In light of a high profile judgment in Bangladesh on violation of labour laws including provisions relating to Workers’ Profit Participation Fund (WPPF), the M&C team summarised the WPPF regulations in a nutshell

What is WPPF?

As per the Labour Laws of Bangladesh, the “Participation of workers in the profit of the company” which is more commonly referred to “Workers’ Profit Participation Fund” or “WPPF” is the mandatory contribution by the employers or company to a fund aimed at promoting the welfare and financial participation of workers in the profits of the enterprise. A WPPF scheme essentially shares a designated amount of the profit earned by the company over the period of a financial year equally amongst all its employees. A part of this profit is also contributed towards the development and welfare of the employees within the company and also to government established funds for welfare of employees throughout Bangladesh.

Who is WPPF mandatory for?

The applicability of the WPPF is provided in Section 232 of the Bangladesh Labour Act 2006 or BLA 2006. WPPF applies to companies or establishments which either have a paid-up capital of Taka 1 (One) Crore or permanent assets of Taka 2(Two) Crores on the last day of its accounting year. The Government has the discretion to qualify other companies or establishments for WPPF through gazette notification. For 100% export-oriented sectors or 100% foreign exchange investing sectors, the Government reserves the right to provide separate provisions for constitution and operation of WPPF if deemed necessary.

What are the penalties for non-compliance and do the penalties extend to individuals in charge of the company?

The penalties for non-compliance and the failure by the company or trustee board of the WPPF to make payments of WPPF are prescribed in Section 236 of the BLA 2006. With regards to the penalties and the extension of penalties to the individuals in charge, the law states that the Government has the discretion to order the company to act in accordance to the law and comply accordingly. On failure to follow such order from the Government, under Section- 236 (2) of the BLA 2006, the Government reserves the right to impose fines of up to Taka 1 (One) Lac and Taka 5 (Five) Thousand for every subsequent day of failure on every director, manager or officer of that company who were directly or indirectly responsible for the management of the affairs of the company or, as the case may be, the Chairman, member or a person or persons of the Board of Trustee concerned who were responsible for the management of the affairs of the WPPF Board. Therefore, in summary, the penalties can extend to the individuals in charge of the company or establishment.

Authored by Md. Wazed Jamil, Associate and Co-Lead of Corporate Practice, Mahbub & Company