Guide · the rules in plain words
Gratuity in Bangladesh: how it is calculated
Under section 2(10) of the Bangladesh Labour Act 2006, gratuity is at least 30 days' wages for each completed year of service, or part of a year over six months, and 45 days' wages a year when service exceeds 10 years. It is paid only where the employer has a gratuity scheme, and you receive the gratuity or the exit benefit, whichever is higher.
Based on the Labour Act 2006 as amended in 2026, checked 12 November 2026 · An estimate, not legal or tax advice.
How is gratuity calculated?
days per year × gratuity years × one day’s wage
- Days per year: 30, or 45 when total service is more than 10 years.
- Gratuity years: completed years, plus one more if the extra part is over six months.
- One day’s wage: monthly basic plus dearness allowance, divided by 30.
Unlike the resignation benefit, gratuity rounds up. 4 years and 8 months counts as 5 gratuity years.
A worked example
Karim has served 12 years and 8 months, and his employer has a gratuity scheme. His basic is 30,000 taka, so one day’s wage is 1,000.
- Gratuity years: 12, plus 1 for the 8 extra months = 13.
- Service is over 10 years, so 45 days a year.
- Gratuity: 45 × 13 × 1,000 = 5,85,000 taka.
- The resignation benefit would be 30 × 12 × 1,000 = 3,60,000 taka.
- Gratuity is higher, so he receives 5,85,000 taka.
When is gratuity paid instead of the exit benefit?
For resignation from 10 years, termination, retrenchment, discharge and retirement, the Act says the worker gets the benefit or gratuity, whichever is higher. You never get both. Pawna compares them for you and shows which one applies.
Do I need a minimum service?
You need at least one completed year. With 1 year and 7 months, gratuity counts 2 years because the extra 7 months is over six.
Does dismissal cancel gratuity?
Dismissal for misconduct pays 15 days’ wages a year under section 23, and nothing for theft, fraud, riot, arson or similar acts. Many contracts also cancel gratuity on dismissal. Read yours before you assume either way.
How is gratuity taxed?
It depends on how it is paid:
| How gratuity is paid | Tax |
|---|---|
| From a gratuity fund approved by NBR | Tax free up to 2.5 crore taka |
| Directly by the company from its own account | Taxed as salary |
On a large gratuity the difference can be tens of thousands of taka. Ask HR in writing which applies.
Gratuity for officers and managers
If you are outside the Labour Act, your gratuity comes from your contract. A common pattern is one month’s basic per year after a vesting period of three to five years. Use the officer calculator to enter your own terms and see how they compare with the Act.
Common mistakes
- Using gross instead of basic.
- Forgetting the round-up for a part year over six months.
- Missing the 45-day rate once service passes 10 years.
- Assuming gratuity is always tax free. Only approved-fund gratuity is.
Common questions
Is gratuity compulsory in Bangladesh?
The Act defines gratuity and says it replaces the exit benefit when higher, but it applies where a gratuity scheme exists. Many employers have one. Check your appointment letter or service rules.
Is gratuity taxed?
Gratuity from an NBR-approved gratuity fund is tax free up to 2.5 crore taka. Gratuity paid directly by the employer is taxed as salary.
Do I get gratuity and the resignation benefit together?
No. The Act says you get the benefit or gratuity, whichever is higher.
Try it with your own figures
The calculator runs on your phone. Your figures are not sent anywhere.