Employment contracts in Bangladesh must comply with the mandatory provisions of the Labour Act 2006 while addressing the specific operational needs of the employer. LegalBD drafts and reviews employment contracts, service agreements, and HR policy frameworks that are legally compliant, commercially robust, and enforceable.
Mandatory Appointment Letter Requirements
The Labour Act 2006 requires that all employees receive a written appointment letter specifying: designation, remuneration and allowances, date of joining, applicable leave entitlements, and working conditions. For workers covered by the Act, probationary periods are capped at six months (three months for skilled workers). Following completion of the probationary period and confirmation of employment, workers acquire the full range of statutory protections including notice rights, service benefits, and gratuity entitlement.
Statutory Service Benefits
Employees who complete one year of continuous service become entitled to gratuity on termination (other than for proven misconduct), calculated at 30 days' wages per completed year of service. Provident fund contributions are mandatory for establishments meeting specified size thresholds. Festival bonuses (equivalent to two months' wages per year) are a statutory requirement. Failure to honour these obligations exposes employers to Labour Court claims and regulatory penalties.
Fixed-Term vs Permanent Employment
The Labour Act distinguishes between temporary, fixed-term, and permanent workers — with different rights applying on termination. Employing workers on successive fixed-term contracts for roles that are by nature permanent creates a risk of reclassification as permanent employment, triggering full Act protections. LegalBD advises on structuring employment arrangements to reflect the actual nature of the role while managing legal risk appropriately.
Senior Executive and Management Contracts
For senior executives and managers excluded from the Labour Act's worker protections, we draft bespoke employment agreements addressing: remuneration structure and incentives; ESOP and bonus arrangements; garden leave provisions; post-termination restrictions on competition and solicitation (with careful attention to enforceability under the Contract Act 1872); and termination arrangements. These agreements require careful drafting to be both protective and enforceable.