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Service Rules under the Labour Act 2006: Why an Employer Wants Them, What They May Say, the 90-Day Approval by DIFE, and a Model Structure

Chapter II of the Bangladesh Labour Act 2006 is the default employment code for every worker in a private establishment. Section 3 lets an establishment write its own service rules instead, on one condition: they may not be less favourable to any worker than Chapter II, and they do not take effect until the Inspector General of Factories and Establishments has approved them. The approval must be given or refused within 90 days of submission (the original six months was cut in 2013), with an appeal to the Government within 30 days decided within 45. An employer who skips the exercise is governed by the Act's own terms on probation, leave, discipline and separation, which are workable but silent on everything a modern workplace needs: code of conduct, harassment, data and confidentiality, performance management, transfer, travel, benefits above the floor. This guide explains what service rules can and cannot do, the Rule 4 procedure, how DIFE reads a draft, and a model chapter structure we use for clients.

Bangladesh Labour Act 2006, s.3 (service rules; approval within 90 days; appeal), s.3(1) proviso (not less favourable than Chapter II), s.4 (classification and probation), ss.23–25 (misconduct and procedure), s.332 (harassment complaint committee) and s.1(4) (government-owned establishments exempt from approval), as amended to 2026Bangladesh Labour Rules 2015, Rule 4 (acknowledgement within 10 days; approved rules effective 30 days after the stamped date; consultation and forms), as amended in 2022; DIFE citizen charter (service rules approval listed at 45 days)Bangladesh EPZ Labour Act 2019 for zone enterprises (BEPZA approval instead of DIFE); figures and rule numbers as read in the consolidated texts, with the 2025–26 amendments noted where reported
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Open rulebook with a stamp pressing a seal, for service rules under the Labour Act in Bangladesh
At a glance
  • Section 3: an establishment may frame its own service rules; they bind only when approved by the Inspector General (DIFE); government-owned establishments are exempt from approval; without rules, Chapter II applies as written.
  • The one rule: nothing in the service rules may be less favourable to a worker than Chapter II (s.3(1) proviso). Rules may add, extend and clarify; they may not cut probation short of the Act's protections, lengthen notice against the worker, reduce leave, or invent grounds of misconduct beyond s.23(4).
  • Procedure under Rule 4: submit to the Inspector General, acknowledgement within 10 days, decision within 90 days, approved rules take effect 30 days after the stamped date; appeal to the Government within 30 days, decided within 45; DIFE's charter lists the service as 45 days.
  • What DIFE strikes out: fixed-term contracts that defeat permanency, probation beyond six months, "termination at will" without s.26 pay, forfeiture clauses, blanket transfer and bond clauses, misconduct catalogues beyond the Act, and any dispute clause ousting the Labour Court.

In this guide: What service rules can do, and the floor they cannot go below · The Rule 4 procedure and the 90-day clock · What DIFE strikes out · A model structure · Staff outside the Act: contracts and handbooks · Keeping the rules alive

The short answer

Decide first whether you need them. If your staff are all outside the worker definition (a small professional office of managers and professionals), the Act’s Chapter II does not reach them and your employment contracts and an HR policy manual govern; no approval is needed. If you employ workers, Chapter II governs them whatever your handbook says, and the handbook binds only to the extent it is at least as favourable; to make your own code enforceable, submit it under s.3. Draft it as an expansion of the Act: take each Chapter II subject (classification, probation, appointment, leave, hours, wages, discipline, grievance, separation, retirement), restate the statutory minimum, then add what the Act leaves open (code of conduct, harassment, confidentiality, IT and data, travel, performance, transfer, benefits). File it with the Inspector General with a covering letter, the participation committee’s or union’s comments where one exists, the trade and DIFE licences and a board resolution; DIFE acknowledges in ten days, queries or approves within ninety, and the rules take effect thirty days after the approval stamp. Then display them, give every worker a copy in Bangla, and keep the approved set with the appointment letters, which should refer to them. Our employer’s guide to the Act has the statutory floor every clause is measured against.

