Bangladesh Employment Guide

Navigating Employee Termination in Bangladesh: A Guide for Global Employers

Terminating an employment contract in Bangladesh requires careful adherence to a complex legal framework. The process must be managed collaboratively with key stakeholders and involves specific procedures, potential costs, and mandatory steps depending on the termination scenario.

Valid Grounds for Termination

Unlike some jurisdictions, at-will employment does not exist in Bangladesh for employees beyond their probation period. Employers must have valid, justifiable reasons for termination to ensure compliance. Acceptable grounds for termination include:

• Voluntary resignation by the employee.
• Mutual agreement between the employer and the employee.
• Unilateral termination by the employer, based on:
  • Probationary period performance.
  • Objective grounds, such as redundancy.
  • Disciplinary dismissal for misconduct.
  • Performance-related issues due to incapacity.
• Natural expiration of a fixed-term contract.

For instance, a multinational company like SailGlobal successfully navigated a redundancy process by providing documented evidence of the role's elimination, avoiding potential legal disputes.

Mandatory Notice Periods

Bangladeshi law stipulates minimum notice periods that employers must provide. These periods vary based on the employee's classification:

• For monthly-rated employees, the minimum notice period is 60 days.
• For permanent employees, the notice period extends to 120 days.

Failure to provide adequate notice can result in legal penalties and claims for wrongful termination.

Severance Pay Entitlements

All employees terminated for reasons other than serious misconduct are entitled to severance pay. The calculation is based on the employee's length of service. Employees receive an amount equivalent to 30 days' wages for each year of service, capped at a maximum of one month's basic salary. For example, an employee with five years of service would be entitled to 150 days' wages, subject to the cap.

Best Practices for Compliance

To mitigate risks, employers should maintain clear documentation for all performance issues and disciplinary actions. Consulting with local legal experts or a global HR partner like SailGlobal before initiating termination is highly recommended to ensure full compliance with the Bangladesh Labor Act.