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Report on Employment Terms in Bangladesh

Executive Summary

This report is focused on the article Employment Terms in Bangladesh. In this article many terms of ELSOA (Employment Of Labor Standing Orders Act, 1965) were described. The focus was in employment contracts and termination. In this article different legislation of employment were discussed describing where it has to be implemented and how. We tried our utmost effort to understand and analyze those issues. We tried to figure out utility of ELSOA in different organizations of Bangladesh. We have also discussed human resource trends in this country. We tried to understand how employment terms works in different private organization. Employment termination rules and procedure, employee rights was also discussed. We also emphasized on implementing ELSOA in different organizations. We tried our utmost level to understand the facts and causes regarding this law.

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Report on Employment Terms in Bangladesh

HRM Background of Bangladesh

Since British colonization in this region personnel recruitment and other managerial work was done in typical bureaucratic way. Bangladesh is very young in HR practices. Human Resource Management Practice in Bangladesh is relatively new phenomena. Since liberation war and before that many international organizations had their business and organizational activities here. These organizations introduced personnel management or Human Resource Management in this country. Though back 90th people knew about HRM in this country they did not implemented in their organizations. Then barely any company had organized management. Back then, we may recall Greers Theorem (1995) of Strategy and HRM Integration- Administrative Linkage, used to be implemented. That is, here there is no HR department and some other figurehead e.g. Finance or Accounts executive looks after the HR function of the firm. The HR unit is relegated here to a paper-processing role. So back then organization head or the owner of the company did not had to think about Human Resources, they just simply recruited people they needed, fired people when had to and there was no real linkage between business strategy and HRM. In the beginning of 21st century many company partially started HR practices. Companies comprehended the necessity of HRM to get competitive advantage. In this way, many organizations like BSHRM (Bangladesh Society for Human Resource Management) was established which promoted HRM then & later on. Hence, in the Higher educational curriculum of Bangladesh HRM was introduced as a prominent subject back in 2003-2006. To give better understanding of HRM BiHRM (Bangladesh Institute of Human Resource Management) was established in 2003. Nowadays most of the company in Bangladesh have HR department. As an important aspect of an organization HRM practices have some regulation & organizations need to abide by them. One of the regulations regarding HRM is ELSOA (Employment of Labor Standing Orders Act, 1965).

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Report on Employment Terms in Bangladesh

Regulation regarding Employment

In Bangladesh HR practices are still adolescent compared to developed world. Though, in terms of employment contract and termination there are legislation to be followed. To conduct HR practices precisely there are some legislation for companies. ELSOA (Employment of Labor Standing Orders Act, 1965) regulate termination of employment in Bangladesh. The ELSOA applies to all shops, commercial and industrial establishments (as defined by the Shops and Establishments Act, 1965), as well as all other industrial establishments where five or more workers are employed. The ELSOA excludes from its scope shop workers or persons employed in commercial or industrial enterprises owned and directly managed by the State (sec. 1, ELSOA). The public servants are covered by the Government Servants Conduct Rules. This act precisely describes contracts of employment & termination of employment. Here is the classification of workers and period of probation (1) A worker employed in any shop or commercial or industrial establishment shall be classified in any of the following classes according to the nature and conditions of work and in the manner provided in this Act

(a) Apprentices. (b) Badlis. (c) Casual. (d) Permanent. (e) Probationer, & (f) Temporary.

The period of probation for a worker whose function is of clerical nature, shall be six months and for other workers such period shall be three months, including breaks due to leave, illegal lock-out or strike (not being an illegal strike) in the shop or commercial or industrial establishment, provided that in the case of a skilled worker, the period of probation may be extended by an additional period of three months if, for any circumstances, it has not been possible to determine the quality of his work within three months' period of his probation.
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Report on Employment Terms in Bangladesh

Focal Facts
There are three main types of termination of employment at the initiative of the employer as defined in the ELSOA: discharge for incapacity, dismissal for misconduct and retrenchment for redundancy. These statutory rules are applicable to workers who have been continuously employed by the employer for more than one year.

Discharge means the termination of services of a worker for reasons of physical or mental incapacity or continued ill health or similar reasons not amounting to misconduct. Provided that a worker having completed not less than one year of continuous service, so discharged, shall be paid by the employer compensation at the rate of thirty days wages for every completed year of service or for any part thereof in excess of six months, or gratuity, if any, whichever is higher.

Dismissal is defined as the termination of services of a worker by the employer for misconduct. The following acts and omissions shall be treated as misconduct

Willful insubordination or disobedience, whether alone or in combination with others, to any lawful or reasonable order of a superior. Theft, fraud or dishonesty in connection with the employer's business or property. Taking or giving bribes or any illegal gratification in connection with his or any other worker's employment under the employer. Habitual absence without leave or absence without leave for more than ten days. Habitual late attendance. Habitual breach of any law or rule or regulation applicable to the shop or commercial or industrial establishment. Riotous or disorderly behavior in the shop or commercial or industrial establishment. Habitual negligence or neglect of work. Frequent repetition of any act or omission for which a fine may be imposed. Resorting to illegal strike or 'go-slow' or inciting others to resort to illegal strike. Falsifying, tampering with, damaging or causing loss of employer's official records.
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Report on Employment Terms in Bangladesh

