The Rules Have Changed - Bangladesh's 2025-2026 Labour Law Reforms And What It Means For Businesses

The Interim Government and then the Bangladesh Parliament has introduced approximately ninety changes in the Bangladesh Labour Act, 2006 between 2025 and 2026, through the Bangladesh Labour (Amendment) Ordinance, 2025 (“2025 Ordinance”) and the Bangladesh Labour (Amendment) Act, 2026 (“2026 Act”) respectively. This has been a consequential wave of labour reform in the country. This article aims to examine those reforms in depth, their provenance, their legislative logic, and the concrete obligations and strategic implications they create for businesses operating in Bangladesh. It is addressed to legal practitioners, compliance officers, investors, and senior management seeking an authoritative and analytically rigorous account of a legal landscape that has changed materially.

I. Why Now?

To understand the 2025–2026 amendments, one must understand the accumulated pressure from which they emerged. The Bangladesh Labour Act, 2006 (Act No. 42 of 2006) has been amended four times prior to the amendments introduced in 2025 and 2026. The latest amendments carriy a different character from its predecessors. Previous amendments were largely reactive, responding to disasters or to the immediate demands of foreign buyers and development partners. The 2025–2026 reform, is simultaneously reactive and structural: it reflects the convergence of three distinct forces.

1.1  International Legal Accountability

In June 2019, a formal complaint was filed under Article 26 of the ILO Constitution by workers' delegates. This is among the most serious supervisory mechanisms in the ILO system, rarely invoked and carrying significant geopolitical and trade consequences. The complaint alleged systematic non-compliance with ILO Convention No. 81 (Labour Inspection), No. 87 (Freedom of Association), and No. 98 (Right to Organise and Collective Bargaining). Bangladesh, a member of the ILO since 1972, faced the prospect of a Commission of Inquiry, the ILO's equivalent of a formal tribunal. To avert this, the Government submitted a time-bound reform roadmap on 23 May 2021, committing to four priority areas: comprehensive labour law reform, simplified trade union registration, stronger labour inspection, and the elimination of anti-union discrimination.

The 2025–2026 amendments represent Bangladesh's delivery against that roadmap. In November 2025, the Interim Government further ratified three ILO Conventions: C155 (Occupational Safety and Health), C187 (Promotional Framework for Occupational Safety and Health), and critically, C190 (Violence and Harassment Convention, 2019). These ratifications were not symbolic, they created immediate domestic implementation obligations that the amendments give effect to.

1.2  The Political Settlement of the 2024 Uprising

Bangladesh's labour law has historically reflected the balance of power between a state closely aligned with industrial employers, a labour movement fragmented and suppressed, and the demands of international buyers and financiers. The political transition of 2024 disrupted this equilibrium. Workers constituted a material portion of those killed and injured in the mass uprising that forced the resignation of Prime Minister Sheikh Hasina. The Interim Government led by Dr Muhammad Yunus, keenly aware of this political debt and of the need to signal a structural break from the previous administration, established a Labour Reform Commission under Syed Sultan Uddin Ahmed. The Commission's report, submitted in April 2025, provided the intellectual architecture for the November 2025 Ordinance and the April 2026 Act.

The political context matters for practitioners. These are not technical tidying amendments. They represent a deliberate recalibration of the employer–worker power relationship, and they will be enforced in a political environment that, at least for the foreseeable future, has a structural interest in demonstrating that recalibration is real.

1.3  Global Supply Chain Due Diligence Pressure

Bangladesh is the world's second-largest apparel exporter. Its approximately USD 47 billion garment sector is subject to the sourcing standards of global brands, the requirements of multi-stakeholder initiatives, and increasingly, the mandatory human rights due diligence laws emerging in the European Union and elsewhere. The EU Corporate Sustainability Due Diligence Directive and analogous legislation in Germany (LkSG) and France (Devoir de Vigilance) impose obligations on companies that source from Bangladesh to identify and address forced labour, unsafe conditions, and suppression of worker rights in their supply chains. Bangladeshi law that falls short of ILO standards creates legal exposure for European buyers. The 2025–2026 amendments are in significant part a response to this commercial reality.

