Partnership Establishment

Publishes by The Daily Star on January 16, 2010 (Link Here)

This week your advocate is Barrister Omar Khan Joy of the Supreme Court of Bangladesh and Head of ‘The Legal Counsel’. His professional interests include commercial law, corporate law, family law, land law, constitutional law, banking law, arbitration and intellectual property laws. Our civil and criminal law experts from reputed law chambers will provide the legal summary advice.

Reader’s query
I work for the Human Resource Department of a reputed company in Bangladesh and have been following your suggestions in the Daily Star for the past few months. In our company, we have employees of various kinds and levels. We have some top level and some mid-level executives whereas we have many entry level employees. Some of our entry-level employees are contractual and many of their contracts are renewed after the expiry, if needed. We do have some part-timers and we also appoint employees through some other agencies to work for us. The system is working pretty efficiently but recently I came to know about some tensions in many other companies with regard to their employee structures etc. We want to take pro-active action in our company and want to do it in the most compliant manner. Please advice.

-Advice seeker

Response
Thanks for seeking my advice. I am glad to know that you have been following my advices for the last few months. I am also delighted that you and your company are keen to be acquiescent with all employment related laws of the country while engaging employees in the company. I really do appreciate your pro-active approach.

Coming to your queries, it is very much prevalent and reasonable that a company will have employees of different kinds and hierarchies. There are basically three sets of governing laws with regard to services. For government employees, government service rules apply. So, this is not a matter of our concern for the moment. The employees, who work for private organizations, are governed by the Bangladesh Labour Act (‘BLA’) -2006 and also by the respective Employment Agreements.

Clarity with regard to a very fundamental but important question can truly resolve lots of problems. The basic question is ‘For which employees does the Labour Act apply?’ Many of us have a misconception that this Act applies only for workers working in industries and factories. But, in fact this is not the case. An employee, who does not have any managerial or administrative capacity is called a ‘Worker’ and consequently falls within the purview of the BLA 2006. Therefore, it is very likely that most of your entry-level employees will be governed by the BLA. However, please note that it is not the designation rather the job responsibility, which is decisive for finding whether someone is a ‘Worker’ or not. Now, for the employees, who fall with the ambit of the BLA will enjoy the rights and benefits conferred by the BLA and the employer will be bound to ensure the same.

So far as your anxiety with regard to the outsourced employees is concerned, please be assured that it is flawlessly legal to make use of workers indirectly, i.e. through a third party. This is now widely known as ‘outsourcing’ and is practiced globally. In such a case, the third party is the employer of such employees and has to abide by all the duties under the BLA. If the said contacting party fails to ensure the same, your company will remain liable. So far as the outsourcing part of your company is concerned, you are strongly advised to put sufficient clauses in the agreement with the contracting party so that they abide by the provisions of the BLA and they indemnify you in case you are held liable for their breaches of BLA. You are also encouraged to have regular inspection and follow up.

Moving to the issue of contractual workers, please note that the BLA does not use the term ‘contractual’ worker, though such terminology seems to have been well practiced in the job-market. The terminology that has been used in the BLA is ‘temporary’ worker. A worker may be employed as a temporary employee for doing any job, which is temporary in nature, i.e. a project work. However, if someone is employed as a temporary worker but his role is actually permanent in nature, then after 6 months of his employment, he will automatically become a permanent employee by operation of law and will be eligible for all rights and benefits like a permanent worker.

So far as the ‘part-timers’ are concerned, I have to advise you to your surprise that BLA does not recognize part-time employment and hence strictly speaking such employment will be a violation of the BLA. Despite being a recent enactment, BLA has failed to accommodate the need to have part time employment of workers. The government has, however, started working on the amendment of the BLA and some proposals have already been made to incorporate and recognize part-time employment of worker. In this point, let’s hope for the best.

Having said the same, it is very important to note that in your company those have administrative or managerial capacity will not fall within the definition of ‘worker’ and hence will not be governed by the provisions of the BLA. For such kind of employees the only governing law is the ’employment agreement’ coupled with any internal laws of the company. This agreement will determine the rights and obligations of the employer and the employee. While entering into agreement with the prospective employees, the employer is always in a higher bargaining position and does not allow any room for the prospective employee to bargain with the terms of his employment. To become an attractive, fair and reasonable employer, the company should not try to abuse its high bargaining capacity.

I hope and believe that the aforesaid opinion and discussion on law will help you and your company to act in a compliant way. Being a reputed corporate body it is not only your duty to be compliant to law; this is also your responsibility towards the nation as a whole. Good Luck!

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