How to Calculate Gratuity in Bangladesh

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The concept of gratuity is not new. It’s been around for a long time, and it has been used for centuries to reward employees for their hard work. In this post, we discuss the concept of gratuity, how to calculate gratuity for your employees and how to pay your employees in Bangladesh.

Gratuity is a retirement benefit provided by employers in Bangladesh as a token of appreciation for an employee’s services. The Labour Law, 2006 governs gratuity and ensures that every employee who completes one year of continuous service with an employer is entitled to receive gratuity upon cessation of employment. In this article, we’ll provide a comprehensive guide on how to calculate gratuity in Bangladesh.

How to calculate gratuity in Bangladesh

If you are a business owner, then you know that it is important to keep track of your employees’ tips. Many business owners have been surprised by the number of tips that their employees have been giving them.

It is a good idea to have an employee gratuity policy in place. There are many different ways that business owners can calculate gratuity. In this post, we will walk you through an easy way to calculate tips in Bangladesh.

When it comes to calculating gratuities in Bangladesh, there are many ways to do so. However, there is one method that is both simple and easy to use. It’s also the most accurate and most used method.

Gratuity calculation in Bangladesh

The issue of gratuity is an important one in the workplace. Employees expect to be paid for their work, and companies need to ensure that they are paid fairly.

A gratuity, or tip, is the money you give your employees when they have completed a job. It’s a good way of rewarding your employees for a job well done, and it’s a nice gesture that makes them feel appreciated.

But, if you don’t pay your employees a fair gratuity, you could be breaching the law as per gratuity rules in Bangladesh.

What is Gratuity?

Gratuity is a form of retirement benefit paid by an employer to an employee at the end of their service period. It is important to note that it is not a bonus or an allowance.

Eligibility Criteria for Gratuity

Under the Labour Law, 2006, an employee is entitled to receive gratuity if they complete one year of continuous service with an employer. This law applies to both permanent and temporary employees, excluding contractual workers.

Calculation of Gratuity To calculate gratuity in Bangladesh, use the following formula:

Gratuity = (Last drawn monthly salary x years of service x 15)/26

For example, if an employee has worked for 5 years and their last drawn monthly salary was BDT 50,000, the gratuity calculation would be:

Gratuity = (50,000 x 5 x 15)/26 Gratuity = BDT 144,231.00

Taxation of Gratuity

Gratuity is subject to taxation in Bangladesh. However, there is a tax exemption limit of BDT 300,000 for gratuity. Any amount exceeding this limit is subject to a flat tax rate of 25%.

Payment of Gratuity

Employers are required by law to pay gratuity to employees within 30 days of cessation of employment. The gratuity payment can be made in cash, cheque, or bank transfer.


Knowing how to calculate gratuity in Bangladesh is crucial for both employers and employees. Employers need to comply with the legal requirements and make timely payments, while employees need to be aware of their entitlements and ensure that they receive the full amount of gratuity owed to them. By following the guidelines outlined in this article, both parties can ensure a fair and transparent process for calculating and paying gratuity.

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