Compensation Consulting Services in Bangladesh for Employers
Payrollbangladesh designs, benchmarks and documents pay structures for companies employing staff in Bangladesh. We build salary grades and bands, tax-efficient basic-to-allowance splits under the Income Tax Act 2023, and festival bonus, gratuity, provident fund and WPPF policies that satisfy the Labour Act 2006 as amended in 2026. We include sales incentive and executive pay plans too. In the end, you receive a written compensation framework your payroll can run every month.
Compensation Consulting Built for Companies Paying Staff in Bangladesh
We take over everything between “we need a proper salary structure” and “every employee is paid lawfully and competitively each month”. That means the grade design, the benchmarking, the statutory benefit policies and the tax treatment. Three kinds of employers use this service:
Foreign companies entering Bangladesh
A new subsidiary, branch or EOR-hired team needs pay grades that match the Dhaka market, a basic/allowance split that works under NBR rules and benefit policies that match the Labour Act — before the first offer letter goes out. We pair this with our Employer of Record track when you have no local entity yet.
Local groups outgrowing ad-hoc pay
When salaries have been set offer by offer, internal equity breaks, increments become negotiations and gratuity and PF liabilities are unknown. We rebuild the structure, cost the catch-up and give you an increment and promotion policy that holds.
Factories, EPZ & zone enterprises
Wage-board gazettes, grade-wise minimum wages, overtime at twice basic, attendance and production incentives and WPPF all have to reconcile on one payslip. We design the grade matrix and the incentive rules so the factory stays compliant at audit and competitive at the gate.
What Is Included in Our Compensation Consulting Service?
Our compensation consulting service in Bangladesh covers nine deliverables. They are: compensation strategy and pay philosophy; job grading and salary bands; market benchmarking; basic-to-allowance structuring for tax efficiency; statutory benefit design; variable pay and sales incentive plans; executive and board remuneration; increment and promotion policy; and the written compensation policy with costed implementation. We fix the fee per project and quote it after a scoping call.
The nine deliverables
Compensation strategy & pay philosophy
We agree with leadership where you want to pay against the market — for example median for most roles, upper quartile for scarce skills. We also fix how fixed and variable pay should split by level, and what the structure must achieve for retention and cost control. All of this happens before we set any numbers.
Job grading & salary bands
We evaluate each role and place it into a grade structure. Each band has a minimum, midpoint and maximum. As a result, every offer, increment and promotion has a defined range, and you can check internal equity in one table.
Market benchmarking
We compare pay for each benchmark role against Bangladesh market data for your sector and city. The data comes from our payroll engagements, published surveys and targeted salary sampling. Because trust matters, we disclose sources and sample sizes in the report.
Basic / allowance structuring
We split gross salary into basic, house rent, medical, conveyance and other allowances. The split is tax-efficient under the Income Tax Act 2023, including the one-third-of-salary-or-BDT-500,000 employment exemption. At the same time, basic wage stays high enough to meet Labour Act expectations on overtime, bonus and gratuity.
Statutory benefit design
Written policies for the two annual festival bonuses, gratuity at 30 days’ wages per completed year, and provident fund (now mandatory on request in establishments of 100+ workers). We also cover WPPF contributions, overtime, leave encashment and the new 120-day maternity leave. We write each policy to the Labour Act 2006 as amended in 2026.
Variable pay & sales incentives
Performance bonus, production and attendance incentives, and sales commission plans. We model thresholds, accelerators and caps against your budget. We also set the payroll and TDS treatment of each payment.
Executive & board remuneration
Packages for country heads, directors and senior managers. We set fixed pay, bonus and long-term incentives, and we value perquisites the way NBR values them (for example company vehicles at BDT 15,000–50,000 per month by engine capacity). Finally, we document everything for board approval and the annual return.
Increment & promotion policy
An annual increment matrix tied to performance rating and position in band, plus promotion rules and the cost of each scenario. The yearly review becomes a budget decision rather than a round of individual negotiations.
Written policy & costed roll-out
A compensation policy document, grade and band tables, and communication templates for managers and employees. You also get a month-by-month cost of moving every current employee onto the new structure.
Compliance frame: Bangladesh Labour Act 2006 (consolidated English text, OGR Legal) as amended by the Labour (Amendment) Ordinance 2025 and Labour (Amendment) Act 2026 (TBS, 9 April 2026; Mondaq summary); Income Tax Act 2023 as amended by the Finance Act 2026 (nbr.gov.bd; PwC Bangladesh individual tax summary, reviewed July 2026). See also our Corporate Payroll Service for running the structure monthly.
