The South Asian region has flourished a lot in recent years, with countries like India, Pakistan, and Bangladesh emerging as key economic players in the global market. Among these countries, Bangladesh is widely known for its booming ready-made garment industry, which contributes significantly to the country’s GDP.

The country is also on a mission to become an upper-middle-income nation by 2031. It’s evident that this venture is being taken seriously, as Bangladesh has seen a 6.4% a year increase on average in GDP between 2010 and 2023. The country even raced ahead of regional giant India in per capita income in the last few years.

If you’re planning to expand your business to South Asia, Bangladesh is an excellent contender. The sooner you enter the market, the better poised you will be for success when the country reaches its full potential. Speaking of success, a professional employer organization (PEO) can be just the support you need to establish your business in the country. Below, we explain how to ace this.

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What Is a Bangladesh PEO?

For businesses planning to go beyond their home countries, it’s important to understand how to enter a new country and how to do it compliantly. We’ve already mentioned that a professional employer organization (PEO) can help you achieve this. But what exactly is a PEO?

A PEO provider is an outsourcing firm that provides HR solutions such as payroll, tax compliance, employee benefits administration, and more for companies operating in foreign countries. They essentially act as co-employers for your company’s employees in the new market and take care of all the necessary paperwork and compliance requirements.

When you’re looking for PEOs in Bangladesh, you’ll likely also hear the term employer of record (EOR). Some people use both terms interchangeably, but there is a slight difference between the two.

An EOR becomes the legal employer for your Bangladeshi employees, while a PEO acts as the administrative employer. So, the former takes on more responsibilities and liabilities, while the latter mainly handles administrative and HR tasks.

Ultimately, both options provide similar support and can help your business expand smoothly into Bangladesh. It’s up to you to decide how much control you’re willing to give up.

If you want to establish a local entity in Bangladesh yourself but have a company manage your HR needs, take the PEO route. However, if you feel that entity establishment will be too hectic or expensive, choose an EOR.

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Why Consider PEOs in Bangladesh?

While you can surely manage the complex legal and cultural landscape of Bangladesh on your own, a PEO by your side can make things much easier. 

Familiarity With Bangladeshi Business Landscape

As a new business, you might only know about the city where you want to establish your headquarters. Dhaka is the capital of Bangladesh, so most foreign businesses choose to set up shop there.

However, decades of experience in the field have made PEOs aware of all major cities and towns of Bangladesh that have business potential. Some of these include Khulna, Chittagong, Rajshahi, Comilla, Sylhet, and Barisal.

The PEO you choose to work with will also know what the current business landscape in the country is like. Some PEOs offer services other than HR, too. For example, they may hire employees on your behalf. Since they know where and how to find the best Bangladeshi talent, you’ll be getting the cream of the crop on your team.

Employment Contract Handling

In Bangladesh, employers are required to fulfill certain obligations for their employees. One of them includes offering a written contract of employment within three months of hiring. The contract must contain the job description, salary, working hours, leave policy, and other relevant details.

There are also limitations on the probationary period for employees. In clerical roles, you can’t have a probationary period of more than six months. For all other roles, it’s three to six months, depending on the position.

A PEO will help you draw up an employment contract that adheres to these local laws and regulations. They can also provide translation services, if required, for local employees.

Compliance With Bangladeshi Employment Laws

The Bangladesh Labor Act of 2006 governs the employment practices in the country. In 2013, the act was amended. The government also released the Labor Rules of 2015, which further elaborates on the provisions of the act.

Some of the topics covered in the act are working conditions, employment rights, compensation, dispute resolution, probation periods, maternity benefits, and weekly working hours. For example, employees in the country can only work 48 hours per week, according to the legislation. Exceptions may be granted in some cases.

Similarly, there are regulations around female employment. Women cannot be made to work night shifts without their consent and must be provided separate bathroom facilities.

As a Muslim country, Bangladesh also celebrates many religious holidays. There are 15 national holidays spread across the Bengali, Gregorian, and Hijri calendars. Employers in the country have to comply with all the aforementioned (and more) laws and regulations to avoid any legal repercussions.

Since PEOs have long been helping businesses like yours set up operations in Bangladesh, they can guarantee compliance with local laws and regulations. Most PEOs also have locally hired teams who are well-versed with the latest changes in employment laws. So, they always keep your business on track compliance-wise.

Administration of Employee Benefits

The Labor Act of 2006 also spells out mandatory employee benefits. For example, women are entitled to a maternity leave of 16 weeks if they have been employed for at least six months before the expected date of delivery. Women who have worked for less than six months are still entitled to leaves, although they may be unpaid.

Similarly, sick leaves and annual leaves are also mandatory employee benefits. The employer must provide their employees with 14 days of fully paid sick leave per day.

In addition, you may want to offer your employees in Bangladesh several perks, such as health insurance, retirement plans, food allowances, and transportation allowances. These are not mandatory by law, but they can significantly boost employee satisfaction and retention rates.

All these benefits have to be properly administered and managed. If you decide to take on this responsibility, it could eat up a lot of your time and resources. On the contrary, a PEO comes prepared with the HR infrastructure needed for employee benefits administration. They can further assist with creating customized benefit plans for your workforce.

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Payroll Administration

The most important role of a PEO in Bangladesh is managing the payroll of your employees in the country. Payroll management entails a lot more than just paying people on time.

