Employee Benefits · Bangladesh
Provident Fund and Gratuity Administration in Bangladesh
We run the day-to-day administration of your provident fund and gratuity scheme: monthly contributions from payroll, member ledgers and annual statements, loans, gratuity calculations and final settlements, with clean records for your trustees, auditors and the tax authority.
Definition
What Is Provident Fund and Gratuity Administration?
Provident fund and gratuity administration is the record-keeping and processing work behind an employee benefit scheme: collecting monthly contributions through payroll, keeping each member’s ledger, allocating profit, managing loans, calculating gratuity and settling both when an employee leaves.
A provident fund is a savings fund built from employee and employer contributions. Gratuity is a lump sum the employer pays for years of service. They often sit side by side, but they follow different rules.
Who this service is for
- ✓Employers with 100 or more workers setting up a provident fund for the first time
- ✓Companies with old provident fund ledgers that no longer match the bank or the payroll
- ✓Foreign subsidiaries and INGOs that need audit-ready benefit records every year
What changed
Is a Provident Fund Mandatory in Bangladesh?
For larger employers, now it is. Here is the short version of the 2025–26 changes.
Provident Fund Now Required for Establishments With 100 or More Workers
The Bangladesh Labour (Amendment) Act 2026, passed by Parliament on 9 April 2026, turned the November 2025 labour ordinance into law. Establishments with 100 or more workers must set up a provident fund, or enrol workers in the government's Progoti universal pension scheme as an alternative.
Contributions are usually 7–8% of basic wages from the worker, matched by the employer. Commentators differ on whether a written demand from workers is still needed before the duty applies, and the resignation benefit rules have also changed.
Confirm the current text with your lawyer before you change your scheme. We then set up the payroll deductions, member records and reports to match.
Gratuity calculation
How Is Gratuity Calculated in Bangladesh?
Under the Bangladesh Labour Act’s definition, gratuity is at least 30 days’ wages at the last rate of pay for every completed year of service, and a period of more than six months counts as a full year. Where service is longer than ten years, the rate is 45 days’ wages per year.
When an employee resigns, they receive the statutory resignation benefit or the gratuity, whichever is higher. We run this comparison for every leaver and keep the working on file for your auditor.
Three things that change the amount
- 1Wage base: your scheme rules say whether basic or gross wages are used
- 2Service rounding: more than six months counts as a full year
- 3Long service: beyond ten years the rate rises to 45 days' wages
Assumes 30 days' wages equal one month's wages. Your scheme rules and the Labour Act decide the wage base.
What we administer
A Member's Journey Through the Fund
From the first deduction to the final settlement, every step leaves a record your trustees can check.
Open the member account, record the nominee and start deductions from the eligible date.
Deduct the employee share, add the employer match and reconcile the deposit to the fund's bank account.
Allocate profit at the rate the trustees approve and send each member a statement.
If the fund rules allow, process the loan and recover instalments through payroll.
Settle the provident fund under the vesting rules, calculate gratuity, and apply the tax treatment.
Governance
We Administer. Your Trustees Decide.
A provident fund is held in trust, so its trustees stay responsible for the rules, the profit rate and where the money is invested. We do the administration they rely on, and we never hold or invest fund money ourselves.
For tax benefits, a provident fund has to be recognised and a gratuity fund approved by the tax authority. We help prepare the trust deed schedules, member records and reports that the application and annual audit need.
FAQs
Provident Fund and Gratuity: FAQs
What is provident fund and gratuity administration?
It is the processing and record-keeping behind an employee benefit scheme: monthly contributions through payroll, member ledgers, profit allocation, loans, gratuity calculations and final settlements, with reports for trustees, auditors and the tax authority.
Is a provident fund mandatory in Bangladesh?
Since the 2025 labour ordinance, made law by the Bangladesh Labour (Amendment) Act 2026, establishments with 100 or more workers must have a provident fund or use the government’s Progoti universal pension scheme instead. Check the current conditions with your lawyer.
How much do employees and employers contribute to a provident fund?
Contributions are usually 7 to 8% of basic wages from the employee, with the employer matching the same amount. Your fund rules set the exact rate.
How is gratuity calculated in Bangladesh?
Under the Labour Act’s definition, gratuity is at least 30 days’ wages at the last rate for each completed year of service, with more than six months counted as a year, and 45 days’ wages per year where service is longer than ten years.
What is a recognised provident fund?
It is a provident fund that the tax authority has recognised under the income tax law. Recognition gives tax benefits to the fund and its members, and needs a trust deed, fund rules, trustees and annual audited accounts.
Do you act as trustee of our fund?
No. Your trustees stay responsible for the fund, its rules and its investments. We provide the administration and records they need, and we do not hold or invest fund money.
How is gratuity shown in company accounts?
For companies reporting under IFRS, gratuity is usually a defined benefit plan under IAS 19. We provide the employee data and liability schedules, and a qualified actuary does the valuation if your auditor requires one.
What happens to provident fund and gratuity when an employee leaves?
The provident fund is settled under the fund’s vesting rules. Gratuity is calculated on the last wage and years of service, and for resignations the employee receives the statutory benefit or gratuity, whichever is higher.
Bring Order to Your Provident Fund and Gratuity Records
Tell us your headcount, whether you already have a fund, and what you need: a new set-up, a clean-up of old ledgers or monthly administration. We will reply with a scope and a written fee.