What Are the Pay & Benefits Rules in Bangladesh? Key Facts at a Glance
We test every compensation structure we design against these figures, and we tie each one to its primary source. Where a figure depends on your sector or wage board, we say so rather than quote a single number.
| Item | Figure | Source |
|---|---|---|
| Standard working hours | 8 / day · 48 / week | Labour Act 2006, s.100 & s.102 (up to 10 / day and 60 / week with overtime) |
| Overtime rate | 2 × (basic + dearness allowance) | Labour Act 2006, s.108 |
| Festival bonus | 2 per year, each up to basic wage | Labour Rules 2015, rule 111(5) — after one year of service |
| Gratuity | 30 days’ last wages per completed year or service over 6 months; 45 days per year after 10 years | Labour Act 2006, s.2(10) — payable in addition to notice pay |
| Workers’ Profit Participation Fund | 5% of net profit | Labour Act 2006, s.234 — companies meeting the capital / asset thresholds |
| Provident fund | Mandatory on written request of ⅔ of workers in establishments of 100+ | Labour (Amendment) Act 2026 (TBS, 9 Apr 2026) |
| Maternity leave | 120 days (60 + 60) | Labour Act 2006, s.46 as amended 2026 (previously 112 days) |
| Lay-off compensation eligibility | 3 months’ service (was 1 year) | Labour Act 2006, s.16 as amended 2026 |
| Minimum-wage revision cycle | Every 3 years (was 5) | Labour (Amendment) Act 2026; RMG gazette minimum BDT 12,500 since Dec 2023 |
| Individual tax-free threshold | BDT 400,000 | Finance Act 2026 — income years 2026/27 (BDT 450,000 from 2028/29) |
| Employment-income exemption | ⅓ of salary or BDT 500,000, whichever is lower | Income Tax Act 2023 (PwC, reviewed 31 Jul 2026) |
| Company-vehicle perquisite value | BDT 15,000 – 50,000 / month | Income Tax Act 2023 — by engine capacity (up to 1,500 cc to over 2,500 cc) |
Why Do Employers Choose Payrollbangladesh for Compensation Consulting?
Because a pay structure that looks good in a slide deck fails on the payslip if it ignores the Labour Act, the NBR or the wage board. We design compensation from the payroll desk outward, so the grades, the tax treatment, the statutory benefits and the monthly run all agree.
Designed by payroll operators
We only propose structures we can process the next month. In other words, we build basic/allowance splits, incentive formulas and bonus rules so payroll can compute them, not just describe them.
Local market data, not imports
Benchmarks come from Bangladesh payroll engagements and local surveys for your sector and city, with sources and sample sizes disclosed so your board can see what the numbers rest on.
Statute-tested, section by section
We map each policy line to the Labour Act, Labour Rules, the applicable wage-board gazette and the Income Tax Act. This includes the 2025–2026 amendments on PF, maternity, lay-off and resignation benefits.
Costed before it is approved
You see the month-one and year-one cost of the new structure, the catch-up for under-band employees and the gratuity and PF liability it creates — before anything is announced.
Fixed project pricing
One fee per project, scoped by headcount and number of benchmark roles, with an optional annual review retainer; no hourly meters and no survey resale mark-ups.
Single point of accountability
One compensation lead per client, backed by a compliance reviewer who signs off the policy and the first payroll run on the new structure.
How Does Our Compensation Consulting Process Work?
Our compensation consulting process runs in six steps. They are scoping and data collection, job grading, market benchmarking, structure and benefit design, costing and leadership sign-off, and roll-out through payroll. Employee communication and an annual review close the loop.
- 01Scoping & data collection. We agree the objectives and budget envelope, collect the current payroll register, organogram, job descriptions and existing policies, and confirm which wage board, zone rules and NBR treatments apply to your workforce.
- 02Job grading. We evaluate roles and place them into grades using a consistent set of factors (skill, responsibility, decision scope, impact). This produces the grade map on which bands, increments and promotions will sit.
- 03Market benchmarking. We price benchmark roles against Bangladesh market data for your sector and location. Then we identify outliers and under-band employees and cost the gap.
