How much does it really cost to hire in Bangladesh in 2026?
Bangladesh has no mandatory national social insurance scheme for private-sector employers. The main employer contribution is a Provident Fund at 10% where the scheme is established. Add 28 public holidays, 14 days of fully paid sick leave, and a gratuity structure that steps up after ten years of service, and the total employer cost runs well below most other South Asian markets.
· Bangladesh guide
Illustration · Dhaka, Bangladesh
Bangladesh does not have a mandatory social insurance scheme for private-sector workers. There is no employer national insurance charge on top of gross salary.
The main employer social obligation is a Provident Fund contribution at 10% of basic salary where the scheme is established. The employee contributes the same 10% from their pay.
Every employee also gets 14 days of fully paid sick leave per year. Permanent employees are entitled to annual leave that accrues at one day per 48 hours of maximum weekly working time context. Employers pay gratuity after five years of service at 30 days of salary per completed year. The result is a total employer cost that consistently runs below 115% of gross salary for most Bangladesh hires.
The headline: what a Bangladesh hire actually costs
Start with gross salary. There is no mandatory social insurance charge. Add the Provident Fund at 10% of basic salary where the scheme applies.
The table below shows illustrative totals at a BDT 1,800,000 annual salary (BDT 150,000 per month). These are computed from verified rates and labelled illustrative. They are not statutory figures.
Bangladesh stands out among South Asian hiring destinations because there is no mandatory employer social insurance levy on gross salary. The two recurring employer costs above gross salary are the Provident Fund contribution and the annual leave and sick pay obligation. Both are material but predictable.
| Line | Illustrative annual cost on BDT 1,800,000 salary | Source |
|---|---|---|
| Gross salary | BDT 1,800,000 | Contract |
| Employer Provident Fund at 10% on basic salary (assuming basic = 60% of gross, i.e. BDT 1,080,000) | BDT 108,000 (illustrative) | Bangladesh Labour Act 2006, Provident Fund rules |
| Employer social insurance charge | None (no mandatory scheme) | Bangladesh Labour Act 2006 s.264-270 |
| Sick pay: 14 days per year at full pay, funded by employer | BDT 69,230 reserve (illustrative, based on BDT 150,000/month over 26 working days) | Bangladesh Labour Act 2006 s.116 |
| Annual leave accrual: 1 day per 18 working days (approx 14 days per year on 260 working days) | Included in salary cost | Bangladesh Labour Act 2006 s.117 |
| Gratuity provision (for employees with over 5 years service): 30 days of salary per completed year | Event-driven; reserve per headcount | Bangladesh Labour Act 2006 s.26 |
| Total illustrative employer cost | BDT 1,977,230 (illustrative) | Approx. 110% of gross (illustrative) |
These figures are illustrative. The Provident Fund line is computed as 10% of the assumed basic salary component of BDT 1,080,000. The actual cost depends on the basic/variable split in the employment contract. The sick pay reserve is computed from 14 days at the daily rate implied by a BDT 150,000 monthly salary across 26 working days. These are not statutory figures.
Add Teamed from $599 per employee per month and the total rises to around 112 to 116% of gross at this salary point. Use the Employer Cost Calculator to run your own figures.
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Set the gross salary
Agree the total gross salary and confirm the basic salary component. The Provident Fund is calculated on basic salary only, not total gross, so the split matters for your cost model.
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Add Provident Fund
Apply the employer Provident Fund rate to the basic salary component. Confirm whether the scheme is established for the business before including this line.
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Provision sick and annual leave
Budget sick pay as a reserve equal to the daily rate multiplied by the statutory entitlement. Annual leave is embedded in the gross salary cost and does not require a separate line.
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Build a gratuity reserve
For each employee who passes the qualifying service threshold, accrue a gratuity liability based on completed years at the applicable rate. This cost does not appear until separation but should be planned from the start.
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Run the full cost model
Use the Teamed Employer Cost Calculator for a complete, currency-converted breakdown before confirming the offer, including Provident Fund, gratuity provision, and any contractual benefits.
Provident Fund: the main recurring employer contribution
Where a Provident Fund scheme is established, the employer contributes 10% of the employee's basic salary every month.
The employee also contributes 10%. Both contributions go into the employee's individual fund account.
The Provident Fund is governed by the Bangladesh Labour Act 2006, sections 264 to 270. It is Bangladesh's primary retirement savings mechanism for private-sector workers. Unlike India's EPF or the UK's pension auto-enrolment, the scheme in Bangladesh is not universally mandatory for every establishment. Employers of a certain size or sector are required to establish a fund; others do so voluntarily. Once a scheme is in place, the rates are binding.
The employer Provident Fund contribution rate is 10% of the employee's basic salary. The employee contributes the same 10%. The total monthly fund accumulation is 20% of basic salary.
