Provident fund and gratuity, run correctly every month
We administer employee provident funds and gratuity schemes for companies, subsidiaries and INGOs in Bangladesh: monthly contributions, member ledgers, annual statements, NBR recognition paperwork and accurate payouts when people leave.
How a provident fund is funded
Typical structure under Section 264 of the Bangladesh Labour Act 2006. Your fund rules set the exact rate.
What is a provident fund in Bangladesh?
A savings fund for employees. Each month the employee contributes a share of basic wage, usually 7–8%, and the employer adds an equal amount. The money is held by a board of trustees, invested, and paid out with returns when the employee leaves under the fund rules.
What is gratuity in Bangladesh?
A lump sum the employer pays at the end of service. The Bangladesh Labour Act 2006 sets it at no less than 30 days’ wages for each completed year of service, rising to 45 days’ wages per year for service of more than ten years.
Provident Fund and Gratuity Administration Services
We run the day-to-day work of both schemes, while your board of trustees keeps the decisions.
Provident fund administration
Monthly
- Contribution processing: employee and employer shares calculated through payroll and deposited to the fund account
- Member ledgers: an individual account for each member, updated every month
- Profit allocation: investment returns shared across members at year end
- Loans and withdrawals: handled under your fund rules, with trustee approval
- Annual statements: a clear balance statement for every member
- Final payouts: balances calculated and paid when members leave
Gratuity administration
Yearly
- Policy set-up: a gratuity policy in line with the Labour Act and your terms
- Liability calculation: the amount you owe each employee, updated every year
- Fund management support: records for an approved gratuity fund, if you have one
- Exit calculations: gratuity or resignation benefit worked out for each leaver
- Final settlement: paid with other dues within 30 working days of exit
- Audit files: calculations and approvals kept for auditors and tax reviews
Provident Fund and Gratuity Rules in Bangladesh
The main legal points we build into every scheme we run.
| Item | What applies | Source |
|---|---|---|
| PF contribution | Employee pays 7–8% of basic wage; the employer contributes an equal amount | Labour Act 2006, s. 264 |
| PF membership | Workers with at least one year of service | Labour Act 2006, s. 264 |
| When a PF is required | Rules for establishments with 100 or more permanent workers were changed in 2025 and again in 2026; see the note below | Labour Act 2006, s. 264, as amended |
| Pension alternative | Employers may enrol staff who ask in the government’s Progoti universal pension scheme instead | Labour Act 2006, s. 264, as amended |
| Gratuity amount | At least 30 days’ wages for each completed year of service; 45 days’ wages per year for service over ten years | Labour Act 2006, s. 2(10) |
| Resignation benefit | Graduated payment for permanent workers who resign after three years, or gratuity if higher | Labour Act 2006, s. 27(4), as amended |
| Payment deadline | All dues, including gratuity, paid within 30 working days after employment ends | Labour Act 2006, s. 123(2) |
| Tax recognition | Provident and gratuity funds recognised or approved by the National Board of Revenue receive tax benefits | Income Tax Act 2023 |
Note on 2025–2026 changes: A 2025 ordinance made a provident fund compulsory for establishments with 100 or more permanent workers. Reports on the 2026 amending Act say it replaced this with a requirement to set one up when two-thirds of those workers ask in writing. We confirm the current position for your organisation before any scheme is set up.
How to Calculate Gratuity in Bangladesh
A simple illustration of the minimum gratuity under the Labour Act formula.
The formula
30 days’ wages is treated as one month’s wage, and 45 days’ wages as one and a half. Your policy decides whether “wage” means basic pay or a wider figure, and may pay more than the legal minimum.
Example: six completed years
- Last monthly wage
- Tk 40,000
- Completed years of service
- 6
- Days’ wages per year
- 30
- Minimum gratuity
- Tk 240,000
Illustration only. Actual entitlement depends on how employment ends, your policy and the wage definition used.
What We Do Every Month, Every Year and at Every Exit
The work follows a fixed calendar agreed with your trustees.
Contributions and ledgers
- Deduct employee contributions through payroll
- Calculate the employer match
- Deposit both to the fund account
- Update each member’s ledger
Statements and valuation
- Allocate investment returns to members
- Issue member balance statements
- Update the gratuity liability
- Prepare files for the fund audit
Final calculations
- Calculate PF balance and any forfeiture under the rules
- Calculate gratuity or resignation benefit
- Obtain trustee approval
- Pay within 30 working days
Setting Up a Recognised Provident Fund or Gratuity Fund
New schemes need the right documents in place before the first contribution.
Fund rules and trust deed
We draft the fund rules and trust deed covering contributions, eligibility, loans, forfeiture and payouts.
Board of trustees
We help you appoint trustees from management and staff and set out their duties.
NBR recognition
We prepare the application for recognition or approval by the National Board of Revenue, so the fund gets its tax benefits.
Bank account and records
A separate fund bank account and ledger system, kept apart from company money.
Provident Fund and Gratuity in Bangladesh: Frequently Asked Questions
Answers to what HR and finance teams ask us most.
Is a provident fund mandatory in Bangladesh?
Not for every employer. The Labour Act lets any establishment set one up, and requires larger establishments, those with 100 or more permanent workers, to do so in certain conditions that were changed in 2025 and 2026. We confirm the current requirement for your organisation before setting up a scheme.
How much is the provident fund contribution in Bangladesh?
Usually 7% to 8% of the employee’s basic wage each month, with the employer contributing an equal amount. The exact rate is set in your fund rules.
How is gratuity calculated in Bangladesh?
Under the Bangladesh Labour Act 2006, gratuity is at least 30 days’ wages for each completed year of service, or 45 days’ wages per year for service of more than ten years, based on the last wage.
When must gratuity be paid?
With all other dues, within 30 working days after employment ends.
Can an employee get both provident fund and gratuity?
Yes. They are separate benefits: the provident fund returns the employee’s savings with the employer’s share and returns, while gratuity is a service-based payment from the employer.
What is a recognised provident fund?
A provident fund recognised by the National Board of Revenue. Recognition gives the fund and its members tax benefits, and requires proper rules, a trust deed and trustees.
Can you run PF and gratuity alongside payroll?
Yes. Contributions are deducted in the same monthly payroll we run, so the fund ledgers, payslips and salary tax always match. See our payroll outsourcing service.
What is the Progoti pension alternative?
Recent amendments let employers enrol staff who ask in the government’s Progoti universal pension scheme instead of a provident fund, with contributions shared by employer and employee.
Hand Over Your PF and Gratuity Administration
Tell us your headcount and whether you already have a fund. We will set out the work, the calendar and the fee.
PayrollBangladesh · Rupayan Shopping Square, Suite 610, Bashundhara R/A, Dhaka 1229 · +880-1711-990010 · info@payrollbangladesh.com
Reviewed by Romana Akter Shila, Chief Executive Officer, PayrollBangladesh, 8 years in EOR and payroll operations. This page is general information, not legal or tax advice.