II. The Substance of the Amendments

The approximately ninety modifications, deletions, and insertions introduced by the 2025 Ordinance and the 2026 Act can be grouped into six thematic clusters. We examine each in turn.

2.1  Expansion of the Scope of Legal Coverage

Perhaps the most consequential structural change is the expanded definition of 'worker' under section 2(65). The amended definition adopts a coverage-by-function approach: it covers any person employed directly or through a contractor to perform skilled, unskilled, manual, technical, promotional, or clerical work for remuneration, regardless of designation. Previously, ambiguity in this definition allowed employers, particularly in the services sector, to avoid compliance by designating workers as 'officers', 'executives', or 'associates'.

Critically, the definition of 'worker' under section 175(1), applicable for the purposes of trade union rights under Chapter XIII, has been extended to self-employed workers and individuals engaged through digital labour platforms. Gig workers on platforms such as ride-hailing applications, food delivery services, and freelance digital marketplaces are now explicitly within the trade union framework, even if they remain outside the general definition of worker under section 2(65). This bifurcated approach may appear internally inconsistent, but it reflects a deliberate legislative choice: it grants platform workers the right to organise without immediately imposing on their engagers the full range of employment obligations (leave, gratuity, compensation) that apply to traditional workers.

The Act now also extends partial coverage, specifically accident compensation and trade union rights, to three historically excluded groups: seafarers, domestic workers, and agricultural workers. The recognition of domestic workers as 'workers' for these limited purposes, formalising a commitment that had existed only in the non-binding Domestic Workers Protection and Welfare Policy of 2015, is symbolically significant. However, it is worth noting candidly that minimum wages, regulated working hours, holidays, and service benefits for past service remain unavailable to domestic workers under the amended Act. The legislation provides a foundation, but the superstructure has not yet been built.

2.2  Workplace Safety, Dignity, and Forced Labour

The amendments introduce a cluster of provisions that collectively establish a new normative framework for the workplace environment. Section 2 now includes, for the first time in Bangladeshi labour statute, formal definitions of: forced or compulsory labour (section 2(12A)), gender-based violence (section 2(12B)), and sexual harassment (section 2(52A)). These definitions directly implement ILO Convention C190, ratified in November 2025.

Section 345(Ga) introduces an absolute prohibition on forced or compulsory labour, with criminal penalties. Although the Constitution of Bangladesh has always prohibited forced labour under Article 34, the Labour Act previously lacked specific implementing provisions. The significance of a statutory prohibition in the Labour Act, as opposed to reliance on a constitutional guarantee, is both practical and commercial: it is the Labour Act that global compliance frameworks and supply chain auditors reference when assessing a sourcing country's forced labour risk.

New sections 332 and 332A mandate the establishment of policies and protections, including a five-member Complaint Committee (with a female chairperson and a majority of women members) in every establishment to receive and investigate complaints of violence, harassment, and sexual harassment. This is a zero-tolerance infrastructure requirement. Establishments that fail to constitute the Committee, or that retaliate against complainants, face penalty exposure under the amended penalty provisions.

Section 61A introduces the right of a worker to refuse dangerous work without retaliation, an explicit protection that did not previously exist. Coupled with the requirement for establishing a Safety Committee in establishments with more than fifty workers under section 90A, for identification of risks and informing owners of the risks, accidents, dangerous occurrences, and diseases.

2.3  Worker Benefits and Compensation

The maternity benefit period has been increased from 112 days (16 weeks) to 120 days (60 days pre-delivery and 60 days post-delivery) under section 46. At 120 days, the paid maternity leave period in Bangladesh is higher than a lot of other countries in Asia, a fact that requires businesses to plan and provision accordingly.

