How to benefit a worker during termination of service
Thursday, 25 June 2009
Mohammad Murshedul Huda Sharifi
FOR any good employer, terminating the services of an employee for reasons other than due retirement may be a painful exercise. All the same, there may arise circumstances where the employer has to take this painful decision. The dictum "hire and fire" is no more available to the employer. Bangladesh Labour Law 2006 (Chapter 2, Employment and condition of Service) recognizes management's prerogative to employ and for reasons of redundancy to terminate, dismiss, discharge and lay-off an employee showing proper cause and excuse. However, the labour court also has the right to interfere into any management prerogatives and strike down any unfair labour practices or victimization.
Bangladesh Labour Law (BIL) 2006 provides different compensation benefit for the employee during termination of their employment. In this, BLL 2006 determines employees' right to establish the termination benefit. Similarly, an employer bears the major responsibility of ensuring the termination benefit and compensation which pronounces that employees are not deprived of the compensation during their termination.
This write-up mainly focuses on the compensation benefit of an employee as stipulated in the Bangladesh Labour Law 2006 and is centered on the calculation that may be apportioned for both employee and employer during the termination of employment.
Section 14 of BLL 2006 provides for the method of calculation for the continuous service period for the purpose of calculating wages which means the average of the basic wages plus dearness allowance plus ad-hoc or interim wages paid in immediately preceding 12 months before retrenchment, dismissal, termination, discharge, retirement or conclusion of service. In this connection, the number of days to be calculated in the following manner if a worker:
For counting continuous service, the following days will come into account:
Days the worker was laid off
Days of leave with or without wages due to accident or illness
Non working days due to legal strike or illegal lock-out
Days on maternity leave for a female worker.
Discharge is the termination of services of worker for reasons of physical or mental incapacity or continued ill health or similar reasons not amounting to misconduct.
Dismissal is the termination of services of a worker for misconduct. Section 23(1) of Bangladesh Labour Law stipulates that a worker may be dismissed without prior notice or pay in the following grounds:
If the worker is convicted for any criminal offence
If he/she is convicted under section 24 of BLL 2006.
But if a worker is dismissed under sub section 4 (b) of section 23, BLL 2006 (for theft, fraud or dishonesty in connection with the employers business or property) shall not be entitled to any compensation.
A worker charged for misconduct may however be suspended from employment pending an inquiry into the charges and such suspension shall not exceed a period of 60 days where the matter is pending before the court. In this case, the worker must be paid a subsistence allowance which would be equal to the worker's average wage plus dearness allowance plus ad-hoc or interim wages.
Under section 26, BLL 2006, the Employer can terminate a worker without assigning any reason except dismissal, discharge etc., in the following manner:
The employer can even terminate the employment of a particular worker without any notice as mentioned above, if the employer pays the wages to the terminated worker for aforesaid period of notice. If the case is for a permanent worker who is terminated by the employer without notice entitled to:
120 days wages (in lieu of notice) plus compensation of 30 days wages for every completed year of service plus other benefits payable to him/her (includes un-availed annual leaves, provident fund etc.)
In section 2(58), lay-off occurs when employer fails, refuses or shows inability to continue employment to the workers, whose names are brought to the muster roll of the factory due to shortage of coal, power or the accumulation of stock or breakdown of machinery or for any other reason. A 'Badli' worker (worker employed in the post of temporary/permanent during his/her absence) whose name is brought in the muster roll for a year shall not be treated as 'Badli' for the purpose of compensation under this chapter.
Retrenchment is expiry of services on the ground of redundancy. Section 20(2) provides that a worker who has been in continuous service for not less than one year shall not be retrenched unless:
the worker has been given one month's notice in written indicating the reasons for retrenchment or has been paid in lieu of such notice;
sending of a copy of the retrenchment notice to the Chief Inspector or any other officer authorized by him/her;
and has been paid a compensation
The Table below shows the different termination benefits that a worker entitled while termination of his/her employment.
An example on calculation in lieu of Notice (for a temporary worker on monthly rated):
Monthly Salary / Number of days in a particular month x Number of days of notice period.
Example:
February 2008 : Tk. 4000 / 29 Days x 30 days Notice = Tk. 4138
March 2008 : Tk. 4000 / 31 Days x 30 days Notice = Tk. 3871
Calculation of termination benefit when a permanent worker resigns (Section 27).
Number of days wages for every Service period
completed year of service
14 Days 5 years and more but not 10 years
30 Days 10 years and more
Example:
Mr. X worked for a company for 12 years and resigned on 16.01.2009. His earnings for the 12 completed months preceding resignation amounted to Tk. 72,000.
Since he worked for 10 years or more he is entitled to 30 days' wages and considering his earnings is inclusive of dearness allowance, ad- hoc interim, etc.
Benefit = Last 12 months wages/ 365 days x 30 x 12 = 72,000 /365 x 30 x 12 = Tk.71,013. So, Taka 71,013 must be paid to Mr. X within 7 days together with other benefit payable to him/her.