- 04Structure & benefit design. We draft salary bands, the basic/allowance split, and festival bonus, gratuity, PF, WPPF, overtime and leave encashment policies, plus variable pay and executive packages. Next, we test all of them against the Labour Act and the Income Tax Act.
- 05Costing & sign-off. We present month-one and year-one cost, transition options and the statutory liability created to leadership. After that, we finalise the policy and obtain board approval where required.
- 06Roll-out & annual review. We issue manager and employee communication templates, reconfigure payroll and review the first run. Finally, we re-benchmark the structure every year, or whenever a wage board or Finance Act changes the numbers.
Which Compensation Compliance Checks Do We Own in Bangladesh?
We check every structure we deliver against this list before sign-off, and again at each annual review. If any item fails, our reviewer holds the policy until we fix it.
Nine checks on every structure
- ✓Minimum wage met for every grade under the wage-board gazette that applies to your sector (for example the RMG gazette of December 2023 with its grade-wise minimums), with the three-year revision cycle diarised.
- ✓Basic wage set deliberately — high enough that overtime at twice basic plus dearness allowance, festival bonus and gratuity are computed on a defensible base, and not artificially suppressed through allowances.
- ✓Two festival bonuses budgeted for every employee with one year of service, each capped at basic wage in line with Labour Rules 2015, rule 111(5).
- ✓Gratuity and resignation benefits provisioned — 30 days’ wages per completed year (45 after ten years) and the tiered 7 / 15 / 30-day resignation benefit introduced by the 2025 amendment, reflected in the balance sheet.
- ✓Provident fund readiness — trust deed, NBR recognition and contribution rules ready for establishments of 100+ workers, where two-thirds of workers can now require a PF or pension scheme.
- ✓WPPF set aside at 5% of net profit for companies within s.234 thresholds, distributed 80 / 10 / 10 between the participation fund, welfare fund and the Workers’ Welfare Foundation fund.
- ✓Overtime and hours within limits — 8 / 48 standard, 10 / 60 maximum, paid at twice basic plus DA and recorded in the registers the Labour Inspectorate checks.
- ✓Tax treatment correct on every component — allowances, perquisites and bonuses valued as the Income Tax Act 2023 requires, the one-third / BDT 500,000 employment exemption applied, TDS deposited monthly and the annual salary statement filed.
- ✓Leave entitlements costed — annual, sick, casual, festival holidays (now 13 days) and 120-day maternity leave priced into the total-reward cost per employee.
Primary sources: Bangladesh Labour Act 2006 (consolidated to 2018); OGR Legal — Labour Law (Amendment) Ordinance 2025; TBS — Parliament passes Labour (Amendment) Bill 2026; Financial Express, 23 Aug 2026 — RMG minimum wage BDT 12,500 and revision cycle; PwC — Bangladesh individual deductions; PwC — Bangladesh income determination (perquisites).
How Is a Salary Structured in Bangladesh? Basic, Allowances and Benefits
A Bangladesh salary is normally a gross figure split into basic wage and allowances. Employers compute statutory benefits on basic. The split is where most of the tax efficiency and most of the compliance risk sits, so we set it deliberately for each grade. The table shows the components we design and what each one drives.
| Component | Drives | How we set it |
|---|---|---|
| Basic wage | Overtime (2× basic + DA), festival bonus cap, gratuity, PF contributions, resignation benefit | Set as a deliberate share of gross per grade — not suppressed to cut statutory cost, which fails at inspection and in the labour court |
| House rent allowance | Gross pay; taxable as part of employment income after the one-third / BDT 500,000 exemption | Sized to market practice for the grade; employer-provided accommodation valued at annual value or rent paid |
| Medical & conveyance allowance | Gross pay; taxable within employment income | Fixed amounts by grade, reviewed with each Finance Act |
| Festival bonus | Two annual payments after one year’s service, each up to basic wage | Budgeted as a percentage of annual basic across the headcount; timing aligned to Eid and the second festival |
| Variable pay / incentives | Performance, production, attendance or sales outcomes; TDS at the time of payment | Formula, thresholds, accelerators and caps modelled against budget before launch |
| Perquisites (vehicle, housing, club) | Taxable at NBR-prescribed values, e.g. vehicle at BDT 15,000–50,000 per month by engine size | Included only where the after-tax value to the employee justifies the cost |
| Gratuity / PF / WPPF | End-of-service and profit-share liabilities; PF distributions tax-exempt from recognised funds | Provisioned in the costing and written into policy, trust deeds and the annual return |
Source: Labour Act 2006 ss.2(10), 100–108, 234, 264 and Labour Rules 2015 rule 111(5); PwC — Bangladesh income determination and deductions (reviewed 31 July 2026). Related: Tax Planning and Statutory Compliance.