Lay-off provisions under section 16 have been clarified and the eligibility threshold significantly lowered. Previously, a worker required one year of continuous service to be eligible for lay-off compensation; this has been reduced to three months. The compensation formula has been stabilised at a minimum of 50% of basic wages regardless of lay-off duration. Similarly, eligibility for death compensation now requires only one year of service, reduced from the previous two-year threshold.

Additionally, resignation benefits have been graduated, workers who resign after qualifying service are entitled to graded compensation based on their length of service, moving Bangladesh closer to the model operating in many neighbouring jurisdictions. The festival holiday entitlement has also been extended from eleven to thirteen days.

2.4  Trade Union Rights and Industrial Relations

The amendments to the trade union framework are among the most politically sensitive and practically consequential. The registration threshold under section 179(2), as substituted by 2026 Act, has been restructured from a percentage-based requirement (30% under the original Act, reduced to 20% by the 2018 amendment) to a tiered fixed-number system. A minimum of 20 members is now required for establishments with up to 300 workers, rising through five tiers: 40 members (301–500 workers), 100 members (501–1,500 workers), 300 members (1,501–3,000 workers), and 400 members (above 3,000 workers). For small and medium enterprises, this is a material reduction in the barrier to union formation. A newly inserted section 179(5) (inserted by 2026 Act) imposes an important structural constraint: no more than three trade union registrations may be granted at any time in a single establishment or federation of establishments, applicable across workers, officers, and owners. This cap is intended to prevent fragmentation and the proliferation of politically motivated micro-unions, but it will require careful management in establishments that already have multiple registered unions approaching that limit.

The anti-union discrimination framework has been materially strengthened through two interlocking provisions. Section 196A, which already prohibited retaliatory action against workers during the trade union registration process, has been expanded by the insertion of new sub-section (1a): retaliation by an employer in response to a worker filing a complaint regarding unfair labour practices under section 195(2) now independently constitutes anti-trade union discrimination. The prohibited conduct under section 195(1), which enumerates unfair labour practices, has been extended to cover the blacklisting of workers or trade union members, the establishment of trade unions under employer control (the classic ‘yellow union’ phenomenon), and the provision of financial or other support to influence trade union activities. A wholly new section 196B creates a direct enforcement mechanism: if an employer commits any unfair labour practice under section 195(1) or any act of anti-trade union discrimination under section 196A, the Director General of Labour is empowered to immediately order cessation of the conduct and, where a worker has suffered harm, to order payment of financial compensation and restitution. This combination of expanded substantive prohibition and direct administrative remedy, bypassing the need to initiate Labour Court proceedings, represents a significant shift in the enforcement architecture.

The check-off system under section 204 has been expanded as well. Sub-section (1), as substituted, now extends the deduction obligation to cover members of any registered trade union, not merely members of the Collective Bargaining Agent (CBA). Employers must deduct the prescribed subscription amount from the wages of all consenting members and deposit the full sum into the relevant trade union or CBA account within fifteen days. Sub-section (3), as amended, further requires employers to provide all facilities necessary for a CBA or trade union to verify that deductions are being made. The practical significance is that trade unions which have not achieved CBA status can now access the check-off mechanism independently, a material improvement in the financial viability of non-CBA unions and an important check against the use of wage-deduction denial as a tool of union suppression. On sectoral bargaining, a new section 203A establishes the legal framework for collective bargaining at the sectoral and national level: trade union federations and confederations representing workers in a sector may request collective bargaining with the relevant employer organisation, and employer organisations may similarly initiate the process. The receiving party must respond in writing within ten days. This formalises what was previously an informal and legally uncertain practice and provides the foundation for the National Social Dialogue Forum structure that the amendment also introduces.