Payment of wages for un-availed leave: Section 11, BLL 2006
In case of the expiry of the specific employment of any worker by way of discharge, dismissal, termination, retrenchment or retirement, if there remains any unavailed leave of the aforesaid worker, he/she shall be entitled to get the wages of those days so unavailed. When payment in lieu of annual leave is to be paid, the calculation is based on ordinary rate of pay.
Monthly Salary / 26 x Annual leave balance
Example: Tk. 4000/ 26 days x five days annual leave = Tk. 769.23
The calculation is not based on the calendar month but 26 days whether February, March or June, the employee gets Tk. 769.23. The above calculation is for the monthly rated employee. For daily rated or piece-rated worker, it is the ordinary rate of pay times annual leave so unavailed. The ordinary rate of pay = Total wages earned by the employee in preceding wage period excluding (a) / Actual days worked by the employee during the wage period excluding (b).
a = Any payment made under an approved incentive payment scheme, or for work done on any rest day, any gazetted public/festival holiday granted by the employer or any day substituted for the gazetted public/ festival holiday.
b = Any rest day, any gazetted public/festival holiday or any paid holiday substituted for gazetted public/ festival holiday.
Calculation of unpaid Leave/ Absent (section 125):
Monthly Salary / Number of days in the particular month.
Example:
February 2008: Tk. 4000 / 29 days x 4 days = Tk. 551.72
March 2008 : Tk. 4000 / 31 days x 4 days = Tk. 516.12
So, the gross salary will be less by the above amounts in the respective months.
Management prerogatives are not absolute, but subject to the principles of natural justice. Professionalism and competitive strength in an industry is sustained when it is not being earned by depriving workers. We must ensure a healthy management practice by establishing and practising Bangladesh Labor Law 2006 in its true spirit.
The writer is an HRM activist. He can be reached at email:
murshedul_huda@yahoo.com
FOR any good employer, terminating the services of an employee for reasons other than due retirement may be a painful exercise. All the same, there may arise circumstances where the employer has to take this painful decision. The dictum "hire and fire" is no more available to the employer. Bangladesh Labour Law 2006 (Chapter 2, Employment and condition of Service) recognizes management's prerogative to employ and for reasons of redundancy to terminate, dismiss, discharge and lay-off an employee showing proper cause and excuse. However, the labour court also has the right to interfere into any management prerogatives and strike down any unfair labour practices or victimization.
Bangladesh Labour Law (BIL) 2006 provides different compensation benefit for the employee during termination of their employment. In this, BLL 2006 determines employees' right to establish the termination benefit. Similarly, an employer bears the major responsibility of ensuring the termination benefit and compensation which pronounces that employees are not deprived of the compensation during their termination.
This write-up mainly focuses on the compensation benefit of an employee as stipulated in the Bangladesh Labour Law 2006 and is centered on the calculation that may be apportioned for both employee and employer during the termination of employment.
Section 14 of BLL 2006 provides for the method of calculation for the continuous service period for the purpose of calculating wages which means the average of the basic wages plus dearness allowance plus ad-hoc or interim wages paid in immediately preceding 12 months before retrenchment, dismissal, termination, discharge, retirement or conclusion of service. In this connection, the number of days to be calculated in the following manner if a worker:
| Actually worked during previous 12 calendar months | Deemed to have worked |
| 240 Days | A continuous period of one year |
| 120 Days | A continuous period of six months. |
Days the worker was laid off
Days of leave with or without wages due to accident or illness
| For worker | Notice period required in written |
| Permanent & Monthly rated | 120 days |
| Temporary Monthly rated | 30 days |
| Permanent others (weekly/daily/piece rated | 60 days |
| Temporary others (weekly/daily/piece rated | 14 days |
Days on maternity leave for a female worker.
Discharge is the termination of services of worker for reasons of physical or mental incapacity or continued ill health or similar reasons not amounting to misconduct.
Dismissal is the termination of services of a worker for misconduct. Section 23(1) of Bangladesh Labour Law stipulates that a worker may be dismissed without prior notice or pay in the following grounds:
If the worker is convicted for any criminal offence
If he/she is convicted under section 24 of BLL 2006.
But if a worker is dismissed under sub section 4 (b) of section 23, BLL 2006 (for theft, fraud or dishonesty in connection with the employers business or property) shall not be entitled to any compensation.
A worker charged for misconduct may however be suspended from employment pending an inquiry into the charges and such suspension shall not exceed a period of 60 days where the matter is pending before the court. In this case, the worker must be paid a subsistence allowance which would be equal to the worker's average wage plus dearness allowance plus ad-hoc or interim wages.
Under section 26, BLL 2006, the Employer can terminate a worker without assigning any reason except dismissal, discharge etc., in the following manner:
The employer can even terminate the employment of a particular worker without any notice as mentioned above, if the employer pays the wages to the terminated worker for aforesaid period of notice. If the case is for a permanent worker who is terminated by the employer without notice entitled to:
120 days wages (in lieu of notice) plus compensation of 30 days wages for every completed year of service plus other benefits payable to him/her (includes un-availed annual leaves, provident fund etc.)
