Analysis: Current and Pending Labour Legislation of Bangladesh

or
A review of current Labour Act, 2006, its amendments, and private sector
accords with analyses outlining the implications for workers rights and
improved working conditions for workers in the RMG sector.

Name of Consultant: A. K. M. Nasim, Sr. Counselor, The Solidarity Center.

Date: June 12, 2013.
The labor legislation of Bangladesh mainly deal with the workers employed in the formal
sectors. A vast majority of the workers employed in informal sector remain outside of the ambit
of the labour laws of the country. Up until 2006, there were more or less thirty separate laws
which related to labour issues in the country. To simply the labour laws and make a
comprehensive single labour code, the Government formed a commission namely the Labour
Law Commission, 1992 with members from employers and workers, as well as Government
representatives and legal experts. Based on the report submitted by the commission on 31st
March, 1994 and followed by long discussions with the Employers and Workers, GOB passed
the LABOUR ACT, 2006 on the 11th October, 2006 repealing the existing 25 laws of the
country.
This Bangladesh Labour Act, 2006 deals with the employment of labour, relations between
workers and employers, determination of minimum wages, payment of wages and
compensation for injuries to workers, formation of trade unions, raising and settlement of
industrial disputes, health, safety, welfare and working conditions of workers, and
apprenticeship and matters ancillary thereto.
Although, the Act was passed in 2006, no rules under this law have yet been made, the
consequence of which the proper implementation of the law is being hampered. The rules made
under the previous repealed laws although remain in force, but those are considered insufficient
for the proper implementation of the BLA, 2006.
In 2009, the Government of Bangladesh initiated a process to amend the Bangladesh Labour
Act, 2006 following the demands mainly from the labour unions to make it consistent in the line
of the ILO Conventions, which are ratified by Bangladesh. The labour unions particularly
demanded that workers must be allowed to exercise their rights to organize themselves and
collectively bargain in the line of the ILO Conventions 87 and 98.
The filing of the GSP petition of the American Federation of Labor and Congress of Industrial
Organizations (AFL-CIO) alleging violation of domestic labour laws and internationally
recognized labour standard in readymade garments industry before the USTR to withdraw the
GSP benefits as well as the possible establishment of Better Work Program in Bangladesh by
International Labour Organization have added the urgency on the Government for quick
passage of labour law amendment. Following a series of deadly industrial accidents, the
Government of Bangladesh has been left with no choice but to move towards passing of the
amendment in a faster pace.

Amendment in Bangladesh Labour Act, 2006:

A proposal of the Ministry of Labour and Employment to amend the BLA was approved by the
Cabinet on 13 May 2013, which is now in the parliament for final enactment. It is expected that