Retrenchment means the termination by the employer of the services of workers on the ground of redundancy. Employees are often the casualty of retrenchment, as the tactic does not take their interests into account. They are often considered simply as commodities that are either profiting or costing the company, and are therefore either a necessary expense or a financial liability. Conditions of retrenchment No worker employed in any shop or commercial or industrial establishment who has been in continuous service for not less than one year under an employer shall be retrenched by the employer unless

(a) the worker has been given one month's notice in writing, indicating the reasons for retrenchment or the worker has been paid in lieu of such notice, wages for the period of notice;

(b) a copy of the notice in respect of the retrenchment is sent to the Chief Inspector or any other officer authorized by him; and (c) the worker has been paid, at the time of retrenchment, compensation which shall be equivalent to thirty days wages for every completed year of service or for any part thereof in excess of six months, or gratuity, if any, whichever is higher:

Provided that in case of retrenchment of a worker no notice as mentioned in clause will be necessary, but the worker shall be paid fifteen days' wages in addition to the compensation or gratuity, as the case may be, which may be payable to him/her. Termination of employment on the grounds of trade union membership or activity is unlawful in Bangladesh. In the event of fire, catastrophe, machinery breakdown, power outage, epidemic, civil commotion or other causes beyond the employers control, the employer may stop work (lay-off). The employer has to notify the workers affected as soon as practicable. If a worker is laid off for more than 45 days during a year, the employer may retrench him or her.

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Report on Employment Terms in Bangladesh

We gather some important aspect about notice for employment termination and severance pay

For mere termination of employment of a permanent worker, except the cases of discharge, dismissal or retrenchment, the employer is required to give 90 days written notice for monthly paid workers and 45 days notice for other permanent workers.

If a permanent worker desires to terminate his/her employment, one months notice in the case of monthly rates workers, and 14 days notice in the case of other workers, must be given in writing to the employer.

No notice provisions are stipulated for discharge from service. As regards retrenchment for redundancy, all workers who have been in continuous employment for more than one year are entitled to a written one months notice indicating the reasons for retrenchment or to payment in lieu of such notice.

In case of discharge from service for incapacity, workers who have been employed in continuous service for more than one year are entitled to compensation at the rate of 30 days wages for every completed year of service.

Workers who have been dismissed for misconduct or for a criminal offence, are also entitled to compensation if their service amounts to more than one year, at a rate of 14 days wages for every completed year of service, or for any part thereof in excess of six months, or gratuity, if any, whichever is higher.

A worker who is entitled to benefits from a Provident Fund, termination of employment for whatever reason may not disentitle him or her from such benefits. In case of dismissal for misconduct, the worker is deprived of the portion of employers contribution.

In case of lay-off, for the first three weeks of stoppage the workers are to receive full wages. After three weeks of stoppage employees may be laid off and receive compensation equal to half of the total of the basic wage and dearness allowance.

For mere termination of employment of a permanent worker, the employer is required to pay his/her employee compensation at the rate of 14 days wages for each completed year of service.

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Report on Employment Terms in Bangladesh

Grievance procedure Any individual worker (including a person who has been dismissed, discharged, retrenched, laid-off or otherwise removed from employment) who has a grievance in respect of any matter covered under this Act and intends to seek redress thereof under this section, shall observe the following procedure;

(a) the worker concerned shall submit his grievance to his employer, in writing, by registered post within fifteen days of the occurrence of the cause of such grievance and the employer shall within fifteen days of receipt of such grievance, enquire into the matter, give the worker concerned an opportunity of being heard and communicate his decision, in writing, to the said worker;

(b) if the employer fails to give a decision under clause (a) or if the worker is dissatisfied with such decision, he may make a complaint to the Labor Court having jurisdiction, within, thirty days from the last date under clause (a) or within thirty days from the date of the decision, as the case may be unless the grievance has already been raised or has otherwise been taken cognizance of as labor dispute under the provisions of the Industrial Relations Ordinance, 1969: Provided that no complaint shall lie against an order of termination of employment of a worker under section 19, unless the services of the worker concerned is alleged to have been terminated for his trade union activities or unless the worker concerned has been deprived of the benefits specified in that section: and

(c) on receipt of any complaint under clause (b), the court after notice and given the parties hearing, may decide the matter; (d) In deciding the matter, the court may pass such orders including orders regarding cost, as it may deem just and proper and it may, in appropriate cases, require, by such order, the reinstatement of the complainant thereof and such order shall be final.

(e) No court fee shall be payable for filing or exhibiting of any complaint or document of any kind in the court.

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Report on Employment Terms in Bangladesh

The regarding article covers most of the part of ELSOA. The regulation described there are convenient for both employees and employer. It guides an employee in the time of peril and helps the employer to take decision and initiatives. In our country merely some organization uses this regulation in terms of employment termination or other issues. In organizations employees are barely aware regarding their right and this regulation. Despite of employees unawareness most of the organization like banks, telecommunication, medicals and other organizations started following this regulation. It is high time in this competitive world where we need to come out of those traditional bureaucratic rules and nonorganized independent rules. To cope with this dynamic world all small and large organization should follow these regulations.

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