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A Legal Opinion on Workforce Downsizing under Bangladesh Labour Act, 2006
To: Fast Value Global (BD) Ltd.
From: Tokyo Consulting Firm Limited.
Date: 25 March 2025
1. Background:
Fast Value Global (BD) Ltd. is experiencing a significant business downturn due to the loss of a major
buyer. To maintain operational efficiency and financial stability, the company must realign its workforce.
In this context, it is crucial to adopt a legally compliant and risk-minimized approach to employee
termination.
2. Purpose of the Report:
• Outline the reasons for workforce downsizing.
• Summarize key activities needed for compliance and execution.
• Provide an overview of legal adherence and risk mitigation.
• Recommending the best applicable law reference based on the current situation and client’s preferences.
3. Scope of Work:
• Compensation and benefits calculation.
• Preparation of legal and compliance documents
4. Analysis:
Given the constraints outlined, we strongly advise the Company to proceed with termination of employment
under Section 26 of the Bangladesh Labour Act, 2006, rather than Section 20 (retrenchment).
5. Rationale:
• Mitigation of Risk:
o Section 20 (retrenchment) requires demonstrable proof of redundancy. Without adequate
internal justification reports, the Company faces significant risk of legal challenge.
Employees may contest the validity of the redundancy claim, potentially leading to costly
litigation.
o Section 26 (termination of employment) provides a clearer and less contentious framework
for termination, particularly when detailed justification for redundancy is unavailable.
• Financial and Non-Financial Risks:
o Pursuing Section 20 without proper documentation exposes the Company to substantial
financial risks, including potential court-ordered compensation, fines, and legal fees.
o Non-financial risks include damage to the Company's goodwill and reputation, as well as
unnecessary intervention from government labor authorities, which could disrupt business
operations.
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• Simplicity and Clarity:
o Section 26 provides a more straightforward process for termination, with clearly defined
notice periods and compensation requirements. This minimizes ambiguity and reduces the
likelihood of disputes.
o Section 26 removes the need to prove that the job itself has been removed.
6. Legal Consideration: Section 20 vs. Section 26
Under the Bangladesh Labour Act, 2006 , two legal provisions apply to workforce downsizing:
(A) Section 20 – Retrenchment:
Section 20 applies to redundancy-based termination , requiring the company to:
• Provide one month’s notice or payment in lieu of notice to affected employees.
• Notify the Inspector General of Factories and Establishments and the Collective Bargaining
Agent (CBA), if applicable.
• Pay 30 days’ wages for each completed year of service or gratuity, whichever is higher.
• Follow the Last In, First Out (LIFO) principle unless otherwise agreed.
Risks of Section 20:
• Possible reputational damage if retrenchment is perceived negatively by employees and
stakeholders.
• Government intervention , requiring official notification to labor authorities.
• Potential legal challenges from employees , particularly if selection criteria are disputed.
• High financial burden due to mandatory severance payments. (if employee disagreed and file
case against company).
Merits of Section 20:
• Lower amount of compensation due to shorter notice period.
Compensation & Final Settlement Calculation Methodology
• Compensation (Retrenchment) Pay: As per Section 20(2)(C) of Bangladesh Labor Act,
2006 .
• Compensation (lieu of Notice) Pay: As per Section 20(2)(a) of Bangladesh Labor Act, 2006 .
• Gratuity Payment: Not Applicable
• Provident Fund Contribution: Not Applicable
• Leave Encashment: [No Information]
• Other Benefits: [No Information]
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Compensation Calculation Summary
Employee
ID Name Designation Years of
Service
Severance
Pay (BDT)
- Tarikul Hasan
Chowdhury
Manager (Production, Sourcing
& Supply chain Control) 4.84 342,000
000006 Md. Imam
Hossain
Executive (Accounting &
General Affairs) 8.03 206,400
(Full list in Annexure A)
*** Notice of 1 (One) month should be provided each employee. Failure to provide such notice
or in case of immediate termination, the employee will receive 1 month’s latest basic salary
as compensation in lieu of notice.