amendment shall be passed in the budget session of parliament in the last week of June 2013.
According to the GOB, the amendment proposal of the BLA 2006 will ensure workers welfare,
rights and safety; industrial safety and expansion of the industry; transparency in Trade Union
registration and wage payment system; and promoting trade unionism and collective
bargaining. The amendment will make the BLA, 2006 more in conformity with the international
labour standards. It is the hope of the Government that this amended law will improve the
working conditions at enterprise level through social dialogue and better understanding among
the workers and employers.
Under the amendment proposal, 76 articles (out of 354 articles of the BLA, 2006) are to be
amended and 7 new articles are to be included. Some of the key features of amendments are:
(1)
Employment through Outsourcing Company: What's more, the series of deadly
industrial accidents have also left the Government of Bangladesh with no choice but to move
towards passing the amendments in a faster pace.
(2)
Bar in engaging temporary worker in permanent work: An establishment shall not
be entitled to employ any temporary (i.e. casual or daily basis or contractual worker) in any
permanent work and shall not be able to contract out any work to any other establishment or
person if such work is essentially permanent in nature for that establishment.
(3)
Gratuity to Workers: All workers who have been working up to 12 years in a factory
will received 30 days' basic salary as gratuity for each completed year. The gratuity money will
be increased to 45 days' basic salary for those workers who have been working for more than
12 years in a factory.
(4) Formation of Trade Unions: On the registration process, the amendment will removed
the requirement of the Director of Labour, on receipt of the registration application, to send a
copy thereof along with the list of officers of the union to the employer concerned for
information. This was a longstanding demand of the unions.
(5)
Participation Committee: The workers representatives in the participation committee
shall be elected by the by the workers. In the absence of trade union in an establishment,
workers representatives in the participation committee of an establishment shall act as CBA, till
a trade union is formed in that establishment.
(6)
Welfare Board and Welfare Fund: RMG sector will be exempted from the application
of Chapter XV of the Act. As a result the RMG employers are no longer required to distribute
5% of the profits to the workers of their establishments. In place of profit sharing, a new
provision for creating of a welfare fund for the workers has been incorporated in the proposed
amendment.
(7)
Workers' Safety: The factory owners will ensure safety of the workers by providing all
personal protection equipments. They will have to ensure secured power system, ensure that
the exit paths are unlocked and the staircases/paths in the factories are kept open during the
working hours to meet any emergency. A new provision for keeping consistency between the
structural design of the building and factory lay-out has also been included in the amendment.
It will be mandatory for every factory to keep its workers abreast of work risk(s) with a view to
securing occupation health and safety of the workers.
(8)
Safety Committees: Safety Committees will have to be formed in the factories having
more than 50 workers. The security staff employed in the establishment must be provided
training on fire safety. (subject to framing of rules)
(9)
Group insurance: Group insurance will have to be made in those factories where a
minimum 100 workers have been working. The factory will ensure that insurance money are
paid within 90 days of the claiming of the money.

(10) Health Centre(s)/Clinic: The owners will have to setup a permanent Health
Centre(s)/Clinic to ensure the health of workers at the factory where 5,000 or more workers
are employed.

Impact of the proposed Amendment on the RMG sector.

The new amendments may have considered a positive step towards making the labour law
evenhanded and well-timed but in reality the implementation of some of the provisions still
remain reliant to the succeeding framing of rules by the government. It is disappointing to note
no rules under the BLA have yet been framed even with the passage of an inordinately
lengthen period of seven years of enactment of the BLA.
The amendments have still been unsuccessful to meet the terms with the most basic standards
set out by the ILO, particularly as regards a basic issue like the workers right to form union in
the establishment. The registration of the union will yet remain at the mercy of the Department
of Labour (the DL). The proposed amendment will not lessen the DLs enormous discretionary
powers while according registrations to the unions. So, the DL still has the scope of being
guided by his whims and caprices in disposing of the application for registration of unions.
The proposal of increasing gratuity in the amendment will curve no niche in improving the lot
of workers. Without effecting corresponding modifications in other relevant sections of the law,
the amendment will earn no benefit to the workers rather be rendered nearly of no use. It is
either an unhappy drafting or not well-thought-out or might be a deliberate attempt to mislead
the workers.
A close scrutiny will also reveal that in many important areas, the employers are being given
undue benefits over the interests of workers. The amendment to the law would rather take
away some of the workers rights which had even existed in the 2006 law. Some of the
examples are(a) Currently, a worker who is dismissed for misconduct is entitled to compensation (@ 14 days
wages for every completed year of service. A worker, however, shall not be entitled to any
compensation if he is dismissed for committing theft, fraud or dishonesty in connection with the
employers business or property. Now GOB proposes that a worker shall also not be entitled to
any compensation if he is dismissed for misconduct for riotous or disorderly behavior in the
establishment or for arson, vandalism or for preventing others to work. The concern is that the
employer will now have the wider opportunities to deprive the workers of their end service
benefits saying that the misconduct is of disorderly behavior.
(b) Presently, the BLA requires RMG company to establish a Workers Participation Fund and a
Workers Welfare Fund and pay every to the Participation Fund, and the Welfare Fund five
percent of its net profits with the workers. In fact, this has been in prevalence since 1968 and
continued under the erstwhile the Companies Profits (Workers Participation) Act, 1968.
The RMG employers have been refusing to comply with these provisions while the unions were
demanding implementation of this law. Brands/Buyers also have started demanding
implementation of this law. Instead of implementation, GOB is now proposing to exempt the
RMG from its application.
(c) This amendment is eliminating the existing scope of the union leaders to represent
workers in conducting their cases in the Labor Courts. This will force the workers to be
exclusively dependent on the professional lawyers, who are usually very expensive.

