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Termination of an employee by a private limited company

Can an employer arbitrarily terminate employee? 

Termination simpliciter refers to termination of service without alleging any misconduct against the employee. It is usually done under section 26 of the Bangladesh Labour Act, 2006, or under a similar clause in the employee’s contract, with payment of statutory notice (or wages in lieu) and other benefits. The employer does not assign any misconduct-related reason, calling it a “simple termination.”

👉 It is different from dismissal (s.23) which is punitive and based on misconduct.

Termination simpliciter will be  lawful only if it is genuine, in good faith, and strictly complies with section 26 of the Labour Act. If used as a disguised disciplinary action, retaliatory measure, or without fulfilling statutory requirements, the courts treat it as illegal and grant reinstatement or compensation.

An officer of a private company in Bangladesh who has been terminated can:

1. Challenge the termination in the Labour Court under the Labour Act within 6 months,
2. Seek reinstatement with back wages or compensation,
3. If governed by a special contract outside the Labour Act, sue in civil court for damages,
4. Appeal to the Labour Appellate Tribunal if dissatisfied with the Labour Court’s decision.

An employer has the right to terminate the employment of a permanent worker by providing written notice. The notice period is 120 days for a monthly-rated worker and 60 days for other workers. In lieu of notice, the employer can pay the worker wages for the notice period. Upon termination, a permanent worker is entitled to compensation of 30 days' wages for every completed year of service, or gratuity, if payable, whichever is higher.

Courts in Bangladesh have consistently held that even though section 26 allows “simple termination,” the power cannot be used arbitrarily, in bad faith, or to punish an employee for alleged misconduct without due process. A worker can challenge this termination under the following conditions as outlined in Section 33(9) of the Bangladesh  Labour Act 2006:

• Trade Union Activities: If the termination is alleged to be due to the worker's trade union activities.
• Ill Motive (Mala Fide): If the termination is alleged to have been passed with an ill motive. This implies that if the termination is a form of victimization or is otherwise in bad faith, it can be challenged.

Key Cases:

Janata Bank vs. Abdur Rahim (43 DLR 166): termination purportedly simpliciter but based on alleged misconduct was held void.

Biman Bangladesh Airlines vs. Rabeya Khatun (49 DLR 447): if misconduct is the foundation, employer must hold enquiry; otherwise termination is illegal.

• Deprivation of Benefits: If the worker has been deprived of the benefits specified under Section 26, such as the correct notice period or pay in lieu thereof, and the rightful compensation or gratuity.

The procedure for challenging such a termination involves the worker sending a written complaint to the employer by registered post within 30 days of being informed of the termination. If the employer fails to provide a satisfactory decision, the worker can then file a complaint with the Labour Court. The Labour Court has the authority to hear the complaint and pass orders it deems just, which can include reinstatement with or without back wages.

What kind of termination simpliciter (a termination without a stated cause) can be challenged before the Court:

1. Termination with Stigma (Disguised Dismissal)

A termination order that is not "simpliciter" but attaches a stigma or is punitive in nature is illegal if the proper disciplinary procedures were not followed. The employer cannot use a simple termination to bypass the inquiry process required for a dismissal for misconduct.

• Attaching Stigma: If the termination order brands the employee with a negative label, such as a "habitual absentee," a stigma has been attached¹. Such an action requires giving the employee a reasonable opportunity to defend themselves through a formal disciplinary proceeding.
• Dismissal in the Garb of Termination: An order of dismissal framed as a "termination of service" is considered illegal, void, and unsustainable in law if the employee was not given an opportunity to be heard or if no inquiry was held. This is because the termination is effectively a punishment without due process.
• Violation of Natural Justice: A termination order with a stigma is illegal if the employee does not get an opportunity to explain their position, as this contravenes the principles of natural justice.

2. Victimization or Ill Motive (Mala Fide)

The law provides a specific safeguard against terminations that are not made in good faith. An employer's right to terminate an employee is conditional on the action not being a form of victimization.

• Grounds for Complaint: A worker can legally challenge a termination order under Section 26 if it is alleged to have been made for their trade union activities or was passed with an "ill motive".
• Victimization for Union Activities: An employer is free to issue a simple termination order provided the intended action is not taken with a view to victimising the worker for trade union activities. Courts can look behind the termination order to see its real purpose, and if it is found to be a case of victimization for union activities, it can be declared illegal.

3. Denial of Statutory Benefits

A termination is illegal if the employer fails to provide the full financial benefits mandated by the law.

• Right to Challenge: A worker can file a complaint if they have been "deprived of the benefits specified" in Section 26.
• Mandatory Payments: For a permanent worker, the employer must provide 120 days' notice (for monthly rated workers) or 60 days' notice (for others), or pay wages in lieu of notice. Additionally, the employer must pay compensation at the rate of 30 days' wages for every completed year of service, or gratuity, if payable, whichever is higher. Failure to provide these benefits makes the termination challengeable.

Time limit for filing the Petition: The complaint to the Labour Court must be filed within 6 months of the termination .

What are the remedies the  Labour Court’s can provide to  the terminated workers:

If the Labour Court finds the termination was wrongful, without due process, or without just cause, it can order:

1. Reinstatement of the worker in their job with full back wages, or
2. Compensation in lieu of reinstatement (often calculated as 30 days’ wages for each completed year of service plus other dues), depending on circumstances .

The Court can also:

• Direct payment of unpaid gratuity, provident fund, leave encashment, and other benefits.
• Convert a dismissal into a discharge to remove stigma if dismissal was procedurally flawed .