The notice period for termination under section 26, 120 days for monthly-rated permanent workers, remains unchanged. However, the combined effect of the expanded section 196A and the new section 196B creates a significant additional exposure for employers. A termination that ostensibly complies with section 26 procedurally (notice given, wages in lieu paid) will nonetheless constitute anti-trade union discrimination under section 196A if it is in retaliation for trade union activity or for a worker having filed a complaint under section 195(2). In such a case, section 196B empowers the Director General to order reinstatement, cessation of the discriminatory conduct, and payment of financial compensation, remedies that sit entirely outside the section 26 framework. Employers who conflate legitimate performance management with union suppression now face dual legal exposure: non-compliance with section 26 on one track, and a direct administrative order under section 196B on the other, without the worker needing to initiate Labour Court proceedings. The practical implication is that any dismissal of a trade union member or officer, or of a worker who has recently filed a labour complaint, requires particularly careful documented justification.

2.5  Dispute Resolution: The ADR Architecture

One of the most structurally innovative additions is the creation of a dedicated Alternative Dispute Resolution (ADR) Authority under new sections 348C. Previously, the dispute resolution framework consisted only of conciliation before government conciliators and adjudication before the Labour Court, a system widely criticised for delay, informality, and limited specialist expertise.

The new ADR Authority will operate with a panel drawn from retired judges and technical experts in labour relations. It will provide conciliation and arbitration as distinct pathways, with the possibility of binding arbitral awards. For businesses, this is a material improvement: complex industrial disputes, involving multi-union establishments, collective bargaining deadlocks, or large-scale retrenchment, will now have access to a faster and more technically competent resolution pathway. The caveat is that the Authority's rules, procedures, and panel composition have not yet been formally prescribed; the enabling legislation exists, but the operational detail awaits subsidiary regulation.

2.6  Enhanced Penalties and Enforcement

The penalty regime has been substantially recalibrated by Act No. 40 of 2026, with revisions tiered by the gravity of the breach. The general residual penalty under section 307, which catches any violation for which no specific penalty is prescribed, has been raised from BDT 5,000 to a floor of BDT 25,000 and a ceiling of BDT 50,000, with up to three months’ imprisonment. This alone closes the era of fines that could be absorbed as a routine cost of non-compliance. Above that floor, the more serious exposures are significant: section 289(1) makes minimum wage non-payment punishable by a fine of BDT 50,000 to BDT 100,000 or up to one year’s imprisonment, with the court empowered to direct the fine be paid as compensation directly to the affected worker; section 291(1) imposes the same fine range for unfair labour practices and anti-trade union discrimination under sections 195 and 196A; and section 309 escalates to up to four years’ imprisonment for violations causing loss of life, and up to two years for those causing grievous injury. Two newly inserted sections add specific criminal exposure for workplace violence and harassment obligations (section 307B, BDT 20,000–50,000) and for non-compliance with Director General enforcement orders under section 196B (section 291(4), BDT 50,000–100,000). Employers who previously treated labour law penalties as a predictable operating cost must now treat them as criminal liability exposure.

The enforcement architecture has been correspondingly strengthened. The Director General of Labour now holds a direct administrative enforcement power under section 196B ordering cessation of unfair labour practices and awarding compensation to affected workers without Labour Court proceedings, and non-compliance with those orders is itself criminalised under section 291(4). That said, the Department of Inspection for Factories and Establishments (DIFE) remains chronically under-resourced relative to the formal economy it supervises. The legal framework has been upgraded; whether the institutional machinery follows is the central unanswered question in the implementation of these reforms.

III. Business Implications

The amendments create a materially different compliance environment for businesses operating in Bangladesh. We identify the key implications across five dimensions.

