Gratuity valuation in Bangladesh turns Labour Act rules into an IAS 19 liability in taka, with the report signed by an FSA actuary.
Gratuity valuation in Bangladesh is the actuarial measurement of what an employer will pay staff when they leave, under the Labour Act 2006 or the company’s own service rules, discounted to the balance sheet date under IAS 19. Prima Consulting produces the measurement, the assumptions memo and the draft notes in taka, ready for your auditor to test.
A Labour Act calculation tells you what one employee would receive if they left today. An IAS 19 valuation estimates what the whole workforce will cost over the years ahead, discounted to the reporting date. The two figures differ, and the financial statements need the second.
Bangladesh’s Financial Reporting Council adopted IFRS Accounting Standards in November 2020, according to the IFRS Foundation profile for Bangladesh. Public interest entities such as banks, listed companies and insurers must apply them, and banks, financial institutions and insurers follow their own regulators’ rules on top. Some non-listed entities may use the IFRS for SMEs Standard, so confirm which framework your accounts follow first.
Then the auditor asks for independent support, the taka reporting date stays fixed, and the payroll workbook no longer counts as evidence. Our plain-English summary of IAS 19 explains the standard before you commission any work.
A gratuity valuation in Bangladesh starts with section 2(10) of the Labour Act 2006 definition of gratuity, which sets the payment at no less than 30 days’ wages, at the last rate received, for each completed year of service or period above six months. Once service passes ten years the figure rises to 45 days’ wages. That rule supplies the benefit formula, so it is an input to the model, not the answer.
IAS 19 adds what a payroll formula leaves out. Paragraph 67 prescribes projected unit credit, and our step-by-step projected unit credit workings show how it runs. The model projects salary increases, withdrawals and mortality to every possible exit date and discounts each payment. Changes in the obligation then land in profit or loss and in other comprehensive income.
Exit routes pay different amounts, so each needs its own treatment. Employer termination pays 30 days’ wages per completed year or the gratuity if higher (section 26(4)), resignation follows the 2026 tiers, and normal retirement falls at 60 (section 28(1)). Where the Labour Act applies, a company’s own service rules can pay more.
Clean data is the only slow part.
What your team needs: an independent, credentialed valuation finished before audit fieldwork closes.
How Prima helps: a defined-scope assignment that ends on an agreed date, handled by an FSA actuary who answers auditor questions directly.
What your team needs: an actuarial liability in place of an undiscounted payroll figure.
How Prima helps: we rebuild the provision as a projected, discounted measurement and bridge it to the amount now in your ledger.
What your team needs: exit rules mapped by employee group and by exit route.
How Prima helps: we read contracts and service rules, then build sections 26, 27 and 28 of the Labour Act into the gratuity valuation in Bangladesh for each group.
What your team needs: a rate derivation that holds up when the auditor pushes back.
How Prima helps: the memo documents how a taka discount rate gets derived, using corporate bond yields or government bond yields, whichever the market data supports.
What your team needs: a clean line between the contribution plan and the benefit plan.
How Prima helps: each plan is tested against IAS 19 and costed on its own basis, so only the gratuity goes through the actuarial model.
What your team needs: a quick, supportable measure of the target's gratuity obligation to its workforce.
How Prima helps: deal-scope valuations feed purchase accounting, followed by advice on merging benefit schemes after an acquisition.
Track A: Full Gratuity Valuation
| Deliverable | Effect on Your Reporting |
|---|---|
| Defined benefit obligation at the reporting date | The liability follows IAS 19 measurement, so your auditor has a figure to test. |
| Assumption memo and sensitivity tables | Every key assumption, from the discount rate to mortality, gets stress testing and a written source, which shortens query rounds. |
| Financial statement note drafts | Reconciliation, remeasurement and sensitivity wording arrives ready for your close file. |
| Software-run computation | Prima's IAS 19 calculation platform runs and cross-checks the numbers, which cuts manual error. |
| Signed report with auditor access | An FSA actuary signs off the report and fields your auditor's questions personally. |
Track B: Review of Existing Valuations and Audit Backing
| Deliverable | Effect on Your Reporting |
|---|---|
| Outside opinion on a valuation you already hold | A second credentialed opinion lands with you ahead of the audit team's review. |
| Line-by-line gap check | We test your booked provision against IAS 19 and the Labour Act, then rank the fixes. |
| Fieldwork query support | Ready documents and first-hand actuary answers keep fieldwork moving. |
| Turnover and pay studies | Your own leaver and salary history shapes next year's assumptions, so they rest on evidence. |
| Step 1: Scoping Call and Quote |
A single call settles which entities, plans and year-end are in scope. | OUTPUT: Engagement letter confirming scope and dates. |
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| Step 2: Census Handover |
You send the census in our template, and completeness tests run on arrival. | OUTPUT: Clean data file with an exceptions list. |
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| Step 3: Basis Selection |
We set the discount rate, wage growth, withdrawals and mortality that fit your workforce. | OUTPUT: A memo that records every assumption with its source and the range tested. |
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| Step 4: Valuation Run and Review Copy |
The model runs, a second actuary reviews it, and a draft reaches you. | OUTPUT: Draft report and note wording for your comments. |
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| Step 5: Signed Report and Audit Backing |
Your comments go in, we finalise the file, and we stay on call for auditor questions. | OUTPUT: Signed report, notes pack and audit query responses. |
Regulated entities where auditors and supervisors both read the benefit notes.
