity policy, provident fund arrangements where adopted, and any industry-specific rules.

0%

Social Security Rate

0%

Social Security Rate for Employers

0%

Social Security Rate for Employees

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Employment Law

Employment laws in Bangladesh govern the rights and obligations of both employers and employees in the workplace. These laws regulate areas such as working conditions, employment contracts, wages, hours of work, leave, occupational safety, and termination of employment. The main employment laws in Bangladesh include the Bangladesh Labour Act, 2006, as amended, and the Bangladesh Labour Rules, 2015, which provide more detailed guidance on implementation. Employers in Bangladesh must comply with these laws to protect workers’ rights and reduce legal and financial risk.

Employment Agreement

An employment agreement in Bangladesh should clearly set out the terms and conditions of employment between an employer and an employee, including role, wages, place of work, hours, leave, and termination terms. Employers should also ensure consistency with the Labour Act and any applicable standing orders or service rules.

Working condition

Working conditions in Bangladesh are subject to the Bangladesh Labour Act and related rules, including provisions on workplace safety, working time, overtime, holidays, and leave entitlements. The normal legal working week is generally 48 hours, and total daily working time including overtime must remain within statutory limits.

Leaves

In Bangladesh, employees may be entitled to different forms of leave including earned annual leave, casual leave, sick leave, festival holidays, and maternity leave. The exact entitlement depends on the worker category and the relevant legal provisions. Employers should review worker classification carefully when administering leave benefits.

Employment termination

Employment termination in Bangladesh may be initiated by either the employer or the employee, but it must follow the procedures set out in labor law. Notice periods, grounds for dismissal, retrenchment rules, and compensation entitlements vary depending on whether the worker is permanent or temporary and on the reason for termination.

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Up to 120 days

Minimum notice period for terminating an employee

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Variable

Total number of public holidays

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48

Working hours per week

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Not standardized

Total number of days for Compassionate & Bereavement Leave

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Immigration

Foreign nationals planning to work in Bangladesh generally require an appropriate visa and work permit approval. For private sector and commercial office cases, employers typically coordinate immigration and work authorization through the Bangladesh Investment Development Authority and the relevant immigration authorities. The duration of the work authorization depends on the approval granted and the nature of the assignment.

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Residency permits

Foreign nationals who wish to work in Bangladesh generally require valid immigration status and, where applicable, work permit approval. For BIDA-approved commercial office cases, the official process references an initial approval period of 3 years. Residence and entry permissions should be reviewed case by case based on the visa category, sponsoring entity, and immigration status.

Work Permit Validity

Initial approval commonly referenced for 3 years in BIDA commercial office cases

Required Documents

A completed visa or permit application form

A letter of appointment or support from the employer in Bangladesh

An original passport valid for the required period

A recent passport photograph

Proof of payment of the relevant visa or permit fees

Supporting recommendation or approval documents from the relevant authority such as BIDA, where applicable

Compliant, reliable, error-free and touchless payroll in Bangladesh

Build the best team and hire top talent compliantly in Bangladesh. Get in touch with Bangladesh payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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    FAQs

    What is an Employer of Record (EOR) in Bangladesh and how does it work for foreign companies?

    An Employer of Record (EOR) in Bangladesh legally employs staff on behalf of foreign companies. It manages employment contracts, payroll, taxes, social security, and compliance with local labor laws, allowing companies to hire employees quickly without establishing a local legal entity.

    Why should businesses choose an EOR instead of setting up a legal entity in Bangladesh?

    Using an EOR avoids the time and costs of setting up a local company. It provides fast market entry, reduces administrative work, ensures legal and tax compliance, and is ideal for businesses testing the Bangladeshi market or hiring a small team.

    How does payroll outsourcing in Bangladesh ensure compliance with local tax and labor laws?

    Payroll outsourcing ensures accurate salary processing, tax filings, and social security contributions according to Bangladeshi law. It reduces compliance risks, avoids penalties, and provides expertise on local labor and tax regulations.

    Can an Employer of Record in Bangladesh hire employees and manage work permits for international companies?

    Yes, an EOR can legally hire employees for foreign companies and handle work permits. It manages HR operations, payroll, and compliance with local labor and immigration laws, enabling smooth operations without a local entity.

    What are the main advantages of using EOR and payroll services in Bangladesh for global expansion?

    EOR and payroll services enable faster hiring, local compliance, reduced legal and financial risk, and access to market expertise. They allow companies to expand into Bangladesh efficiently while focusing on business growth.

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