Employee benefits are non-financial forms of payment provided in addition to salaries by organizations to improve the well-being of employees.
It is an essential aspect of the human resource management of a company. The labor costs in Bangladesh are comparatively low. A well structured employee benefits scheme is crucial to retain talent here.
Employee benefits in Bangladesh are forms of compensation that motivate employees. It is essential to keep employees satisfied by fulfilling their needs.
Generally, employee benefits in Bangladesh include health insurance, paid leaves, overtime pay, festival bonus, retirement benefits, termination benefits, etc.
The Labor Act of Bangladesh mandates a set of employee benefits to ensure workforce security and well-being. Employers are required to comply with these regulations to avoid penalties and fines.
What Are the Mandatory Employee Benefits in Bangladesh?
Under the Labor Act of Bangladesh, employers are required to provide certain benefits to employees. They are as follows.
Paid Leaves
For each calendar year, all employees are entitled to 10 days of paid casual leave. Workers will also get 14 days of paid sick leave in a calendar year.
Paid Festival Holiday
Employees can claim 11 days of paid festival holiday in a calendar year. Here, employers have the right to choose these holidays. If an employee needs to work on one holiday, the employer must compensate him with one day of holiday and a salary for two days.
Festival Bonus
According to the Bangladesh Labour Rules, 2015, an employee who has completed one year of service in a company is eligible for two festival bonuses each year. The bonus amounts cannot exceed the amount of the basic salary.
Paid Maternity Leave
Female employees will get a 16-week paid maternity leave. This is divided into two periods. Eight weeks before and eight weeks after childbirth.
Healthy Work Environment
Employers must ensure a healthy and safe workplace environment for good employee health and hygiene.
Overtime Compensation
Employees are entitled to be compensated for the overtime hours worked. The overtime pay can vary depending on the industry and working conditions.
Annual Paid Leaves
An adult employee who has completed one year of service for a company is eligible for one day of paid leave in a certain period. This period of days varies depending on industries.
- Employees working in a shop, commercial facility, industrial establishment, factory, or road transport establishment will receive one day of paid leave for every 18 days of work.
- Workers of tea plantations will get one day of paid leave for every 22 days of work.
- Newspaper workers will get one day of paid leave for every 11 days of work.
Termination Benefits
Termination benefits are the amounts compensated to employees when their employment is ended by the employer.
- If an employer terminates a permanent worker, he or she is entitled to be compensated at the rate of 30 days’ wages for each completed year of service or gratuity, whichever is higher.
- If an employee resigns after completing service for 5 to less than 10 years, he or she is entitled to be compensated at the rate of 14 days’ wages for each completed year. For employees with 10 or more years of continuous service, it will be 30 days’ wages for each completed year.
- If an employee is discharged from service due to illness and completed at least one year of continuous service, he or she is entitled to be compensated at the rate of 30 days’ wages for each completed year of service or gratuity, whichever is higher.
What Employee Benefits Are Available for Expatriates in Bangladesh?
In Bangladesh, employers are responsible to bear the costs of making work visas for expat workers. For hiring expat workers, companies should have a separate relocation package. This is to help the foreign employees with accommodation within the country. It can be temporary accommodation or housing allowances for a smoother transition of expatriate employees.
What Are the Compensation Laws in Bangladesh?
Compensations are provided to employees by following some specific rules of the Labor Act.
- According to the Labor Act 2006 of Bangladesh, a minimum remuneration for all classes of employees is recommended.
- The appointment letter must include information regarding salary, financial benefits, compensation, provisions, etc.
- As per Bangladesh Labor Policy 2012, a productive-non-discriminatory and healthy work environment should be provided to employees.
- Compensations for diseases or injuries must be paid by making a deposit to the Labour Court. An employer paying an employee directly will not be considered as a payment of compensation.
What Voluntary Benefits Do Companies Offer Beyond Legal Requirements?
To boost employee morale organizations in Bangladesh provide supplemental employee benefits beyond legal requirements.
- Flexible working hours to balance personal and professional commitments.
- Performance-based rewards to motivate employees.
- Paternity leave as an additional benefit.
- Health insurance and medical benefits to show commitment to employee well-being.
- Retirement plans for financial security.
- Wellness programs and counseling sessions in the workplace to support mental and physical health.
- Employee discounts on goods and services to improve job satisfaction.
- Death benefits to provide financial support for an employee’s family.
- Gratuity benefits to reward employees with financial security upon leaving the company.
How Are Employee Benefits Taxed Under Bangladeshi Law?
Most employee benefits are fully taxable. Cash house rent allowance exceeding 50% of basic salary or 25,000 BDT per month (whichever is higher) is taxable income.
Medical allowance up to 120,000 BDT annually or 10% of basic salary (whichever is lower) is tax-exempt. Gratuity benefits up to 2.5 core are not taxable. Other allowances like overtime, festival bonus, etc., are fully taxable.
What Are the Restrictions on Employee Benefits and Compensation in Bangladesh?
If an employer terminates a female employee during her maternity period (six months before and eight weeks after) without showing proper cause, the employee will still get her maternity benefit from the company.
Without written permission, an employee cannot work for more than one organization. Everyone should be treated equally in the workplace. There should not be any discrimination in terms of gender, job opportunities, promotions, or working conditions.
What Are the Latest Trends in Employee Benefits in Bangladesh?
Companies in Bangladesh are adopting various employee benefits strategies to enhance job satisfaction and retain top talent.
- Personalized Benefits: Employees have diverse needs and preferences. Employers try to recognize them and make personalized benefit packages for each employee. Also, employees can choose benefits aligning with their unique needs.
- Wellness And Mental Health Support: Prioritizing employee well-being, employers provide comprehensive wellness programs as part of the benefits package. This can include access to mental health resources, fitness classes, or virtual therapy sessions.
- Financial Wellness & Security: Financial stress can negatively impact employees’ overall productivity. By providing financial security plans like retirement and gratuity benefits, employers ease employees’ concerns about financial stability.
- Flexible work environments: Employers offer multiple work options like remote, onshore or hybrid working models. This way employers can attract and retain top talent who prioritize flexibility and work-life balance.
How Can HR Software Simplify Managing Employee Benefits in Bangladesh?
Managing employee benefits requires accurate data recording and calculations. Manually doing this for a large workforce for a long time can cause serious errors.
Which can ultimately result in legal penalties and employee dissatisfaction. HR software simplifies this process by automating calculations, accurate recording and employee tracking. Also, using HR software helps businesses follow labor laws automatically with predefined rules.
Final Words
Bangladesh Labor Act states specific regulations on employee benefits for both national workers and expatriates. The employee benefits and compensation laws vary depending on various industries. According to the labor law, most of the employee benefits are taxable income.
So, keeping accurate records is crucial to avoid legal penalties. Also, mishandling employee benefits management can lead to employee frustration and decreased morale. Using automated HR software can help in efficient employee benefits management and improve employee satisfaction and engagement. To retain talents, employers must obtain the latest trends of employee benefits.
