Cultural and religious festival bonuses in Bangladesh are a significant aspect of employee compensation. This is provided to improve employee morale and support them during cultural and religious events. The bonuses are given for major religious festivals such as Eid-ul-Fitr and Eid-ul-Adha for Muslim employees, Durga Puja for Hindu employees and Christmas for Christian employees.
These festival bonuses are mandatory benefits of employees. Employers are legally obligated to provide these bonuses to ensure compliance with labor regulations.
What Are the Festival Bonus Rules in Bangladesh?
According to Bangladesh labor rules, 2015, any worker who has completed at least one year of service period in a company is entitled to receive 2 festival bonuses in a year. The bonus amount shall not exceed the amount of basic salary. The applicability of festival bonuses can vary depending on categories of workers and industries.
For instance, in the RMG sector, employers are required to provide festival bonuses before major religious festivals like Eid and Durga Puja. Also, employers in the public sector receive additional allowances for cultural celebrations like Pohela Boishakh.
The 2022 amendments stated many changes regarding labor employee benefits. However, the core provisions regarding festival bonuses remained unchanged.
What Are the Eid Bonus Rules in Bangladesh?
To be eligible to receive an Eid bonus, an employee is required to complete a minimum one year of continuous service period with the same company.
Companies can also provide bonuses to employees with less than one year service period. This depends on a company’s internal policies and the bonus will be calculated on the duration of employment. Employers are required to disburse the bonus amounts before Eid holidays.
What Are the Durga Puja Bonus Rules in Bangladesh?
Pohela Boishakh is known as the Bengali New Year. In 2016, the government of Bangladesh announced a festival allowance for the Bengali New Year for public sector employees.
Since then, they are getting 20% of their basic salary as Pahela Baishakh bonus. People of all religions will receive the same allowance for Pahela Boishakh at the same time. However, this allowance does not extend to the private sector.
Is Festival Bonus Mandatory in Bangladesh?
Under the Bangladesh Labor Act, 2006, and the Labor Rules, 2015, festival bonuses are mandatory employee benefits in Bangladesh. An employee is entitled to receive two festival bonuses annually if he or she has completed at least one year of service in a company.
Is Festival Bonus Taxable in Bangladesh?
According to the Income Tax Ordinance, 1984, festival bonuses are not classified as perquisites. Thus, festival bonuses are fully taxable as part of an employee’s income.
What Are the Festival Bonus Policies in Organizations Across Bangladesh?
In Bangladesh, employees from the public sector receive two annual festival bonuses for major religious events. The amount depends on government regulations and notifications for public employees. This policy is also mandatory for the private sector employees.
Here, the amount of the festival bonus is given based on the company’s internal policy. There is one cultural festival bonus “Pahela Boishakh” that is mandatorily given to government employees.
But this is not legally applicable for private companies. Bangladesh labor regulations have a minimum standard for festival bonuses. To improve employee satisfaction and increase retention organizations in Bangladesh have adopted their own internal policies for festival bonuses.
Companies often offer festival and cultural bonuses to employees with less than a year of service. Also, there are many private organizations that provide additional bonuses for cultural festivals like Pohela Boishakh. This is to improve employee morale even though they are not legally required to do so.
How Is the Festival Bonus Calculated in Bangladesh?
In Bangladesh, festival bonuses are calculated based on the basic salary and service tenure of an employee. You can calculate them using a manual method which is time consuming and prone to error. Also, you can utilize HR and payroll software to automate the calculation and find accurate results.
Manual Calculation
Here, an employer keeps record of employee data using tools like Excel sheets. For eligible employees the bonus is calculated based on their basic pay. If the bonus rate is 100%, the bonus amount will be equal to a full basic monthly salary of the employee. Employers use a Pro-Rata calculation method for employees with less than a year of service.
Let’s assume an employee will get a bonus after completing six months in a company. If the company sets the bonus rate to be 50% then the employee will receive half of the basic salary as a bonus amount.
Using HR and Payroll Software
Companies utilize HR and payroll management systems to automate the calculation and disbursement of festival bonuses. The software keeps accurate records of employee data along with their employment cycle.
It automatically calculates bonus amounts with predefined rules like given bonus rates. HR and payroll software helps manage large workforce in terms of calculating and disbursing festival bonuses. Employers can easily generate reports and maintain compliance with regulatory requirements.
Final Words
In Bangladesh, festival bonuses are given to increase employee morale. The Government of Bangladesh has made it mandatory to provide two festival bonuses annually, reflecting common HR practices in Bangladesh. This applies to both public and private sectors.
To government employees, 20% of the basic salary is given as a festival bonus during Pahela Boishakh. However, this is not mandatory for employees in the private sector. To maintain employee satisfaction, organizations in Bangladesh adopt HR practices that often exceed these requirements.