Source: PiHR: Provident Fund in Bangladesh, Rules, Calculation, Tax
No mandatory social insurance levy
Bangladesh has no separate mandatory national social insurance contribution for private-sector employers. There is no equivalent of UK employer NIC, India ESIC, or Germany's social insurance ceiling. The 0% mandatory social insurance charge on gross salary is the statutory position. The Provident Fund is the primary vehicle, and it applies only to basic salary, not total gross pay.
How the basic/variable split affects the cost
Because the Provident Fund applies to basic salary only, the component structure of the employment contract determines the actual BDT cost. A contract where basic salary is 60% of total compensation produces a lower Provident Fund bill than one where basic is 80%. Confirm the basic/variable structure with your payroll provider before modelling costs. This is the single most important cost variable in a Bangladesh hire.
Leave, sick pay, and public holidays
Bangladesh employers pay full wages during sick leave. Every employee gets 14 days of paid sick leave per year.
There are 28 official public holidays in 2026. Annual leave accrues at one day for every 18 working days.
The leave stack in Bangladesh is set by the Bangladesh Labour Act 2006, sections 115 to 120. The three main components are casual leave, sick leave, and annual leave. They accrue separately and are funded differently.
Sick leave: employer-funded at full pay
Every employee is entitled to 14 days of paid sick leave per calendar year. The employer pays 100% of wages for the full sick leave period. There is no state sick-pay scheme. The employer carries the entire cost. Budget this as an event-driven reserve: most employees use far fewer than 14 days days in any given year, but the obligation is unconditional once a medical certificate is provided.
Annual leave accrual
Annual leave accrues at one day of paid leave for every 18 working days. Over a standard working year of around 260 days, this produces approximately 14 days of earned leave. The leave entitlement builds continuously. Unused leave may be encashed or carried forward subject to the employer's internal rules and any applicable industry regulations. Annual leave is already embedded in the gross salary cost. It is not a separate line item to add on top.
Public holidays
The Ministry of Public Administration gazetted 28 public holidays for 2026. Bangladesh has the most public holidays in South Asia. This affects output planning: a Bangladesh team has more public holiday days per year than equivalents in India, Pakistan, or Vietnam. Not all holidays fall on weekdays; the actual number of paid non-working days depends on how weekend and holiday overlaps fall in a given year.
Working time limits
The maximum working week is 48 hours, split across a maximum of 8 hours per day. Overtime above these limits is permitted subject to conditions and must be paid at a premium rate. Budget overtime as a variable cost, particularly for roles with unpredictable peaks.
Gratuity and severance: the deferred cost
Bangladesh employees qualify for gratuity after 5 years of continuous service.
The gratuity rate is 30 days of salary per completed year of service for the first ten years, then 45 days per year after that.
Gratuity is a terminal benefit paid on voluntary resignation, retirement, or termination without cause. It is the largest deferred employer cost in Bangladesh. Unlike the Provident Fund, which is a monthly contribution, gratuity accrues as a liability on the employer's books and is paid in a lump sum when the employment ends.
The qualifying threshold
An employee must complete at least 5 years of continuous service to be entitled to gratuity under the Bangladesh Labour Act 2006. No gratuity is owed for separations before that threshold, regardless of the reason for leaving. This makes the first five years of a hire gratuity-free for the employer.
How the gratuity rate steps up
For the first ten years of service the rate is 30 days of salary per completed year. Once the employee crosses ten years the rate increases to 45 days per completed year for all subsequent service. The step-up applies prospectively from the ten-year mark, not retrospectively to earlier years.
Worked example (illustrative)
An employee earning BDT 150,000 per month who leaves after seven completed years of service is entitled to gratuity calculated as seven multiplied by 30 days of monthly salary. That works out to 210 days of salary. At BDT 150,000 per month across approximately 26 working days, the daily rate is roughly BDT 5,769. Seven years times 30 days times BDT 5,769 gives an illustrative gratuity of approximately BDT 1,211,490. This figure is illustrative only. The actual calculation uses the final monthly salary and the number of completed years confirmed at separation.
Notice and severance on termination
Termination without cause of a permanent monthly-rated employee requires 120 days of notice or pay in place of notice. For permanent non-monthly-rated workers the notice period is 60 days. Separately, if the employment ends by termination (not resignation), employees with at least 1 completed year of service are also entitled to severance at 30 days of wages per year of service. Gratuity and severance are typically alternative entitlements: the higher of the two is paid, not both stacked.
Bangladesh income tax bands in 2026 and what they mean for take-home pay
Income up to BDT 375,000 per year is tax-free for general taxpayers.
The top rate is 30% on income above BDT 3,575,000 per year.