What service rules can do, and the floor they cannot go below

Section 3(1) says an establishment may have its own service rules on the conditions of employment of its workers, provided they are not less favourable than the provisions of Chapter II; s.3(2) to (5) make approval the condition of validity. The Labour Court applies three consequences. First, where the rules are silent, Chapter II fills the gap; where the rules are more generous, the rules apply; where the rules are less generous, that clause falls and the Act applies, even if the worker signed the rules. Second, “less favourable” is tested clause by clause and worker by worker, not on the balance of the whole document: a longer annual leave does not buy a shorter termination notice. Third, approval does not cure illegality; DIFE’s stamp is strong evidence that the rules meet the floor, not a bar to a worker arguing a clause does not. The practical list of what the rules may add: a code of conduct and the discipline it attracts within the s.23 categories; a harassment policy and the complaint committee s.332 now requires; confidentiality, intellectual property and conflict-of-interest terms; IT, data and social-media use; travel, expenses and allowances; performance appraisal and increment policy; transfer between the employer’s establishments with notice and relocation terms; training bonds limited to recovering actual cost; benefits above the floor (leave, bonus, medical, provident fund, gratuity beyond s.2(10)); a grievance ladder below the s.33 statutory route. What they may not do: extend probation beyond six months for clerical or three for other workers (s.4); make permanent workers “contractual” to avoid s.26; shorten the employer’s notice or lengthen the worker’s beyond s.27; reduce any leave or holiday; add grounds of dismissal outside s.23(4); authorise deductions outside s.125; forfeit earned wages, leave or gratuity; or oust the Labour Court.

The Rule 4 procedure and the 90-day clock

StepProvisionTime
Board approval of the draft; consultation with the participation committee or CBA where one existsRule 4 (consultation sub-rules; verify in the Bangla text)Before filing
Submission to the Inspector General, DIFE, with the prescribed form, three copies in Bangla (English translation optional), covering letter, licences and board resolutions.3(2); Rule 4—
Acknowledgement of receiptRule 4Within 10 days
Scrutiny, queries, hearing if needed, approval or refusal with reasonss.3(3)Within 90 days of receipt (DIFE charter: 45 days)
Effect of approved rulesRule 4(13)30 days after the date stamped on the approval
Appeal against refusal or against conditions imposeds.3(4)–(5)To the Government within 30 days; decision within 45 days, final
Amendment of approved rulesSame routeSame clocks; the old rules apply until the amendment is approved

Two points about the clock. There is no deemed approval in s.3: if the 90 days pass in silence the rules are not in force, and the remedy is a reminder, then the appeal route, not implementation. And the 90 days run from a complete submission; a file returned for missing documents restarts them. In practice DIFE’s divisional office reads the draft against a checklist of Chapter II, sends a query letter listing the clauses that fall below the floor or that it does not understand, and approves once they are corrected; a clean draft that tracks the Act’s own order comes back faster than a translated foreign HR manual. Government-owned or managed establishments are exempt from approval (s.1(4) read with s.3); EPZ enterprises submit to BEPZA under the EPZ Labour Act 2019 instead.