Large permanent workforces with long service histories, where leaver assumptions move the liability.
Long-serving staff whose retirement promises build a large liability.
Gratuity valuations run beside your wider actuarial reporting by a team that already works on insurance liabilities.
Fast hiring and frequent role changes, so pay-growth assumptions need care.
Mixed factory, laboratory and sales staff on different pay scales, which one assumption set would misstate.
Big crews and frequent exits, so the leaver rate drives the result.
Seasonal and rota-based hiring in volume, so the quality of the census sets the accuracy of the result.
A gratuity figure with no actuarial support seldom stays hidden. At the next audit it turns into an adjustment, a restatement or a modified opinion that lenders and boards will read. Review the valuation errors that auditors flag most often before your next close.
Cash is the other exposure. Section 30 of the Labour Act requires an employer to pay all dues within 30 working days after service ends, so a heavy retirement or restructuring year can drain money nobody modelled. The valuation’s projected payout schedule gives finance a figure to plan against.
Our cross-border IAS 19 service shows the alternative: a signed actuarial report on file before fieldwork begins. Booking early also leaves room to talk assumptions through with your auditor.
Tell us which entities and gratuity plans you run, including terms above the statutory minimum. A scoped quote for your gratuity valuation in Bangladesh follows, with a firm timetable, normally inside one business day.
Section 2(10) sets gratuity at no less than 30 days' wages at the last rate for each completed year of service or period above six months, and 45 days' wages once service exceeds ten years. Termination by the employer under section 26(4) pays 30 days' wages per year or the gratuity, whichever is higher. IAS 19 then measures the expected future cost of these payments, not today's payout.
No. The Act fixes a payment for one exit date, while IAS 19 requires a projected and discounted measurement built on actuarial assumptions. A provision that simply equals the statutory payout invites a question from the auditor.
The Bangladesh Labour (Amendment) Act 2026 replaced section 27(4) on resignation compensation. A resigning permanent worker now receives 7 days' wages per completed year up to three years of service, 15 days' for more than three and under ten years, and 30 days' or the gratuity, whichever is higher, from ten years. The valuation carries these tiers into the leaver assumptions.
Entities that report under IFRS Accounting Standards as adopted by the Financial Reporting Council apply IAS 19. That includes public interest entities such as banks, listed companies and insurers. Some entities may use the IFRS for SMEs Standard instead, and the materiality of the liability determines if a full valuation is required.
No, they are separate plans. Under section 264 on provident funds, an employer with at least 100 permanent workers must set up a fund if two-thirds of them ask in writing, and is exempt if it enrols interested staff in the Pragati universal pension scheme. Contributions to a fixed-contribution plan are expensed when due, while the gratuity still needs its own actuarial valuation.
Section 30 requires all dues within 30 working days of the break in service, whatever the reason: retirement, discharge, retrenchment, dismissal or termination. The projected payout schedule in the valuation shows finance when that cash is likely to be needed.
Section 28(1) sets normal retirement at 60. Each employee is projected to age 60 as one exit route, and to earlier resignation or termination dates as others. A wrong retirement age moves every payout date and the obligation with it.
IAS 19 paragraph 83 anchors the rate to year-end yields on corporate bonds of high credit quality, or on government bonds when no deep corporate market exists. The rate has to reflect the currency and duration of the obligation, which here means taka. The actuary documents the source and attaches sensitivity tables.
Each covered employee's date of birth, joining date, wage components, category and any company gratuity terms. We provide a template and check the file when it arrives. Most of it sits in payroll records.
A single entity takes about two to three weeks once the census is complete. Groups run to the timetable agreed up front, and a close audit deadline can often be met with Prima's software.
Yes. We apply one method and one report format to every entity, then add a group-level summary. The group auditor gets a single methodology document and consistent assumptions.
An auditor who helps build an estimate has to test it later, a self-review threat. An independent valuation hands the auditors a number to examine without that conflict.
A gratuity provision nobody can support gets more expensive each year it remains in the ledger. Prima Consulting prepares IAS 19 gratuity valuations in taka for single entities and groups, and Prima's wider actuarial team covers other benefit plans in the same file.
A free 30-minute call with no commitment, and scope confirmed in writing first. Ask us for the census checklist.
Share your company details, gratuity terms and reporting dates in the form, and we will come back with a proposed plan.
We find a call slot that fits your diary
We meet to understand your entities and benefits
We send you a proposal