What are the Practical Steps an employee need to take to  challenge termination order: 

An officer of a private company who is terminated can:

1. File a complaint under Section 33 of the Bangladesh Labour Act, 2006 within 30 days to employer, and then to Labour Court within 6 months.
2. Seek reinstatement with back pay or compensation if termination is found illegal.
3. Appeal to Labour Appellate Tribunal within 60 days if dissatisfied.

The terminated officers must take following steps to challenge the termination order: 

1. Collect All Documents:
   • Appointment letter, service rules, termination letter, charge-sheet (if any), enquiry reports, pay slips, etc.
2. Review Compliance:
   • Was proper notice given or paid in lieu?
   • If dismissed for misconduct, was there a domestic enquiry with opportunity to defend?
   • Were retrenchment benefits or other statutory dues paid?
3. File Complaint:
   • Submit written complaint to employer within 30 days as per s.33.
   • If no remedy, file case in Labour Court within 6 months.
4. Seek Relief:
   • Reinstatement with back wages or
   • Compensation + all statutory dues.

Is an officer of an employee of a private commercial Bank worker under the  Labour Act: 

Employees of private commercial banks are generally covered by the Bangladesh Labour Act, 2006 (as amended in 2013 & 2018), unless they hold a position that is wholly managerial or administrative and excluded by section 2(65) of the Act.

👉 In most cases (officers, senior officers, executives, even many branch managers), the Labour Act applies because their functions are primarily operational rather than policy-making.

The definition of “worker” in section 2(65) of the Bangladesh Labour Act, 2006 excludes:

“…a person employed mainly in a managerial or administrative capacity.”

👉 This means:

If the person’s primary (main) duties are managerial or administrative, they are not a “worker” and therefore the special protections and remedies under the Labour Act (e.g., for unlawful termination) do not apply. Instead, they are treated as higher-level employees whose service is governed by their contract, company’s service rules, or other special laws.

2. Judicial Precedents established by the Supreme Court of Bangladesh. 

• Designation or title is not decisive – what matters is the actual nature of the duties.
• The terms “managerial” and “administrative” are interpreted in their ordinary sense.

(A) Managerial Functions

Work is managerial when the employee:

• Formulates policy or has a role in decision-making on company/business operations.
• Has power to hire, promote, transfer, discipline or dismiss staff.
• Exercises budgetary or financial authority.
• Directs and controls the work of subordinates as a representative of the employer.
• Has discretion to make decisions that affect the organisation, not just to implement routine instructions.

(B) Administrative Functions

Work is administrative when the employee:

• Performs duties related to administration of the organisation itself, such as maintaining compliance with laws, internal governance, official correspondence, or record-keeping at a higher-level supervisory capacity.
• Is involved in implementing and ensuring adherence to policies, procedures, and official decisions.
• Has a role in regulatory reporting, HR administration, policy enforcement.

(C) Clerical / Operational Work (Not Managerial)

By contrast, the following are not managerial or administrative:

• Routine clerical, technical, or customer-facing banking operations,
• Processing loan applications under instructions,
• Teller duties,
• Inputting data,
• Performing field collection or cash-handling without discretion over policy or staff.

 Even if such employees hold titles like “Officer” or “Senior Officer”, they are workers because they carry out the core banking services under instruction and do not have managerial or administrative discretion.

3.  Key Case-Law Illustrations

• Mujibur Rahman vs. Chairman, Labour Court (31 DLR 301) – A supervisor doing mainly clerical/operational work was held to be a worker; only those exercising managerial control are excluded.
• Janata Bank vs. Abdur Rahim (43 DLR 166) – Courts scrutinised actual functions; an employee accused of misconduct but doing routine work was treated as a worker.
• Sonali Bank Assistant Cashier Case – Despite the designation, the job was operational, so the employee was treated as a worker.
• Nazrul Islam Patwary vs. Rupali Bank – A bank collection agent was treated as a worker since he had no managerial discretion.

4.  Key Tests Applied by Courts

To decide whether a person is employed “mainly in a managerial or administrative capacity”, courts look at whether the person:

1. Exercises independent decision-making authority on policy or key business operations.
2. Controls or supervises other staff as an employer’s representative with power to hire/fire, sanction leave, discipline.
3. Holds and exercises budgetary/financial authority.
4. Represents the employer in external relations, e.g., with regulators, government bodies.
5. Spends most of their working time on such higher-level managerial/administrative tasks, not on routine banking, clerical, or technical work.

If most of these apply → managerial/administrative → not a worker.
If mainly operational/clerical → worker → protected by Labour Act.

Conclusion:

The crucial factor for determination of “ Worker” is the nature of the work performed by the individual.

• Who is a Worker? A worker is legally defined as someone employed to do any skilled, unskilled, manual, technical, trade promotional, or clerical work for payment. For example, an Assistant Cashier in a bank, despite any internal officer ranking, was considered a worker because their job was primarily clerical.
• Who is NOT a Worker? The law explicitly excludes anyone employed mainly in a managerial, administrative, or supervisory capacity. A person's duties are considered supervisory only if they also exercise functions that are mainly managerial or administrative in nature.

Designation vs. Actual Duties

The legal precedents repeatedly clarifies that a job title is not sufficient to disqualify someone from being a worker.

• An internal classification system, such as a bank creating a category of "officers" for staff management, is considered for internal administration only and "has nothing to do with the definition of worker".
• Even an employee with a title like "Production Manager" can be considered a worker if the employer fails to prove that the employee's duties were primarily managerial or administrative

The “managerial or administrative work” means work of higher-level responsibility involving decision-making, policy implementation, and control over other employees on behalf of the employer. Employees whose main duties are managerial or administrative are excluded from the definition of “worker”. Employees whose main duties are clerical, technical or routine operational, even if called “Officer”, remain workers and are protected by the Labour Act.

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