What DIFE strikes out

The query letters we see repeat the same objections. Fixed-term contracts for permanent work: a clause making all workers “contractual employees” renewable yearly, which the Act treats as permanent after probation regardless; DIFE requires the s.4 classes. Probation longer than the Act, or “extendable at the company’s discretion” without the s.4 limit of a further three months for skilled workers. Termination at will or “either party may terminate on one month’s notice”, which cuts the employer’s 120 days under s.26 and removes the compensation; the rules must restate s.26 and s.27 or improve on them. Misconduct lists that add “any act prejudicial to the company” or “loss of confidence” as grounds for dismissal; dismissal lies only for the s.23(4) grounds after the s.24 procedure, and the rules may define conduct within those grounds, not beyond them. Forfeiture: loss of gratuity or leave encashment on dismissal or on failing to serve notice; the Act allows the employer to recover notice pay from a resigning worker, not to forfeit earned benefits. Transfer anywhere in the country or to any group company at the employer’s discretion; DIFE wants notice, the same terms and a relocation allowance, and transfer to another legal entity needs the worker’s consent. Bonds beyond actual training cost recovery. Deductions for uniforms, tools, shortages or damage outside ss.125 to 129. Arbitration or “final decision of the Managing Director” clauses that purport to oust the Labour Court. And silence on maternity, on the harassment committee, on the grievance procedure and on the Act’s leave, which DIFE reads as an attempt to avoid them. A draft that restates the floor explicitly in each chapter draws few queries.

Service rules under the Bangladesh Labour Act 2006: s.3 approval by DIFE within 90 days, the Chapter II floor, what DIFE strikes out, model structure — BD Advocacy

A model structure

ChapterContentsStatutory anchor
1. PreliminaryTitle, commencement (30 days after approval), application to workers and to staff by adoption, definitions tracking s.2, relationship to the Act (floor clause)s.3(1)
2. Classification and appointmentThe s.4 classes, probation periods and confirmation, appointment letter and ID, service book, medical examination, age proofss.4–9
3. Hours, attendance and holidaysWorking hours, shifts, rest, overtime at double rate and authorisation, weekly and festival holidays, attendance and late-coming rules within s.126 limits on finesss.100–118, 126
4. LeaveCasual 10, sick 14, annual 1 per 18 days and accumulation, maternity 120 days, any additional leave, application and sanction procedure, encashmentss.45–50, 115–117
5. Wages and benefitsPay day, components, deductions permitted, festival bonus, increments, allowances, provident fund and gratuity scheme, group insurance, WPPF where applicabless.120–132, 2(10), 99, 232, 264; Rule 111
6. Conduct and disciplineCode of conduct; misconduct defined within s.23(4); punishments within s.23(2); the s.24 procedure in full (charge, seven days, enquiry, suspension on subsistence allowance, order, appeal within the company)ss.23–25
7. Harassment, discrimination and grievanceComplaint committee composition and procedure, anti-discrimination, protection from retaliation, grievance ladder ending in the s.33 rightss.332–332A, 345A–C, 33
8. Transfer, travel and secondmentNotice, same terms, allowances, consent for transfer to another entity—
9. Confidentiality, IT and conflictsConfidential information, devices and data, social media, outside work, gifts—
10. Separation and retirementTermination, retrenchment, discharge, dismissal, lay-off, resignation, retirement at 60, death; notice and benefits restating ss.16–28; final settlement within 30 working days; certificate of servicess.16–28, 123(2)
11. MiscellaneousSafety and the s.90A committee, participation committee, notices and display, amendment procedure, Bangla text prevailsss.90A, 205, 337

The Bangla text is the operative one; DIFE approves the Bangla and an English translation is for the employer’s convenience. Every chapter should begin with the statutory entitlement and then state the employer’s addition, so that the inspector, the worker and the Labour Court can see at a glance that the floor is met.

Staff outside the Act: contracts and handbooks

Managers, administrators and supervisors are outside the worker definition and therefore outside Chapter II; their terms are a matter of contract, the Contract Act 1872 and the general law, and service rules approved under s.3 do not bind them unless the rules say they apply to all staff and the contract adopts them. Most employers run one document for everyone: the approved service rules for workers, and the same rules adopted by reference in the employment contracts of non-workers, with a separate schedule for executive terms (notice, bonus, non-compete within the limits the courts enforce, which in Bangladesh is narrowly). Two cautions. The classification must be real: calling a clerk an “officer” to take her outside the Act fails on the function test, and the 2025 Ordinance’s attempt to bring officers inside the Act, reversed by the 2026 Act, shows the direction of pressure. And the handbook for non-workers is still a contract: unilateral changes need consent or a variation clause, and dismissal without the agreed notice is a breach claim in the civil court rather than a s.33 complaint, with damages measured by the notice period. Our appointment letter guide has the clause set for both groups.