Bangladesh Fire and Building Safety Accord

After the Rana Plaza collapse Bangladesh Fire and Building Safety Accord, more commonly

called the Geneva Accord or the EU Accord, has been put together. In fact, planning for this
accord had started some time ago, initially as a GIZ plan; the work was then expedited
following the Tazreen factory fire. Clearly, the horrific Rana Plaza collapse expatiated the
process further with many major international companies, alongside IndustriALL Global Union
and UNI Global Union, agreeing to work together to implement the accord as quickly as
possible.
Since last April 24, approximately 40 global fashion companies that work with suppliers in
Bangladesh have signed on this the Accord. Some of the leading global brands and retailers are
PVH (worlds largest shirt-seller), H&M (largest global buyer from Bangladesh), Tesco (thirdlargest retailer in the world), Inditex (worlds largest fashion retailer, owner of Zara and many
other brands), and several others. However, brands like, Walmart and Gap, refusing to sign,
announced that they would develop their own nonbinding safety code.
This Accord requires signatory companies to take certain steps to implement and maintain
safety standards within their Bangladeshi suppliers workplaces. The Agreement, in substance,
commits signatory brands and retailers to three things: (1) participating in the governance and
development of an effective fire and building safety program; (2) funding the administration
and operation of the programs inspection, reporting and training elements; and (3) requiring
their supplier factories remediation of safety hazards identified through the programs
inspections and financing this remediation to the extent that contract suppliers lack the
financial means.
Each signatory company shall contribute funding for these activities in proportion to the annual
volume of each companys garment production in Bangladesh subject to a maximum
contribution of $500,000 per year for each year of the term of this Agreement.
The agreement establishes a permanent bilateral Steering Committee to monitor
implementation of the agreement. The representatives on the Steering Committee are
appointed in equal numbers by, on one hand, the signatory companies, and, on the other hand,
the global unions who signed the agreement. The committee will be chaired by a person
nominated by the International Labour Organization.
However, the Bangladesh Accord is still in its formative stages. The signatories have agreed to
develop and agree an Implementation Plan within 45 days of signing this Agreement. It is also
yet to be worked out how local unions and government of Bangladesh shall be involved in the
implementation process
It is hoped that this Accord will contribute to creating safe working conditions in the garment
industries in Bangladesh. But at the same time this Accord is full-size, wide and a complex one.
The Accord runs the risk of becoming a victim of its own success.
Conclusion: The proposed amendments lack compliance the basic standards set out by ILO
particularly when it relates to main issue of workers right to union. The proposed amendment
wants to ensure smooth formation of the trade unions in the sector, which may contribute in
reducing the discrepancy between the growth of the garment sector and compliance issues. But
the issue of registration should be liberalized and got it freed from any trickery. The sector
improves but the life style of the workers does not. To reduce the incidents of workers unrest in
the factories, the adjustments of their salaries in view of the inflation of every year is also
needed, but unfortunately which we will continue to miss this in our labour law. The new
amendment will again not provide any protection to the worker from being stripped off the right
of becoming member of a trade union of a factory in the event he loses the job.
Workers in garment sectors are still some of the lower wage earners in the world, living and
working in deplorable conditions in the face of unapologetic exploitation. Unless concrete steps
are taken to safeguard the security of the workers, both in terms of physical and livelihood, the

whole RMG sectors future will remain at stake. Bangladesh Fire and Building Safety Accord is a
noble initiative on the part of the buyers and global unions. But it remains to be seen how
effectively this external initiative is integrated locally.
Importantly, strict and timely monitoring of the compliance including factory inspection shall
have to be ensured and a new provision of stringent punishment for the delinquent officials,
which is presently missing in BLA, has to be added to the law. At last not least, the proposed
amendment needs to be intensely discussed as an attempt to have the amendments flawed
free and pragmatic for betterment of all concerned.