(B) Section 26 – Termination of Employment (Recommended):
Section 26 allows termination of a permanent worker’s employment through standard procedures,
requiring:
• 120 days’ notice (for monthly-rated workers) or 60 days’ notice (for other workers).
• Compensation of 30 days’ wages per completed year of service or gratuity, whichever is
higher.
Marites of Section 26:
• No mandatory notification to Government authorities, avoiding unnecessary intervention.
• Greater flexibility in employee selection, eliminating strict LIFO requirements.
• Lower risk of labor disputes, as termination follows standard employment conditions.
• Protection against reputational risks, as termination appears as a routine business decision rather
than mass layoffs.
• Reduces compliance risks, eliminating additional legal scrutiny.
Demaris of Section 26:
• The company needs to pay high amount of compensation to the employee.
• Communicate the termination decision clearly and respectfully to affected employees.
7. Legal Recommendation
We acknowledge the post termination/retrenchment concerns of the company. Sometimes, employees feel
exploited by the employer and sue against the employer in the labor court and ask for more compensation.
In such a scenario, the employer must face court hassle and additional expenditures (court fees, lawyer or
professional fees, compensation if case lost etc.).
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Although, Section 20 is the relevant reference of law which exactly matches with the termination
background of Fast Value Global (BD) Ltd. However, if the company wants to reduce/avoid the possibility
of being sued or avoid any future hassle, expenditure or compensation then it is recommended to follow
Section 26 of the Labor Act 2006. Given the financial and legal risks associated with Section 20 , it is in
the best interest of Fast Value Global (BD) Ltd. to implement Section 26 for workforce downsizing. This
approach ensures:
• Legal compliance with Bangladesh Labour Act, 2006 .
• Lower risk of disputes and reputational damage by adhering to standard termination
procedures.
• Reduced government and union involvement , preventing unnecessary regulatory scrutiny.
• Minimized future financial liability by avoiding redundancy-related severance complexities.
8. Conclusion
To mitigate financial and regulatory risks, Fast Value Global (BD) Ltd. should proceed with
terminations under Section 26 instead of retrenchment under Section 20. This approach provides a
legally sound, cost-effective, and reputationally secure method for workforce downsizing.
9. Disclaimer:
This legal opinion is based on the information provided to us and is intended for the Company's internal
use only. This opinion should not be considered a substitute for comprehensive legal advice. Whichever
law reference, Fast Value Global (BD) Ltd. chooses (Section 20 or Section 26 of the Labor Act 2006)
Tokyo Consulting Firm Limited doesn’t bear any responsibility.
Yours sincerely,
____________
Fumihiro Abe
Director
Tokyo Consulting Firm Limited.
Annexures & Attachment
Annexure A: Employee Compensation Details (Detailed Compensation Calculation per employee as per
Section 20).
Annexure B: Employee Compensation Details (Detailed Compensation Calculation per employee as per
Section 26).
Annexure C: Lawyer’s Opinion (Detailed Compensation Calculation and opinion by Mr. Shaleh Akram
Somrat, Barrister-at-Law).
Annexure D: Calculation review by TCF (Schedule of Compensation for Termination Employees.
Annexure E: Answer to other queries raised in the meeting.