Should You Set Pay In-House or Use Payrollbangladesh? Direct Comparison
Most companies set salaries offer by offer and fix the structure only when increments, resignations or a labour-inspection notice force the issue. The rows below are the failure points we are hired to fix on Bangladesh engagements.
| Dimension | In-house / ad hoc | Payrollbangladesh (consulted) |
|---|---|---|
| Salary bands | None, or inherited from a parent company abroad; same job paid differently across hires | Grade matrix with minimum, midpoint and maximum per band, benchmarked to Bangladesh |
| Basic / allowance split | Basic pushed down to reduce bonus and gratuity, creating inspection and court exposure | Basic set deliberately per grade; statutory benefits computed on a defensible base |
| Market data | Anecdote from recruiters and candidates’ own claims | Sector and city benchmarks with sources and sample sizes disclosed |
| Statutory benefits | Festival bonus, gratuity, PF and WPPF handled case by case; liabilities unprovisioned | Written policies, provisioned in the costing and the balance sheet |
| Tax treatment | Allowances and perquisites valued inconsistently; TDS corrected at year-end | Each component valued per the Income Tax Act 2023 and run through payroll monthly |
| Increments | Annual negotiation, employee by employee | Increment matrix by rating and band position, costed before approval |
| Legal change | Discovered when a notice or claim arrives | Annual review covering wage-board gazettes, Labour Act amendments and the Finance Act |
| Accountability | Split across HR, finance and an outside accountant | One compensation lead and one compliance reviewer |
Need the wider HR policy set — contracts, handbook, performance management — as well? See HR Management and Management Consulting.
How Much Does Compensation Consulting Cost in Bangladesh?
We price compensation consulting as a fixed project fee, scoped by headcount and the number of benchmark roles, with an optional annual review retainer. There are no hourly charges and no mark-up on survey data. After the scoping call, we issue a written quote.
| Tier | Headcount band | Fit | What’s included |
|---|---|---|---|
| Foundation | Up to 50 employees | New Bangladesh entity, EOR team or growing local company | Grade structure, salary bands, basic/allowance split, statutory benefit policies, written compensation policy |
| Growth | 51 – 300 employees | Multi-department companies and group entities | Foundation + market benchmarking report, increment and promotion policy, variable pay design, costed transition plan |
| Enterprise | 300+ employees or factories | Manufacturing, EPZ / economic-zone plants and multi-site corporates | Growth + wage-board grade matrix, production and attendance incentives, executive and board remuneration, WPPF and PF set-up, annual review retainer |
All tiers include a compliance review against the Labour Act 2006 (as amended 2026) and the Income Tax Act 2023, and hand-over to payroll. We price monthly processing on the new structure separately under our Corporate Payroll Service.
Frequently Asked Questions — Compensation Consulting in Bangladesh
Eleven questions employers ask us
What does “compensation consulting in Bangladesh” include?
Compensation consulting in Bangladesh is the design of a complete pay framework for your employees. It includes a compensation strategy, job grades and salary bands, and market benchmarking. We then set a basic-to-allowance split that is tax-efficient under the Income Tax Act 2023, and statutory benefit policies (festival bonus, gratuity, provident fund, WPPF, overtime, leave encashment and maternity) under the Labour Act 2006 as amended. It also covers variable pay and sales incentive plans, executive packages, an increment and promotion policy, and the written policy document with a costed implementation plan. Payrollbangladesh delivers all of this as a fixed-fee project.
What is the minimum wage in Bangladesh?
There is no single national minimum wage. Minimum wages are set sector by sector through Minimum Wage Board gazettes; the ready-made garment gazette of December 2023, for example, set an entry-level minimum of BDT 12,500 per month with grade-wise rates above it. Under the Labour (Amendment) Act 2026 minimum wages must now be reviewed every three years instead of five, so we diarise the revision cycle for your sector and re-test your lowest grades when a new gazette is published.
How are overtime, festival bonus and gratuity calculated in Bangladesh?
