Legal Framework for Employment Separation
Statutory Entitlements by Separation Type
| Separation Type | Statutory Provision | Notice Period / Pay | Compensation / Gratuity |
|---|---|---|---|
| Termination (Section 26) | Section 26(1) | 120 Days (Monthly Rated) | 30 days' wages for every year of service |
| Retrenchment | Section 20 | 30 Days | 30 days' wages for every year of service |
| Discharge (Health) | Section 22 | N/A | 30 days' wages for every year of service |
| Dismissal (Misconduct) | Section 23 | None | None (except for specific cases) |
The Section 26 Termination Workflow
Procedural Requirements for Retrenchment (Section 20)
Retrenchment is defined as the termination of services on the ground of redundancy. Under Section 20 of the Bangladesh Labour Act 2006, the following conditions must be met:
- Notice: One month's notice in writing or wages in lieu of notice.
- Notification: A copy of the notice must be sent to the Chief Inspector or an officer authorized by him.
- Compensation: Payment of compensation equivalent to 30 days' wages for every completed year of service or gratuity, whichever is higher.
- Principle of Seniority: Unless otherwise agreed, the employer must retrench the worker who was the last person to be employed in that category ('Last Come, First Go' principle as per Section 20(2)).
Calculation of Final Settlement
Under Section 30, all amounts due to a worker must be paid within 30 working days from the date of cessation of employment. This includes:
- Arrear wages and overtime.
- Payment for unavailed annual leave (Section 117).
- Compensation for termination (Section 26) or Retrenchment (Section 20).
- Gratuity (if applicable under Section 2(10)).
- Provident Fund benefits (if applicable).
Consult Barrister Liton Sarkar
For complex retrenchment strategies or labor court litigation, ensure your compliance aligns with the latest 2018 amendments.
Schedule Legal ConsultationFrequently Asked Questions
What is the notice period for terminating a permanent monthly-rated worker under Section 26?
According to Section 26(1) of the Bangladesh Labour Act 2006, the employer must provide 120 days' notice for a permanent monthly-rated worker. Alternatively, the employer may pay wages in lieu of the notice period.
How is compensation calculated for retrenchment under Section 20?
Under Section 20(c) of the Bangladesh Labour Act 2006, a retrenched worker with at least one year of continuous service is entitled to 30 days' wages for every completed year of service, or gratuity, whichever is higher.
Can an employer terminate a worker without notice for misconduct?
Yes, under Section 23(1) of the Bangladesh Labour Act 2006, a worker may be dismissed without notice or wages in lieu of notice if found guilty of misconduct under Section 23(4), following a formal domestic inquiry.
◆ Related Statutory Guides & Practice Insights
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