Bangladesh income tax is administered under the Income Tax Act 2023 and the Finance Act 2025. The six-band structure runs from 0% on the first BDT 375,000 up to 30% at the top. Tax is deducted at source from employees' monthly salaries by the employer and remitted to the National Board of Revenue.
Income tax bands FY 2025/26
| Income band (annual) | Tax rate |
|---|---|
| Up to BDT 375,000 | 0% |
| BDT 375,001 to BDT 675,000 | 10% |
| BDT 675,001 to BDT 1,075,000 | 15% |
| BDT 1,075,001 to BDT 1,575,000 | 20% |
| BDT 1,575,001 to BDT 3,575,000 | 25% |
| Above BDT 3,575,001 | 30% |
Source: PwC Tax Summaries: Bangladesh Individual Taxes on Personal Income, FY 2025/26.
Enhanced thresholds for some taxpayer groups
The BDT 375,000 zero-rate band applies to general taxpayers. Women and taxpayers over 65 receive a higher threshold of BDT 425,000. Persons with a disability receive BDT 500,000. War-wounded freedom fighters receive BDT 525,000. The six-band rate structure above applies once the applicable threshold is exceeded.
Minimum wage context
Bangladesh does not have a single universal minimum wage. The best-known reference rate is the ready-made garment (RMG) sector minimum at BDT 12,500/month. Other sectors have separate wage boards. No hire may be made below the applicable sector minimum. For professional roles above the RMG sector, the minimum wage floor is unlikely to be a binding constraint, but confirm the applicable rate for the specific sector and job category.
How Teamed handles Bangladesh employment costs for you
Teamed becomes your legal employer of record in Bangladesh for from $599 per employee per month, with zero FX mark-up in any currency.
Provident Fund, income tax withholding, gratuity provisioning, and the full Bangladesh payroll compliance stack run on one platform.
Real HR and legal experts handle your Bangladesh hires from the first offer letter through every monthly tax deposit and annual return. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Every employer contribution passes through at cost, itemised on every invoice. You see the Provident Fund line, the gratuity provision, and the sick-pay reserve separately. Nothing is hidden inside the management fee.
EOR payroll, contractor onboarding, and entity setup all live on one platform. A Bangladesh contractor who converts to payroll keeps their record. That same employee can graduate from EOR to your own Bangladesh entity without switching systems. EOR is the right structure for a first Bangladesh hire, until it isn’t. Teamed does not lock you in. Start from the Bangladesh hiring overview or run the Employer Cost Calculator to see the full picture.
Frequently asked questions
Does a Bangladesh employer pay social insurance contributions?
No mandatory national social insurance contribution applies to private-sector employers in Bangladesh. There is no equivalent of employer NIC, ESIC, or a payroll tax on gross salary. The main employer social obligation is the Provident Fund at 10% of the employee's basic salary where a scheme is established. Verify with your payroll provider whether a fund is required for your specific sector and establishment size.
What is the employer Provident Fund rate in Bangladesh in 2026?
Where a Provident Fund scheme is in place, the employer contributes 10% of the employee's basic salary each month under the Bangladesh Labour Act 2006 sections 264 to 270. The employee also contributes 10% from their own pay. The fund accumulates in the employee's individual account and is paid out on separation.
How does gratuity work in Bangladesh?
Gratuity is owed to employees who complete at least 5 years of continuous service. The rate is 30 days of salary per completed year for the first ten years, rising to 45 days per completed year after ten years. It is paid as a lump sum on resignation, retirement, or termination without cause. The higher of gratuity and severance pay is typically paid, not both.
What paid leave must a Bangladesh employer provide?
Every employee is entitled to 14 days of paid sick leave per year, fully funded by the employer at 100% of wages. Annual leave accrues at one day per 18 working days under the Bangladesh Labour Act 2006 section 117. There are 28 official public holidays in 2026 per the Ministry of Public Administration gazette.
What are the income tax rates in Bangladesh in 2026?
Under the Income Tax Act 2023 and Finance Act 2025, income up to BDT 375,000 per year is tax-free for general taxpayers. Rates then rise progressively: 10% on the next band, through to the top rate of 30% on income above BDT 3,575,001 per year. The employer deducts income tax at source from employees' monthly salaries and remits to the National Board of Revenue.
The cost surprise in Bangladesh is not a social insurance charge, because there is not one. It is the gratuity step-up. At year ten the rate jumps from thirty days to forty-five days per year. A long-tenured employee costs meaningfully more to separate than a calculation based only on recent salary would suggest. Provision for it from day one, not year nine.
Bangladesh has no social insurance levy on gross salary. The Provident Fund at 10% of basic salary is the main recurring employer cost.
Add 14 days of fully paid sick leave and a gratuity that steps up after ten years.
Know every line before you send the offer.