Gross Basic
1 Md. Tarikul Hasan Chowdhury Office Manager (Production, Sourcing & Supply chain Control) 7/6/2020 4/15/2025 4.84 5.00 114,000 68,400 342,000 68,400 410,400
2 Md. Imam Hossain Office Executive -Accounting & Genaral Affairs 5/16/2017 4/15/2025 8.03 8.00 43,000 25,800 206,400 25,800 232,200
3 Md. Bahar QC Senior QC 12/16/2015 4/15/2025 9.47 9.00 16,785 9,557 86,013 9,557 95,570
4 Md. Monir Hossen QC QC and Dispatching 4/16/2017 4/15/2025 8.11 8.00 15,420 8,647 69,176 8,647 77,823
5 Md. Billal Hossain Mamun QC QC and Dispatching 11/16/2017 4/15/2025 7.52 8.00 14,273 7,882 63,056 7,882 70,938
6 Monir Hossen (2) QC QC and Dispatching 2/16/2018 4/15/2025 7.26 7.00 14,273 7,882 55,174 7,882 63,056
7 Md. Salim QC QC and Dispatching 3/16/2018 4/15/2025 7.19 7.00 14,273 7,882 55,174 7,882 63,056
8 Md. Rafiul Islam QC QC assistant 7/16/2024 4/15/2025 0.76 1.00 12,500 6,700 6,700 6,700 13,400
9 Md. Jamear Rohman Loader Direct labour 7/16/2024 4/15/2025 0.76 1.00 12,800 6,900 6,900 6,900 13,800
Total 257,324 149,650 890,593 149,650 1,040,243
Sl.
No.
Current Wages
Name Deparment Position Joining Date
(MM/DD/YYYY) Cut Off Date Duration of Service
(in Years)
Eligible to
Receive
Compensation
Notice Pay (if
sufficient notice
not given)
Total Amount
Annexure A
Compensation
Amount
Fast Value Global (BD) Ltd.
Schedule of Compensation for Retrenched Employees
Annexure B
Gross Basic
1 Md. Tarikul Hasan Chowdhury Office Manager (Production, Sourcing & Supply chain Control) 6/7/2020 4/15/2025 4.93 5.00 114,000.00 68,400.00 342,000.00 273,600.00 615,600.00 729,600.00
2 Md. Imam Hossain Office Executive -Accounting & Genaral Affairs 5/16/2017 4/15/2025 8.03 8.00 43,000.00 25,800.00 206,400.00 103,200.00 309,600.00 352,600.00
3 Md. Bahar QC Senior QC 12/16/2015 4/15/2025 9.47 9.00 16,785.00 9,557.00 86,013.00 38,228.00 124,241.00 141,026.00
4 Md. Monir Hossen QC QC and Dispatching 4/16/2017 4/15/2025 8.11 8.00 15,420.00 8,647.00 69,176.00 34,588.00 103,764.00 119,184.00
5 Md. Billal Hossain Mamun QC QC and Dispatching 11/16/2017 4/15/2025 7.52 8.00 14,273.00 7,882.00 63,056.00 31,528.00 94,584.00 108,857.00
6 Monir Hossen (2) QC QC and Dispatching 2/16/2018 4/15/2025 7.26 7.00 14,273.00 7,882.00 55,174.00 31,528.00 86,702.00 100,975.00
7 Md. Salim QC QC and Dispatching 3/16/2018 4/15/2025 7.19 7.00 14,273.00 7,882.00 55,174.00 31,528.00 86,702.00 100,975.00
8 Md. Rafiul Islam QC QC assistant 7/16/2024 4/15/2025 0.76 1.00 12,500.00 6,700.00 6,700.00 26,800.00 33,500.00 46,000.00
9 Md. Jamear Rohman Loader Direct labour 7/16/2024 4/15/2025 0.76 1.00 12,800.00 6,900.00 6,900.00 27,600.00 34,500.00 47,300.00
Total 257,324 149,650 890,593 598,600 1,489,193 1,746,517
Sl.
No. Name Deparment Position
Joining Date
(MM/DD/YYY
Y)
Total Amount
(Current Month
Salary)
Total
Amount
Fast Value Global (BD) Ltd.
Schedule of Compensation for Termination of Employees
Cut Off Date
Duration
of Service
(in Years)
Eligible to
Receive
Compensati
on
Current Wages
Compensation
Amount
Notice Pay (if
sufficient
notice not
given)
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Ref: FVG/Termination Procedure Date: 24.03.2025
To
Fast Value Global (BD) Limited
Rupayan Battala, Zamgora, Zirabo,
Ashulia, Savar, Dhaka-1341
Ref: Termination Procedure of Manager, Executive Officer, Senior QC, QC, QC Assistant
and Direct Labor in accordance to Bangladesh Labor Act, 2006.
