Establishment requirements
Companies in Bangladesh must establish a Workers Profit Participation Fund (WPPF) under the Labour Law 2006 (section 232). The law mandates that organisations contribute five percent (5%) of net profit to the WPPF, Welfare Fund and Bangladesh Workers' Welfare Foundation Fund in a ratio of 80:10:10. This payment must be completed no later than nine months after the close of each year.
However, establishment is only mandatory if a company meets one of two conditions: either paid-up capital on the accounting year's final day equals at least 1 crore taka (10 million taka), or the value of permanent assets reaches at least 2 crore taka (20 million taka).
Exemptions and special cases
The requirement to create a Workers Profit Participation Fund is relaxed for hundred-percent export-oriented industrial sectors or those with hundred-percent foreign investment. Section 232(3) of the Labour Act 2006 allows the government to establish rules for such cases, exempting these companies from the obligation.
Fund management and governance
All employees are equal beneficiaries and may participate proportionally in the fund. Employees must complete six months of service during an accounting year to participate that year. Each company must establish a Board of Trustees to manage and administer the fund. Companies may utilise participation funds for business operations only with the approval of the trustee board.
Disputes between the Board of Trustees and the company regarding fund administration require government notification, with the government serving as the final decision-maker.
Annual audit requirements
Section 248 of the Labour Act 2006 mandates yearly audits of workers' participation funds. The audit process verifies the accuracy and completeness of financial records while ensuring compliance with regulations and accepted accounting standards.
These audits serve both employers and employees by maintaining transparency, detecting errors, preventing fraud and ensuring proper fund administration.