2026 Edition
Everything Bangladeshi HR and payroll professionals need — Provident Fund,
Gratuity, WPPF, Personal Income Tax (TDS), leave entitlements
and the 2026 Labour Law reforms. All in
one comprehensive guide.
WHY THIS GUIDE MATTERS
Every payroll run in Bangladesh carries legal weight. Get it right, and your people are paid accurately, your contributions land on time,
and your business stays on the right side of a labour law that has just undergone its broadest reform in over a decade. Get it wrong, and
the consequences range from financial penalties to Labour Court claims.
For HR and payroll teams, the challenge is real. Bangladeshi payroll is not complicated in principle — but it is detailed, and the details
matter. Here is a plain-language overview of what employers need to manage in 2026.
This guide explains:
THE THREE STATUTORY FRAMEWORKS
Mandatory retirement savings
Establishments with 100+ permanent workers must now form a provident fund automatically. Worker contributes 7–8% of basic wage; employer matches. Income earned by the fund is taxed at 15%; contributions are otherwise tax-exempt.
End-of-service lump sum payment
30 days’ wages per years of service (up to 10 years); 45 days’ wages per year beyond that. Payable on death, discharge, resignation, retrenchment or termination.
Qualifying companies pay 5% of net profit, split 80:10:10 across the Workers’ Participation Fund, Workers’ Welfare Fund and the government Welfare Foundation Fund — within 9 months of year-end.
These are the mistakes that happen when payroll configuration was correct when first set up but was never
revisited as the law changed. Given how much changed in 2026 alone, an annual review against the current
gazetted text is now a baseline requirement, not a discretionary exercise.
Treating provident fund as optional once the 100-worker threshold is met, rather than automatic
Misclassifying managerial staff as “workers” under the narrowed 2026 definition
Failing to maintain a funded, audited gratuity scheme, leading to disputes over what’s payable
Missing the new 3-year resignation benefit trigger, still applying the old 5-year rule
Applying the old 11-day festival holiday count or the old 112-day maternity leave figure
Calculating overtime on basic wage alone rather than basic wage plus dearness allowance
Overlooking WPPF and WWF obligations for qualifying companies at audit time
Treating provident fund as optional once the 100-worker threshold is met, rather than automatic
Applying the old 11-day festival holiday count or the old 112-day maternity leave figure
Misclassifying managerial staff as “workers” under the narrowed 2026 definition
Calculating overtime on basic wage alone rather than basic wage plus dearness allowance
Failing to maintain a funded, audited gratuity scheme, leading to disputes over what’s payable
Overlooking WPPF and WWF obligations for qualifying companies at audit time
Missing the new 3-year resignation benefit trigger, still applying the old 5-year rule
HOW MIHCM SUPPORTS BANGLADESH PAYROLL COMPLIANCE
MiHCM Payroll handles provident fund, gratuity, WPPF and TDS calculations automatically for
Bangladesh. Every pay run applies the correct contribution rates, accrual rules and NBR slab structures
— configured for a labour law that has just undergone its broadest reform in over a decade.
Provident fund (7–8%), gratuity 30/45-day tiers, and progressive TDS — all applied automatically every run.
Automatic accrual using the 30-day / 45-day service-length rules, compared against compensation on exit.
Net profit allocation logic supporting the 80:10:10 split, with cash and retained portion tracking.
Provident fund trustee reports, WPPF distribution records and TDS deposit reconciliation — one click.
Monthly TDS recalculated automatically as thresholds and rates change each fiscal year.
Malaysia, Thailand, Cambodia, Bangladesh, Sri Lanka and more — unified HR platform.
