Contractor management in Bangladesh: managed HR and payroll for independent contractors
Compliant contractor agreements, tax-withheld payments in taka, invoicing and misclassification screening for remote roles that do not need full employment — from USD 39 per contractor per month.
What is managed contractor payroll in Bangladesh?
Managed contractor payroll in Bangladesh is a service in which a local provider contracts, pays and administers independent contractors on behalf of a foreign company: drafting a Bangladesh-law services agreement, collecting invoices, withholding tax at source, paying in taka, and screening each engagement for misclassification risk under the Bangladesh Labour Act 2006.
Foreign companies use it for project-based developers, designers, consultants and part-time specialists who are genuinely self-employed and do not want, or do not qualify for, permanent employment. Where the relationship looks like employment, we say so and recommend the Employer of Record route instead — the cost difference is small and the risk difference is not.
What is the misclassification risk when paying contractors in Bangladesh?
If a contractor works under your control, on your hours, exclusively for you and indefinitely, a Labour Court may find they are a "worker" under s.2(65) of the Labour Act, entitling them to notice or pay in lieu under s.26, compensation of 30 days' wages per year and gratuity under s.2(10). The 2025 amendment expressly added gig and platform workers.
The 2025 amendment widened the definition of worker to include platform and gig workers, closing the argument that app-based or remote contractors fall outside the Act. Our screening scores each engagement on control, integration, exclusivity, duration, substitution and equipment, and gives you a written recommendation: contractor, fixed-term employee, or permanent employee through the EOR.
| Factor | Points to contractor | Points to employee |
|---|---|---|
| Control of work | Deliverables and deadlines only | Daily direction, fixed hours, attendance |
| Exclusivity | Other clients allowed and real | Works only for you |
| Duration | Defined project or under 6 months | Open-ended, renewed repeatedly |
| Integration | Own tools, own email domain | Your laptop, your email, your title |
| Substitution | Can subcontract the work | Must perform personally |
| Payment | Per project or invoice with VAT/tax handled | Fixed monthly amount on payday |
This page is informational and reflects Bangladesh law as we understand it on the review date. It is not a substitute for licensed legal or tax advice in Bangladesh or in your own jurisdiction. Statutory figures change; confirm current values with your adviser before relying on them.
What does the contractor management service include?
The service includes a Bangladesh-law services agreement with IP assignment and confidentiality, contractor onboarding with e-TIN and bank verification, invoice collection and approval workflow, withholding tax at source and deposit to the NBR, payment in taka, monthly statements in your currency, and a quarterly misclassification review with conversion recommendations.
Services agreement
Scope, deliverables, fees, IP assignment, confidentiality, non-solicitation and termination terms drafted under the Contract Act 1872 and reviewed by local counsel.
Invoicing and withholding
Contractors invoice Nexus; we approve against your sign-off, withhold tax at source under the Income Tax Act 2023, deposit it and issue certificates.
Payment in taka
Bank or mobile-wallet payment on an agreed date, funded by you in USD, EUR or GBP with the FX rate shown on the statement. No contractor is ever paid in foreign currency from abroad.
Misclassification screening
Six-factor assessment at onboarding and every quarter, with a written recommendation and a conversion path to EOR employment when the risk profile changes.
Light-touch HR
Optional equipment provisioning, co-working access and a point of contact in Dhaka for contractors who need local support without the employment relationship.
Reporting
Monthly contractor cost statement, tax withheld, outstanding invoices and engagement-duration alerts for your finance and legal teams.
How much does contractor management cost?
Nexus Payroll charges USD 39 per contractor per month, covering the agreement, invoice processing, withholding, payment and screening. Contractor fees are passed through at cost. There is no set-up fee, and conversion to an EOR employee is free of charge — you simply move to the USD 299 EOR rate from the conversion date.
Contractor management FAQ
Is it legal to hire independent contractors in Bangladesh?
Yes. Bangladesh recognises independent-contractor and consultancy agreements under the Contract Act 1872. The risk is not the contract but the reality: if the person works fixed hours, under your direction, exclusively for you, with your equipment, a Labour Court can treat them as a worker under the Labour Act and award notice, compensation and gratuity. Our screening tests the arrangement before you sign.
How are contractors in Bangladesh taxed?
Contractors are responsible for their own income tax, but the paying entity must withhold tax at source on service fees under the Income Tax Act 2023. When Nexus Payroll is the paying party we deduct the applicable rate, deposit it with the NBR and issue the contractor a withholding certificate they use in their own return. This is the part most foreign companies paying directly from abroad miss.
When should we convert a contractor to an EOR employee?
Convert when the engagement passes six months, the person works only for you, or you want to grant equity, benefits or a title. At that point the misclassification risk outweighs the flexibility, and the employee typically prefers a permanent contract with Provident Fund and gratuity. Conversion through our EOR takes the same 5–7 business days as a new hire and preserves continuity of service where you choose.
Pay Bangladesh contractors compliantly
Send us the role, salary range and start date. We reply within one business day with a cost breakdown and a compliant employment plan. First hire in 5–7 business days.