3.1  Immediate Compliance Obligations

Every employer in Bangladesh should, as a matter of priority, take the following steps:

• Audit your workforce classifications. The expanded definition of 'worker' will bring previously excluded categories of staff, particularly in professional services, technology, and outsourced functions, within the Act's scope. This has implications for gratuity, maternity leave, compensation entitlements, and trade union exposure.
• Constitute Complaint Committees. Any establishment that has not yet established a five-member Complaint Committee for workplace violence and harassment is in violation of sections 332A. Committee constitution, training, and procedural policies should be addressed without delay.
• Review maternity benefit provisioning. The increase to 120 days requires financial provisioning adjustment.
• Check-off deductions for trade union subscriptions must be processed and deposited within fifteen days.
• Review cessation of employment compensations. The reduction in lay-off and death compensation eligibility thresholds require a recalculation of end-of-service reserves. Employment contracts and HR policies should be updated to reflect the revised entitlements.
• Under section 90A, establishments with 50 or more workers must establish Safety committees.
• Revise anti-blacklisting and trade union policies. Internal HR policies must clearly prohibit employer interference with trade union activity and prohibit blacklisting.

3.2  Sector-Specific Considerations

Technology and Gig Economy

The inclusion of platform and gig workers within the trade union framework is a signal of regulatory direction even if current obligations remain limited. Technology companies and platform operators, such as ride-hailing applications, food delivery services, e-commerce logistics providers, should treat this as an early warning of a broader extension of worker protections to platform labour that is likely in the medium term. The legislative logic of recognising gig workers for union purposes but not for benefit entitlements is inherently unstable; subsequent amendment or judicial interpretation is likely to close that gap.

Professional and Financial Services

The expanded definition of 'worker' creates material exposure for employers in banking, professional services, and corporate environments who have historically excluded senior staff from compliance calculations. The managerial/administrative/supervisory exclusion under section 2(65) remains, but the Bangladesh Labour Rules, 2015 guidance on identifying these excluded categories is acknowledged by the Labour Reform Commission itself to be vague. Employers should obtain qualified legal advice on which of their employees fall within the exclusion, bearing in mind that the default position under the amended Act is inclusion, not exclusion.

Construction, Shipbreaking, and Hazardous Industries

Section 101(d) empowers the Government to prescribe separate working and rest hour regimes for construction, shipbreaking, welding, and related hazardous industries. The new right of workers to refuse dangerous work without retaliation (section 61A) create a significantly more demanding safety environment. Employers in these sectors who have been accustomed to informal enforcement will need to treat occupational safety as a legal compliance matter rather than an operational convenience.

3.3  Industrial Relations Strategy

The reduction in trade union formation thresholds and the prohibition on employer interference fundamentally alter the industrial relations landscape. Employers who previously relied on high membership requirements or informal suppression as barriers to unionisation must now develop proactive labour relations strategies. This means:

• Investing in direct worker communication channels and grievance mechanisms before unions fill that vacuum;
• Training supervisory and management staff on the legal prohibitions regarding trade union interference;
• Developing collective bargaining capabilities, negotiating with a CBA requires very different skills from the administrative compliance posture that previously sufficed;
• Engaging constructively with the National Social Dialogue Forum structure at the sectoral level, which will progressively shape the normative environment within which individual employers operate.

3.4  What the Law Leaves Open

It is important for practitioners to advise clients not only on what the law now requires, but on what it leaves ambiguous. Several material gaps and interpretive questions remain.

The managerial/administrative exclusion from the worker definition, as noted above, is imprecisely drawn. This will generate disputes, particularly in sectors where 'manager' is used as a designation for workers with no genuine supervisory authority.

The violence and harassment provisions and the Complaint Committee requirement depend for their practical effect on implementing rules yet to be prescribed. Until those rules are published, there is genuine ambiguity about procedural requirements, timelines for investigation, evidentiary standards, appeal mechanisms, that creates both a compliance uncertainty and a litigation risk for employers who act in good faith but under incomplete guidance.

The ADR Authority is established in law but not yet operationally constituted. Until it becomes functional, parties must continue to rely on the existing Labour Court system.

