Workers Profit Participation Fund (WPPF) – Definition and Meaning. The labor law requires a company to pay five percent (5%) of its Net Profit to the Workers Profit Participation Fund, Welfare Fund, and Bangladesh Worker’s Welfare Foundation Fund at the ratio of 80:10:10. The payment must be made no later than nine (9) months of the close of every year.
However, the establishment of such a fund is not mandatory for a company or establishment unless it meets any of the two conditions as specified in section 232 of the Labour Act 2006.
The two conditions are:
- Either the amount of its paid-up capital on the last day of an accounting year is not less than taka 1 (one) crore (i.e. Tk 10 million);
- Or the value of its permanent assets on the last day of an accounting year is not less than taka 2 (crore) (i.e. Tk. 20 million).
Example (Pictorial representation)
Establishment of Participation Fund and Welfare Fund:
|Less: Operating Expenses||200|
|WPPF: 5% of 210 (210/105X5)||10|
|So, as per ratio, Workers Profit Participation Fund, Welfare Fund, and Bangladesh Worker’s Welfare Foundation Fund at the ratio of 80:10:10 Workers Participation Fund: 80% = Tk. 8 Welfare Fund: 10% = Tk. 1 Welfare Foundation 10% = Tk. 1|
|It is mentionable that if Applicable date is: 30.6.15 >>>>> then One Month is required for its >>>> Establishment date : 30.7.15If A/Y-30.6.15 >>>>>>>then Distribution within 9 months >>>>>>>>>>>> 30.3.16|
Workers Profit Participation Fund (WPPF) Laws in Bangladesh
However, in cases of
- hundred percent export-oriented industrial sectors
- or hundred percent foreign exchange investing sectors;
>>>> the requirement of creating workers profit participation fund is relaxed.
According to section 232 (3) of the Bangladesh Labour Act 2006, the Government can make rules for establishing a fund in cases of a hundred percent export-oriented industrial sector or industrial sectors with a hundred percent foreign investment.
Therefore, the companies which fall under the description of Section 232 (3) of the Act are not bound to establish a Workers Profit Participation fund under the Act.
- It is the law that every employee are beneficiaries of the Workers Profit Participation Fund in equal proportion and are eligible to participate in the Fund.
- However, employees who have not completed six (6) months of this their service during a year of account, are not eligible to participate in the Funds in respect of that year.
- Every company where the creation of Workers Profit Participation Fund applies is required to establish a Board of Trustees for the management and administration of such funds.
- Notably, a company is allowed to utilize the participation fund for its business operation.
- However, this is subject to approval from the Board of Trustees.
- It is provided that, in the event of any dispute relating to the administration of the Fund between the Board of Trustees and the company, it must be notified to the Government, and the Government would be the ultimate decision-maker.
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