Termination of Employment in Bangladesh: Legal Framework and Employer Guidelines

Termination of Employment in Bangladesh: Legal Framework and Employer Guidelines

Termination of employment is a sensitive and regulated area of labour law in Bangladesh. Whether you are an employer managing a workforce or an employee facing dismissal, understanding the statutory provisions governing termination is crucial. The Bangladesh Labour Act, 2006, provides specific procedures, notice requirements, and compensation rules for various types of termination.

In this article, we outline the key legal aspects of termination of employment under Bangladeshi law.

Types of Termination

The Bangladesh Labour Act recognizes several types of employment termination:

1. Termination by Notice (Without Cause) – Section 26

An employer may terminate a permanent worker’s employment without assigning any cause, provided they:

• Give 120 days’ notice in writing for monthly-rated workers.
• Give 60 days’ notice in writing for other workers.

Alternatively, wages in lieu of the notice period must be paid.

The worker may also terminate the contract by giving 60 days’ notice or salary in lieu thereof.

2. Termination for Misconduct – Section 23

If a worker is found guilty of misconduct, such as:

• Theft, fraud, or dishonesty
• Willful disobedience
• Habitual late attendance
• Breach of discipline
• Riotous or disorderly behavior

The employer may dismiss the worker without notice, but due process must be followed:

• A charge sheet must be issued.
• The worker must be given a chance to respond.
• An inquiry must be held.
• A report must justify the findings.

If misconduct is not proven, dismissal may be declared unlawful.

3. Termination for Conviction – Section 24

A worker convicted of a criminal offense involving moral turpitude may be dismissed without notice.

4. Retrenchment – Section 20

When an employer reduces the workforce due to redundancy or reorganization:

• The last-in-first-out (LIFO) principle generally applies, unless there are valid reasons to deviate.
• The employer must:
  • Provide one month’s notice (or wages in lieu),
  • Pay 15 days’ wages for each completed year of service as compensation,
  • Inform the Chief Inspector of Labour.

5. Discharge for Physical or Mental Incapacity – Section 19

If a worker becomes permanently unfit for work due to physical or mental incapacity, they may be discharged from service.

Compensation is required as per Section 19(2) if the incapacity is not caused by workplace injury.

6. Resignation by Employee – Section 27

An employee may resign from their position by:

• Providing 60 days’ notice (for permanent workers).
• In case of temporary or casual workers, shorter notice may apply.
• If the employer accepts a resignation before the notice period ends, wages must be paid for the remainder of the notice.

Termination of Probationary Workers – Section 4

During the probation period, an employer may terminate the worker without notice or compensation. However, if the probation period is extended beyond six months (for skilled workers), proper notice or pay in lieu must be given.

Payment of Compensation

Under Section 26(2):

• Terminated workers who have completed at least one year of continuous service are entitled to 30 days’ wages for each year of service, in addition to any other dues.

In retirement, retrenchment, or termination without cause, this compensation is mandatory.

Legal Considerations for Employers

1. Due Process: Employers must maintain clear documentation — charge sheets, inquiry reports, notices, and acknowledgements — to defend any termination.
2. Non-Compliance Risks: Failure to follow legal procedures may lead to claims for reinstatement, back wages, and even criminal liability.
3. Settlement: Upon termination, all dues — wages, leave encashment, gratuity (if applicable), and compensation — must be cleared within 30 days.

Final Thoughts

Termination of employment must not only follow internal HR protocols but also the statutory requirements of the Labour Act. Employers should seek legal guidance before making any dismissal to avoid costly disputes, while employees should know their rights to challenge wrongful termination.

At our law firm, we provide comprehensive services including:

• Drafting termination notices and employment agreements
• Conducting domestic inquiries
• Legal representation in labour courts and tribunals
• Mediation and settlement negotiation

Whether you are an employer or an employee, we’re here to ensure your rights are protected within the framework of Bangladesh’s labour law.