The Bangladesh Export Processing Zone Labour Act, 2019 has not been amended in parallel. Workers in export processing zones (EPZ), remain outside the new framework's protections, including the right to form trade unions rather than workers' welfare associations. This divergence is unlikely to be sustainable in the face of continued ILO scrutiny and the EU's interest in extending due diligence obligations to EPZ supply chains.

IV. The Unfinished Agenda

Candour requires acknowledging what the 2025–2026 amendments left undone, because these gaps define the continuing legal and reputational risk exposure of the Bangladesh employment environment.

The informal sector, comprising 80%–85% of Bangladesh's workforce, remains entirely outside the Act's scope. The expansion of coverage to domestic workers, agricultural workers, and seafarers is meaningful but marginal relative to the scale of unprotected labour in the economy. A country that relies on the work of millions of informal workers while providing them no legal protection faces an inherent legitimacy deficit that periodic formal sector amendments cannot address.

The minimum wage determination process remains inadequate. Although the amendment requires review every three years, the Minimum Wage Board's historical functioning means that the legal mandate is only as good as the institutional machinery that implements it. RMG workers who struck repeatedly over the past decade for living wages know this intimately.

The EPZ gap remains unaddressed. Workers in the country's export processing zones cannot form trade unions under the EPZ Labour Act, 2019. Given that Bangladesh's long-term ILO compliance commitment expressly includes EPZ reform, and given that EU due diligence frameworks do not respect EPZ boundaries, this gap is a significant unresolved risk for the Government and for EPZ employers.

Implementation infrastructure remains thin. The most carefully drafted law does not protect workers if the inspectorate cannot enforce it. Bangladesh's DIFE is chronically under-staffed relative to the scale of the formal economy it supervises. Without a parallel investment in enforcement capacity, the 2025–2026 reforms risk joining the long list of legally progressive Bangladeshi statutes that have limited operational reality.

V. Reform as an Ongoing Process

The Bangladesh Labour (Amendment) Ordinance, 2025 and Bangladesh Labour (Amendment) Act, 2026 is the most significant transformation of the country's employment legal framework since the Rana Plaza amendments of 2013. It reflects the convergence of a powerful domestic political settlement, a serious international accountability mechanism, and the growing commercial logic of supply chain due diligence. In that sense, it is qualitatively different from previous incremental amendments.

But Bangladesh's labour law history teaches a lesson about the gap between legislative text and lived reality. Every major amendment, 2013, 2018, and now 2026, has been greeted with a combination of cautious optimism about what the law now says and legitimate scepticism about whether institutional practice will change to match. The test of the 2025–2026 reforms will be in their implementation: in whether the ADR Authority is constituted and adequately funded, in whether DIFE is reinforced sufficiently to exercise its enhanced mandate, in whether the subsidiary regulations needed to operationalise the violence and harassment framework are promulgated on schedule, and in whether the EPZ reform that the Government's own roadmap commits to actually materialises.

For businesses, the practical message is clear: the cost and complexity of labour compliance in Bangladesh has increased materially and permanently. The penalty exposure is higher, the protected categories are broader, and the trade union landscape is more open and more litigious. That is not, however, a reason for alarm, it is a reason for sophistication. Businesses that treat the new framework as an obstacle to be minimised will incur disproportionate risk. Those that engage with it proactively building genuine compliance cultures, investing in worker relations, and working with capable legal counsel, will find that the reformed legal environment makes Bangladesh a more credible and sustainable operating location.

Reform, in Bangladesh as elsewhere, is never finished. The 2025–2026 Act is a significant step, not a final destination. Legal practitioners, HR professionals, and business leaders who treat it as the beginning of a sustained engagement with an evolving legal framework, rather than as a compliance event to be checked off, will be best positioned to navigate what comes next.

Note

This article is intended for general informational purposes only and does not constitute legal advice. The Bangladesh Labour (Amendment) Act, 2026 and its implementing Rules are subject to ongoing development. Businesses are advised to seek qualified legal counsel before taking action in reliance on any provisions discussed herein.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.