Overtime is paid at twice the ordinary rate of basic wage plus dearness and ad-hoc allowance (Labour Act 2006, s.108), within the limits of 10 hours a day and 60 hours a week. Festival bonus under Labour Rules 2015, rule 111(5) is two payments a year for employees with at least one year of service, each not exceeding the basic wage. Gratuity under s.2(10) is at least 30 days’ last-drawn wages for each completed year of service (or service over six months), rising to 45 days per year for service beyond ten years, and is paid in addition to notice pay. All three are driven by basic wage, which is why we set basic deliberately for each grade.
Is a provident fund mandatory in Bangladesh?
Since the Labour (Amendment) Act 2026, an establishment with 100 or more workers must set up a provident fund or join the national pension scheme when two-thirds of its workers request it in writing. Many employers set one up voluntarily as a retention benefit, and distributions from an NBR-recognised fund are tax-exempt to the employee. We draft the trust deed and contribution rules and cost the employer contribution into the structure.
What is the Workers’ Profit Participation Fund (WPPF)?
Under s.234 of the Labour Act 2006, companies that meet the capital or asset thresholds must contribute 5% of net profit each year, split 80% to the workers’ participation fund, 10% to the welfare fund and 10% to the Workers’ Welfare Foundation fund. We confirm whether your company is within scope, build the contribution into the total-reward costing and design the distribution rules.
How should salary be split between basic and allowances?
There is no statutory percentage, but the split matters twice: basic drives overtime, festival bonus, gratuity and PF, while allowances and perquisites are taxed as employment income after the exemption of one-third of salary or BDT 500,000, whichever is lower. Suppressing basic to cut statutory cost is a known red flag for labour inspectors and courts. We set basic as a deliberate share of gross for each grade and model the after-tax outcome for the employee and the total cost for you.
How are salaries taxed in Bangladesh in 2026/27?
Resident individuals pay no tax up to BDT 400,000 under the Finance Act 2026. Above that the slabs are 10% on the next BDT 300,000, 15% on the next 400,000, 20% on the next 500,000, 25% on the next 2,000,000 and 30% on the rest. Minimum tax is BDT 5,000 once income exceeds the threshold. Employment income benefits from the one-third / BDT 500,000 exemption, and perquisites such as company cars are valued at NBR-prescribed amounts. The employer deducts TDS monthly and files the annual salary statement — both of which our payroll team handles.
Where does your market benchmarking data come from?
From three sources: anonymised pay data across Payrollbangladesh’s own payroll and EOR engagements, published Bangladesh salary surveys and targeted sampling for roles with thin data. The report discloses the sources, the number of data points behind each benchmark and the date of collection, so you can judge how much weight each figure carries.
How long does a compensation consulting project take?
Typically 4–8 weeks from kick-off to a signed-off policy: one to two weeks for data collection and grading, two to three weeks for benchmarking and design, and one to two weeks for costing, leadership review and sign-off. Larger factories and multi-entity groups take longer because of the wage-board grade matrix and incentive modelling.
What changed in Bangladesh labour law in 2025–2026 that affects pay?
The Labour (Amendment) Ordinance 2025, made law by the Labour (Amendment) Act 2026 on 9 April 2026, raised maternity leave from 112 to 120 days. Lay-off compensation eligibility fell from one year to three months of service. Resignation benefits became tiered at 7, 15 or 30 days’ wages per year of service. Establishments of 100+ workers must now set up a provident fund or pension scheme when two-thirds of workers ask. In addition, festival holidays rose from 11 to 13 days, the law shortened the minimum-wage revision cycle to three years and widened the definition of “worker” to cover more sales and business-development staff. Each of these changes the cost and the drafting of a compensation policy, and all are built into our current framework.
Which other Payrollbangladesh services pair with compensation consulting?
The most common pairings are our Corporate Payroll Service to run the new structure monthly, Tax Planning, Statutory Compliance, HR Management, Expatriate Management for foreign staff packages and the full EOR track for foreign companies hiring in Bangladesh.
Need a Pay Structure That Holds Up in Bangladesh?
Get a fixed project quote and a free check of your current salary structure against the Labour Act 2006 (as amended 2026) and the Finance Act 2026 — no obligation.
Payrollbangladesh · Rupayan Shopping Square, Suite 610, Bashundhara R/A, Dhaka 1229 · +880-1711-990010 · info@payrollbangladesh.com