You also have to make sure the payments are accurate. More importantly, you need to deduct the right amount of taxes and social security contributions from your employee’s paychecks.

Every business also needs to keep an audit trail not just for compliance purposes but also for legal purposes. You must keep track of all the payroll-related documents, such as pay stubs, tax withholdings, and benefits contributions. In a non-home country, this is even more important.

PEOs provide regular reports of your payroll and employee benefits administration. Many of them have centralized dashboards where you can see real-time data and analytics on employee compensation and taxes. You can share these reports with government agencies and auditors to show your compliance with local regulations. 

Pricing Models for PEOs in Bangladesh

The cost of working with a PEO in Bangladesh will depend on their pricing model and your company size. Understandably, bigger companies will have higher PEO costs.

When you’re looking for a PEO to work with in Bangladesh, you’ll notice that they offer three main pricing structures. Each of these models has its pros and cons. Let’s look at them individually.

Percentage of Payroll

Some PEOs take a percentage of your payroll as their fee. For example, if they charge 5% and your monthly payroll is $50,000, you’ll pay them $2,500. The actual percentage they charge will depend on the number of services they provide.

The percentage of the total payroll pricing model is beneficial for larger companies with a high payroll. However, the downside is that if your company’s payroll fluctuates, so will your PEO costs. Also, some services may not be included in the percentage, and you’ll have to pay extra for them.

Flat Fee 

In a flat fee model, you have to pay a set price for each employee. If you’re a small business with about 50 employees and the PEO charges $300 (as the range is around $299 to $1000) per employee, your monthly cost will be $15,000. The advantage of this model is that it’s easy to understand and budget for.

The services a PEO will provide for each of your employees will be mentioned in the contract. For example, they may offer payroll and benefits administration for this price. If you also want to include employee onboarding and permit processing, their pricing per employee may be $80.

While this pricing model is straightforward, the disadvantage is that it can add up to a lot if you have a large number of employees. Also, you may not need all the services included in the flat fee, but you’ll have to pay for them anyway.

Tiered Pricing

Just like SaaS subscriptions, PEOs may offer different bundles or tiers of services at varying prices. For example, they may have a basic tier with services like payroll and benefits administration for $1,000 per month.

The intermediate package may cost $2,000 and include additional services like onboarding and training. Similarly, the premium tier may cost $3,000 and have performance management and compliance assistance in addition to services in the intermediate plan.

A tiered pricing structure is best for businesses that want flexibility in selecting services and paying for what they need. However, it can become expensive at times. 

How to Choose a PEO in Bangladesh?

Here are the selection criteria for your search for a PEO in Bangladesh.

Service Offerings and Customization

You have to first decide which services you need and then select a PEO accordingly. Every PEO in Bangladesh offers a different set of services and customization options.

Some offer full HR outsourcing, while others specialize in specific areas such as payroll management. Make the choice based on your needs.

Payroll and Reporting Technology

Every PEO has its own technology stack that it uses to manage payroll and reporting. Make sure that their system is up-to-date and can handle the complexities of local tax regulations in Bangladesh. Their systems should also be secure and compliant with data protection laws.

If you already have a payroll system, the PEO’s software should be able to integrate with it to avoid any disruptions in your current processes. Also, ask about their reporting capabilities. If you need customized reports for your business, this will be a must for you.

Transparent Cost Structure

The last thing you want to happen to you in a new, foreign country is to find hidden fees. They can throw off your budget and put a strain on your resources.

So, you should work with a PEO that offers transparent pricing. If you have any questions about their fees, don’t hesitate to ask before signing the contract.

Ample Expertise

Ideally, you want to work with a PEO that has been operating in Bangladesh for quite some time. They should have built strong relationships with local authorities and have reliable contacts for any HR-related issues. The more experience they have in the market, the better it is for you.

Scalable Services

Over time, you’d want to grow, of course. If the PEO is only able to offer basic HR services, you’ll need to contract additional vendors when you need specialized services.

As a result, you’ll have to manage multiple vendors and the associated costs. To avoid this, work with a PEO that offers scalable services and can be your one-stop-shop for HR needs as you continue to grow in Bangladesh.

Additional Services

While this isn’t a necessity, it can be helpful to work with a PEO that offers additional services such as employee recruitment and development. These extra services can assist you in business expansion in Bangladesh and save you the time that you’d otherwise have to spend doing these tasks on your own.

Manage Your HR in Bangladesh

We’ve already established that working with a PEO is an efficient way to handle HR and payroll in Bangladesh. However, the costs can often be a bit high to justify, especially if you have a large team or require a full-service plan. That’s not to say you should spend even more on the DIY approach.

You can use Remote People’s PEO brokerage services to get 40% off on PEO services in Bangladesh. Providing services across 150+ countries, we can assist you in global expansion.

Contact us to discuss your needs in detail.

Frequently Asked Questions

Using a PEO is legal in Bangladesh. However, it's imperative to partner with a reputable PEO familiar with local employment laws to ensure full compliance with regulations.

PEOs in Bangladesh handle payroll, employee onboarding, compliance, tax management, and benefits administration. Some also offer recruitment support, employee training, and workplace safety guidance.

Not at all. You maintain control over your employees' day-to-day tasks and performance. The PEO handles administrative responsibilities so that you can focus on managing your team effectively.