LEGAL OPINION
We have been instructed to give our opinion on :
Legal Procedure to terminate the employees holding the ranks of Manager, Executive
(Accounting & General Affairs), Senior QC, QC, QC Assistant and Direct Labor who joined
your company from 07.06.2020 to 16.07.2024 in accordance with the sections of the
Bangladesh Labor Act, 2006.
We are furnishing our opinion on the following documents, as provided by you to us :
a) E-mail dated 16.02.2025.
b) Bangladesh Labor Act, 2006.
Below is our opinion (categorically and very briefly):
We were only provided with the E-mail. However, we have made our observations after
perusing the E-mail and the sections of the Bangladesh Labor Act, 2006.
Case Scenario- [Manager, Executive (Accounting & General Affairs), Senior QC, QC,
QC Assistant and Direct Labor]-
1. According to the Section- 26 (1) (a) of the Bangladesh Labor Act, 2006 the employees
will receive benefit of 120 days or 4 month's basic salary for termination within
immediate effect. According to your information, the last basic salary of the employees
will be preferred before the termination in this regard.
2. The said employees will also receive termination benefit in accordance section-26 (4) of
the Bangladesh Labor Act, 2006 along with earn leave where the said employees had
been working in your company for last 1 year to 9 years.
3. The Company shall issue a simple termination letter to the employees by stating that the
service of the employees has been terminated with an immediate effect and the employees
have received all their salary and benefits from the company. Moreover, the Company
must not mention any reasons and grounds in the termination letter where the termination
letter would be very precise and short.
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4. The Company must ensure that the employees have received all their salaries and benefits
from the company with the signatures of the employees in the termination letters.
5. The employees shall receive the mentioned salary and service benefits from your
company according to the laws mentioned in the Bangladesh Labor Act, 2006 which is
given below-
Names 4 Months'
Notice Pay-
120 days/ 4
months (Basic
Salary X 4)
Termination
Benefit-
(Basic Salary X
Service Years)
Earn Leave-
As per Company's
Record-
(Gross X Days of
Earn Leave
divided by Thirty)
Calculation
and Amount
Tarikul
Hasan
Chowdhury
(68,400 X 4)
=2,73,600
(68,400 X 5 )
= 3 , 42 , 0 00
As per Company's
Record
BDT- 6 , 15 , 6 00
Md. Imam
Hossain
(25,800 X 4)
=1,03,200
(25,800 X 8 )
= 2 ,0 6 , 4 00
As per Company's
Record
BDT- 3 , 09 , 6 00
Md. Bahar (9557 X 4)
=38,228
(9557 X 9)
=86,013
As per Company's
Record
BDT-1,24,241
Monir
Hossein
(8647 X 4)
=34,588
(8647 X 8)
=69,176
As per Company's
Record
BDT-1,03,764
Billal
Hossain
(7882 X 4)
=31,528
(7882 X 8 )
= 63 , 056
As per Company's
Record
BDT- 94,584
MD. Monir
Hossen (2)
(7882 X 4)
=31,528
(7882 X 7)
=55,174
As per Company's
Record
BDT-86,702
MD. Salim (7882 X 4)
=31,528
(7882 X 7)
=55,174
As per Company's
Record
BDT-86,702
Md. Rafiul
Islam
(6,700 X 4)
=26,800
(6,700 X 1)
=6,700
N/A (Less than 1
year)
BDT-33,500
Md. Jamear (6,900 X 4)
=27,600
(6,900 X 1)
=6,900
N/A (Less than 1
year)
BDT-34,500
Total [Except-
Earn Leave]
BDT
1, 489 ,1 93
6. The employees named Md. Rafiul Islam and Md. Jamear will not receive any Earn Leave
as they have served under your company less than 1 year and in according to section 117
of Bangladesh Labor Act, 2006 the said employees will not receive any payment
regarding Earn Leave and other employees will receive Earn Leave which is mandatory
for your company to provide such Earn Leave by checking the records that the leaves
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taken by the said employees from your Company's Registry Book. Generally, the Earn
Leave is counted as-
Gross Salary X Days of Earn Leave
30
** For 1 year – No employee shall receive more than 40 Day's Earn Leave.
7. The Company will execute the abovementioned procedure under the Bangladesh Labor
Act, 2006 to terminate the said employee.
