Workers’ rights and remedies against unjustified terminations

Lay-off, retrenchment and unjustified dismissals have become a pervasive reality for Bangladeshi workers, especially in the Ready-Made Garments (RMG) sector. Reports show that at least 20 thousand workers have lost their jobs through lay-off or retrenchment during the first half of 2026. More recently, on 6 August, an export-oriented garments factory in Ashulia retrenched a staggering 565 workers, citing financial distress and global economic downturn. The explanation was disputed by the labour organisation, calling the large-scale retrenchment an ‘inhumane’ act. The focus of the present write-up will be on our labour law, how it addresses such situations, and whether there exists any legal remedy for this.

Retrenchment means the termination of the employment of workers on the ground of redundancy. Essentially, it stands on a similar footing as termination simpliciter, except that retrenchment occurs only due to specific economic reasons, e.g., surplus of labour causing financial distress to the business. Section 20 of the Bangladesh Labour Act (BLA), 2006 lays down the essential conditions of retrenchment. These conditions can be classified broadly under two heads: (a) requirement of notice, and (b) payment of compensation. While the former is a mandatory procedural requirement, the latter encompasses the substantive right of the worker. Nevertheless, both are considered conditions precedent stipulated for the protection of the workers’ interests.

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Clauses (a) and (b) of section 20(2) of BLA lay out the procedural aspects of notice requirements. For workers under continuous service for a minimum of one year with an employer, a one-month written notice must be given to the workers, mentioning the clear reasons for retrenchment. Notably, if no such notice is given, the workers will be entitled to receive wages for the notice period, i.e., one month. Again, a copy of such notice must be sent to the Inspector General (IG) of the Department of Inspection of Factories and Establishments (DIFE), If there is any Collective Bargaining Agent (CBA) in that establishment or factory, another copy of the notice shall also be sent to it as well. Under Rule 27 of the Bangladesh Labour Rules (BLR), 2015, the notice of retrenchment must furnish, amongst others, the following details: notice pay amount (where applicable), gratuity or compensation, arrear wages, overtime and other allowances, the date of payment of dues.

Besides the notice requirement, clause c of section 20(2) specifically recognises the right to compensation of the retrenched workers. According to the provision, all retrenched workers are entitled to a payment of compensation tantamount to 30 days’ wages for every year of service, or a gratuity amount – whichever is higher, to be paid at the time of retrenchment. The provision forms the substantive core of section 20. Notably, the payment of compensation does not affect the workers’ right to wages. Instead, under section 123(2), the workers will be entitled to receive wages within 30 working days from the date of retrenchment.

One exception to the aforesaid provisions may be found in sub-section (3) of section 20. The section exempts the employer from the requirement to give notice in case of workers laid off for a continued period of 15 days or more after the initial 45 days in a calendar year. Nonetheless, they must be paid an additional 15 days’ wages alongside the aforesaid compensation or gratuity amount.

Furthermore, retrenchment under the BLA follows the ‘last come, first go’ principle. Under section 20(4), when a worker of any particular category is to be retrenched, the employer has to retrench the last person employed in that category. However, an important caveat is that an agreement to the contrary may override the benefit under this sub-section.

On the other hand, section 21 grants the retrenched workers the right to re-employment. Thus, a retrenched worker can claim preferential treatment when the employer intends to employ any worker again within a year from the date of retrenchment. If more than one retrenched worker applies, preference shall be given on a seniority basis.

Notably, law requires that any termination of employment, including retrenchment, must be made in good faith. But in some cases, the employer may fabricate redundancy in order to punish the workers. Thus, a worker may face dismissal in the name of retrenchment. Unlike retrenchment, dismissal attaches stigma or aspersion to the worker. Hence, strict measures are to be taken under section 24 of the BLA (e.g., written complaint, hearing the parties, independent enquiry) before a dismissal is made. To avoid the procedural complexity of dismissal, employers often disguise disciplinary actions or retaliatory measures in the form of retrenchment. In such cases, the worker may challenge the retrenchment as a colourable exercise of power.

Section 33 sets forth the redress mechanism against unlawful retrenchment, lay-off, dismissal, etc. To avail remedy under this section, a retrenched worker has to send a written complaint to the employer within 30 days after being informed of the cause of his retrenchment. Unless the authority accepts the complaint directly and acknowledges its receipt, the complaint must be sent by registered post. After receiving the complaint, the employer is required to make an enquiry into the complaint within 30 days, hear the concerned worker, and communicate its decision in writing.

If the employer fails to give a decision or if the worker is dissatisfied with the decision given, the worker can approach the Labour Court by submitting a complaint in writing within 30 days from the date of the decision of the employer or the date of expiry of the deadline for enquiry. After giving due notice to the parties and hearing their statements, the Court will pass such order as it deems just. In appropriate cases, the Court may declare the termination void ab initio and reinstate the worker to their original post. On the other hand, where the retrenchment is lawful, but the employer failed or refused to pay the wages under section 123(2) or the amount specified under section 20(2), the worker can rightfully claim the same from the Court. The Court may also order payment of additional compensation where it is not possible to reinstate the worker along with all retrenchment benefits, including gratuity.

Finally, it is also important to note that the provisions on retrenchment under the labour law are not free from shortcomings. Bangladesh has not yet ratified the ILO Termination of Employment Convention, 1982 (C158). Acceding to the Convention would entitle workers to further benefits after their termination. For example, severance allowance, benefits from unemployment income or other forms of social security, including old-age benefits. Besides, Article 13 of the Convention requires mandatory consultation with workers’ representatives when the employer contemplates termination for economic, technological, structural or similar reasons.

Currently, section 20(2)(b) requires nothing more than sending a copy of the notice to the CBA, if one exists in that establishment. There is no provision for mandatory consultation with workers’ representatives before any retrenchment decision is made. Unlike the BLA, under the Convention the employer must communicate to the workers’ representatives the relevant information (e.g., the number and category of workers likely to be retrenched) in good time, rather than after making the decision. Particularly, the Convention obliges the employer to consult with the workers’ representatives so that the adverse effects of retrenchment can be averted, minimised or mitigated.

To conclude, it is true that our law provides some protection to workers regarding retrenchment decisions. However, workers can be afforded better protection by ratifying Convention No. 158. Moreover, the law should also mandate early communication of possible retrenchment so that the path of negotiation remains open and adverse effects of retrenchment may be mitigated.     

The writer works as a Law Desk Assistant at Law & Our Rights, The Daily Star.