Annexure E: Answer to other queries raised in the meeting.
Query 1: Is it possible to convert a Permanent Employee to a Contractual Employee (e.g., 3/6 Months)?
Answer:
Yes, it is legally possible, but only with the consent of the employee. As per the Bangladesh Labour Act, 2006, there is no express prohibition against changing the nature of employment from permanent to contractual, but it must not be done unilaterally by the employer.
A written mutual agreement is required where the employee voluntarily accepts the change in employment status.
This should be documented with proper terms and conditions, and ideally, the permanent employment contract should be formally terminated, and a new fixed-term agreement should be executed.
The transition must be genuine and not a means to deprive employees of statutory benefits.
Query 2: If a permanent employee is converted to contractual employee, do the company need to provide any compensation to the permanent employee?
Answer:
Yes, if a permanent employee is being released from their permanent status, the employer must terminate the previous contract properly under Section 26 of the Labour Act.
This means:
Termination benefits must be paid at the time of converting the permanent employee to contractual status, including:
Compensation: 30 days' wages (basic) for every completed year of service.
Notice Pay: 120 days’ notice or wages in lieu.
Encashment of Earned Leave.
Query 3: If company make 3 months contract and then renew the contract after every 3 months, then the contractual employee will be treated as a permanent employee?
Answer:
Yes, potentially. Under the Bangladesh Labour Act:
Section 4(8) states that if a temporary or casual employee works continuously for more than 1 year (or repeatedly renewed contracts without any break), he/she shall be treated as a permanent worker, unless the nature of the job is project-based or of temporary nature.
So:
If a 3-month contract is renewed continuously without significant break, and the work is of a regular nature, the employee may acquire permanent status by implication of law.
The Labour Court may consider such an employee to be a de facto permanent worker, making them eligible for all statutory benefits.
Hence, repeated short-term renewals should be carefully structured with clear justification (e.g., project-based, seasonal work), and not used to avoid permanent employee obligations.