Apart from the above observations, the rest of the administrative decision will be taken from
your company.
Thanks for seeking our opinion. We would be glad to assist you in any other matter. Should
you have any further queries, please revert back to us.
Yours truly,
Earned
Leave
Balance
Gross Basic As at
15.04.2025
a b c d=a*c e=c*120 f g=f*(b/30) h=d+e+f
1 Md.Tarikul Hasan Chowdhury Office Manager (Production, Sourcing & Supply chain Control) 6/7/2020 4/15/2025 4.93 5.00 114,000.00 68,400.00 342,000.00 273,600.00 14.00 53,200.00 668,800.00
2 Md.Imam Hossain Office Executive -Accounting & Genaral Affairs 5/16/2017 4/15/2025 8.03 8.00 43,000.00 25,800.00 206,400.00 103,200.00 23.00 32,967.00 342,567.00
3 Md.Bahar QC Senior QC 12/16/2015 4/15/2025 9.47 9.00 16,785.00 9,557.00 86,013.00 38,228.00 22.00 12,309.00 136,550.00
4 Md.Monir Hossen QC QC and Dispatching 4/16/2017 4/15/2025 8.11 8.00 15,420.00 8,647.00 69,176.00 34,588.00 17.00 8,738.00 112,502.00
5 Md.Billal Hossain Mamun QC QC and Dispatching 11/16/2017 4/15/2025 7.52 8.00 14,273.00 7,882.00 63,056.00 31,528.00 17.00 8,088.00 102,672.00
6 Monir Hossen (2) QC QC and Dispatching 2/16/2018 4/15/2025 7.26 7.00 14,273.00 7,882.00 55,174.00 31,528.00 17.00 8,088.00 94,790.00
7 Md. Salim QC QC and Dispatching 3/16/2018 4/15/2025 7.19 7.00 14,273.00 7,882.00 55,174.00 31,528.00 17.00 8,088.00 94,790.00
8 Md.Rafiul Islam QC QC assistant 7/16/2024 4/15/2025 0.76 1.00 12,500.00 6,700.00 6,700.00 26,800.00 - - 33,500.00
9 Md.Jamear Rohman Loader Direct labour 7/16/2024 4/15/2025 0.76 1.00 12,800.00 6,900.00 6,900.00 27,600.00 - - 34,500.00
Total 257,324 149,650 890,593 598,600 131,478 1,620,671
Opinion:
Sincerely,
Fumihiro Abe
Director
Tokyo Consulting Firm Limited
Deparment Position Joining Date
(MM/DD/YYYY)
The schedule titled “Schedule of Compensation for Termination Employees” dated April 15, 2025 has been reviewed by Tokyo Consulting Firm Limited.
This assessment is based on the provisions of the Bangladesh Labour Act, 2006, specifically Section 26, Section 117, and Section 123,
and relevant rules regarding termination, notice pay, and earned leave encashment. Based on the review, the compensation, notice pay,
and earned leave encashment amounts have been calculated in accordance with the Bangladesh Labour Act, 2006.
Therefore, the proposed payouts are legally compliant and justifiable.
Annexure D
Current Wages
Cut Off Date
Duration
of Service
(in Years)
Eligible to
Receive
Compensation
Compensation
Amount
Notice Pay (if
sufficient notice
not given)
Earned Leave
Encashment Total Amount
Fast Value Global (BD) Ltd.
Schedule of Compensation for Termination Employees
Sl. No. Name