In section 2(58), lay-off occurs when employer fails, refuses or shows inability to continue employment to the workers, whose names are brought to the muster roll of the factory due to shortage of coal, power or the accumulation of stock or breakdown of machinery or for any other reason. A 'Badli' worker (worker employed in the post of temporary/permanent during his/her absence) whose name is brought in the muster roll for a year shall not be treated as 'Badli' for the purpose of compensation under this chapter.
Retrenchment is expiry of services on the ground of redundancy. Section 20(2) provides that a worker who has been in continuous service for not less than one year shall not be retrenched unless:
the worker has been given one month's notice in written indicating the reasons for retrenchment or has been paid in lieu of such notice;
sending of a copy of the retrenchment notice to the Chief Inspector or any other officer authorized by him/her;
and has been paid a compensation
The Table below shows the different termination benefits that a worker entitled while termination of his/her employment.
| BLL 2006 | Termination of service by | Required period of service for entitlement of compensation/ Benefit | Compensation/ Benefit entitlement |
| Section 22(2) | Discharge | Completed at least one year of continuous service | 30 days for every completed year of service or gratuity whichever is higher. |
| Section 23(3) | Dismissal | Completed service of 1 year or for any part thereof in excess of six months. | 14 days wages for every completed year of service. |
| Section 26(4) | Termination of permanent worker by employer | Completed one year of service | 30 days for every completed year of service or gratuity whichever is higher in addition to other benefit payable. |
| Section 16(1) | Lay-off | Completed a continuous period of one year service | Benefit for all the days except weekly holidays in the following manner:Compensation of lay-off for 1st 45 days = (Total Basic+ dearness allowance + ad-hoc wages)/2 + full amount of house rent he/ she used to get)Compensation of lay-off for if extended for 15 period beyond first 45 days= (Total Basic + dearness allowance+ Ad-hoc wages)/4 + full amount of house rent he/ she used to get) |
| Section 20(2) | Retrenchment | Employment for a period minimum one year | 30 days wages for every completed year of service or for any part thereof in excess of 6 months or gratuity whichever is higher.In case a worker is to be laid off, after first 45 days, for any continuous period of 15 days or more, the employer may instead of laying off such a worker retrench him without notice but the worker shall be paid 15 days more in addition to compensation as stated above. |
Monthly Salary / Number of days in a particular month x Number of days of notice period.
Example:
February 2008 : Tk. 4000 / 29 Days x 30 days Notice = Tk. 4138
March 2008 : Tk. 4000 / 31 Days x 30 days Notice = Tk. 3871
Calculation of termination benefit when a permanent worker resigns (Section 27).
Number of days wages for every Service period
completed year of service
14 Days 5 years and more but not 10 years
30 Days 10 years and more
Example:
Mr. X worked for a company for 12 years and resigned on 16.01.2009. His earnings for the 12 completed months preceding resignation amounted to Tk. 72,000.
Since he worked for 10 years or more he is entitled to 30 days' wages and considering his earnings is inclusive of dearness allowance, ad- hoc interim, etc.
Benefit = Last 12 months wages/ 365 days x 30 x 12 = 72,000 /365 x 30 x 12 = Tk.71,013. So, Taka 71,013 must be paid to Mr. X within 7 days together with other benefit payable to him/her.
Payment of wages for un-availed leave: Section 11, BLL 2006
In case of the expiry of the specific employment of any worker by way of discharge, dismissal, termination, retrenchment or retirement, if there remains any unavailed leave of the aforesaid worker, he/she shall be entitled to get the wages of those days so unavailed. When payment in lieu of annual leave is to be paid, the calculation is based on ordinary rate of pay.
Monthly Salary / 26 x Annual leave balance
Example: Tk. 4000/ 26 days x five days annual leave = Tk. 769.23
The calculation is not based on the calendar month but 26 days whether February, March or June, the employee gets Tk. 769.23. The above calculation is for the monthly rated employee. For daily rated or piece-rated worker, it is the ordinary rate of pay times annual leave so unavailed. The ordinary rate of pay = Total wages earned by the employee in preceding wage period excluding (a) / Actual days worked by the employee during the wage period excluding (b).
a = Any payment made under an approved incentive payment scheme, or for work done on any rest day, any gazetted public/festival holiday granted by the employer or any day substituted for the gazetted public/ festival holiday.
b = Any rest day, any gazetted public/festival holiday or any paid holiday substituted for gazetted public/ festival holiday.
Calculation of unpaid Leave/ Absent (section 125):
Monthly Salary / Number of days in the particular month.
Example:
February 2008: Tk. 4000 / 29 days x 4 days = Tk. 551.72
March 2008 : Tk. 4000 / 31 days x 4 days = Tk. 516.12
So, the gross salary will be less by the above amounts in the respective months.
Management prerogatives are not absolute, but subject to the principles of natural justice. Professionalism and competitive strength in an industry is sustained when it is not being earned by depriving workers. We must ensure a healthy management practice by establishing and practising Bangladesh Labor Law 2006 in its true spirit.
The writer is an HRM activist. He can be reached at email:
murshedul_huda@yahoo.com