Keeping the rules alive

Approved rules go stale. The 2013, 2018, 2025 and 2026 amendments each moved a figure that older rules state wrongly (sick leave from half to full pay, festival holidays from 11 to 13, maternity from 112 to 120 days, the resignation benefit tiers, the harassment committee), and a rule that states a lower figure than the Act is simply displaced, which means the employer is applying a document that is wrong in places without knowing which. Review the rules after every amendment of the Act or Rules and after any change in the business (a new establishment, a new class of staff, a provident fund set up), file the amendment under the same s.3 route, and re-issue the Bangla copy to workers. Keep the approval letter, the stamped copy and the acknowledgement of each worker’s receipt in the file the DIFE inspector and the Labour Court will ask for. For establishments inside an EPZ, the EPZ Labour Act 2019 and BEPZA’s instructions govern instead; for a group with units inside and outside a zone, two sets of rules are needed.

General information, not advice on your case. This guide states the law and the usual practice of the licensing authorities, the Labour Directorate and the courts as at the date above. The Bangladesh Labour (Amendment) Act 2026 (which replaced the Ordinance of November 2025) changed many thresholds and the Rules are being revised to match; where we could not read the gazette text we say so, and fees, forms and deadlines change by gazette. Your own establishment, documents and the officer at the desk decide what applies to you.
Service rules
1

Scoping

Which staff are workers, which Chapter II terms apply, what the business needs above the floor.

2

Drafting

Bangla rules in the model structure with the statutory floor restated in each chapter; English translation.

3

Approval

Filing with the Inspector General, answering queries, the 90-day clock and any appeal.

4

Roll-out

Display, worker copies, appointment letters amended to refer to the rules, review after each amendment.

Fixed fee for drafting and approval; review retainer available.Book a Consultation

Common questions

Are service rules compulsory for a private company in Bangladesh?

No. Section 3 permits them; without approved rules Chapter II of the Labour Act applies to workers as written. Rules become binding only when approved by the Inspector General of DIFE.

How long does DIFE take to approve service rules?

Section 3 requires a decision within 90 days of receipt (cut from six months in 2013); DIFE's citizen charter lists 45 days; acknowledgement is due within 10 days under Rule 4 and approved rules take effect 30 days after the stamped date. There is no deemed approval.

Can service rules provide less than the Labour Act?

No. The proviso to s.3(1) requires them to be not less favourable than Chapter II, tested clause by clause; a less favourable clause is displaced by the Act even if approved and even if the worker signed.

Can service rules extend probation?

Not beyond s.4: six months for clerical work and three months for other workers, with one extension of three months for a skilled worker whose work cannot be judged. Longer or open-ended probation clauses are struck out.

Can we include a one-month notice clause for termination?

Not for workers. Section 26 fixes the employer's notice at 120 days for monthly-rated permanent workers (60 for others) with compensation, and s.27 the worker's at 60 days; the rules may improve on these for the worker, not reduce them.

Do service rules apply to managers and officers?

Only if the rules say so and their contracts adopt them. Managerial, administrative and supervisory staff are outside the worker definition, so their terms are contractual; most employers apply the same rules to them by reference with an executive schedule.

What happens if we operate rules that were never approved?

They do not bind workers; Chapter II applies, and any clause below the floor is unenforceable. DIFE may also treat unapproved rules as a breach; the fix is to file them under s.3.

Do EPZ factories submit service rules to DIFE?

No. Enterprises in an export processing zone are governed by the EPZ Labour Act 2019 and submit to BEPZA; a group with units inside and outside a zone needs two sets.

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Need service rules drafted or approved?

Send your current handbook and the staff list; we mark what falls below the floor, redraft in the model structure and file with DIFE. A written assessment costs nothing.