Labor law compliance means following rules set by the government to protect employees’ rights and ensure safe working conditions. For SMEs, compliance is essential for smooth business operation. Many small businesses face fines, penalties, or even temporary closure because they are unaware of their responsibilities.
This guide explains important steps for compliance in simple language, including employee registration, wages, working hours, leave, safety, and basic benefits. Following these steps helps SMEs maintain a trustworthy and productive workplace.
Step 1: Know Who Labor Laws Apply To
• All employees in your business, whether full-time, part-time, or temporary, are protected under labor laws
• Small factories, workshops, offices, and stores must follow basic labor rules
• Compliance requirements depend on number of workers, type of business, and work environment
Example: Even a shop with 5–10 workers must maintain records of employees and pay minimum wages.
Step 2: Register Employees and Maintain Records
• Maintain records of employee name, address, national ID, wages, and joining date
• For factories or workshops with 10+ workers, registration with the Department of Labor may be required
• Track working hours, overtime, leave, and salary payments
Tip: Using a simple spreadsheet or notebook to track this data helps during inspections or audits.
Example: A small garment workshop keeps a sheet of all employees with joining date, monthly wage, and leave record.
Step 3: Follow Wage Rules
• Pay at least the minimum wage set by the government for your type of business
• Pay wages on time every month
• Provide a simple wage slip if possible, showing basic pay, allowances, and deductions
• Overtime pay applies if employees work beyond normal working hours
Tip: Clear and timely payments increase employee trust and reduce complaints.
Example: A factory worker working extra 10 hours in a month should get overtime payment, otherwise it’s a violation.
Step 4: Set Working Hours and Leave
• Standard working hours: 8 hours/day, 48 hours/week (or as defined by government rules)
• Provide weekly holidays for all employees
• Offer paid leave such as annual leave, sick leave, or maternity leave
• Ensure breaks during working hours, especially in workshops or factories
Example: A small tea stall owner rotates staff weekly and gives a weekly off to each worker.
Step 5: Ensure Workplace Safety
• Provide a safe working environment, free from hazards
• Use protective gear for workers handling machinery, chemicals, or hot equipment (gloves, masks, helmets)
• Keep emergency exits clear and first-aid kits available
• Regularly check fire extinguishers, lights, and ventilation
Example: A small leather workshop provides gloves and masks to employees to prevent accidents and dust-related illnesses.
Step 6: Health and Social Benefits (if applicable)
• Contribute to Employee Welfare Fund or social security if required
• Provide access to clean drinking water, proper toilets, and good lighting
• Ensure employees have access to basic medical care if needed
Tip: Even small investments in health and safety prevent accidents and complaints, creating a productive workforce.
Step 7: Train Staff and Maintain Awareness
• Teach employees about their rights, workplace safety, and responsibilities
• Inform them about emergency procedures and reporting accidents
• Train staff to report hazards, unsafe practices, or harassment
Example: A small factory conducts a 15-minute weekly session on safety rules and fire drill practice.
Current Situation for SMEs
• Many SMEs are hiring more employees as businesses grow
• Lack of awareness of labor laws is a major reason for fines or legal notices
• Proper compliance improves employee trust and productivity
• Workplace safety and proper wages are required for bank loans, investor confidence, and government support programs
Common Challenges for SMEs
• Not maintaining proper employee records
• Paying wages late or below minimum wage
• Ignoring working hours, leave, or overtime rules
• Overlooking workplace safety and protective measures
• Limited knowledge about labor laws and compliance procedures
Helpful Resources
• Department of Labor: https://dol.gov.bd/
• SME Foundation – Legal Support: https://smef.gov.bd/
• Bangladesh Investment Development Authority (BIDA) – HR Guidelines: https://bida.gov.bd
• Local labor consultants or legal advisors
Final Advice for New SME Owners
• Maintain proper records for all employees
• Pay wages on time and follow minimum wage rules
• Respect working hours, leave, and overtime policies
• Ensure workplace safety and provide basic protective gear
• Train yourself and staff about employee rights and responsibilities
• Consult Department of Labor or SME Foundation for guidance
Basic labor law compliance ensures SMEs run smoothly, build a safe and fair workplace, avoid legal penalties, and maintain trust with employees. Following these simple steps helps create a sustainable and professional business.