Your Advocate

Query
I am working for last three years as a senior HR Manager in a renowned multinational company in Bangladesh, which is operating in here for many years.  I am faced with demand from my colleagues to establish a scheme whereby they can participate in the company's profit (Worker's Participation in Company's Profit- WPCP). While I am aware of such issues, I am not sure as to the specific law or the mechanism. I have talked with my peers within and outside our industry but I am receiving contradictory and vague replies. I would be grateful if you may advice.

Response
Thank you very much for your query. I am glad to hear that you have requested for an opinion on such a very important contemporary issue. Many of your peers are actually ignoring the laws or are simply giving misinterpretation of the law. While I will attempt to provide you with the basic understanding on the law in my reply, please note that it is not a simple mechanism, which can purely be solved/established by a newspaper reply. One needs to look into loads of issues before the entire set up can be recommended. I hope that the following summary will help you to have the preliminary understanding.  

Chapter XV of the Bangladesh Labour Act (BLA) deals with Workers' Participation in the Company's Profits ('WPCP'). Prior to 2013 amendments of the BLA, Chapter XV of the BLA 2006 was applicable only to those establishments, which were companies engaged in Industrial Undertaking and which also satisfied of the three conditions given in S. 232 (1) of BLA 2006.  The term 'Industrial Undertaking' was defined in S. 233(1)(g) of BLA 2006. So up until the amendment in 2013, the companies need to see whether it was un industrial undertaking along with whether it satisfied one of the three criterion set in s. 233(1). If answers to both were positive, the company was bound to abide by the provisions.
The recent changes brought about by the amendment, to some extent, simplified the situation. Section 232, Chapter XV of the BLA 2006 as amended by the Bangladesh Labour (Amendment) Act (BL(A)A) 2013 is applicable to all establishments or companies, subject to the fact that it qualifies one of the criteria provided in the section, namely: -
*    the paid up capital of the establishment or company is one crore taka or more at the end of the accounting year;  or
* the value of the fixed assets at cost on the last day of the accounting year is not less than two crore taka or more.
Nevertheless, the amendment itself is not free from vice. S 232 of BLA 2006, which deals with the 'Application of the Chapter' (WPCP), has been repealed and replaced whereby the section no longer contains the term 'Industrial Undertaking'. On the contrary, S. 233 as amended by BL(A)A 2013, providing the 'Special Definitions', has not omitted the definition of 'Industrial Undertaking'. Rather the 2013 amendment added to the list of establishments falling under the definition of 'Industrial Undertaking'. This has created confusion, since the applicability section does not contain a term which is defined in details in the definition section.  It is, therefore, humbly submitted that the term Industrial Undertaking does not have any application.  So, if your organization satisfied any of the above two criteria, which I believe it does, it has to abide by the provisions of the chapter. Nevertheless, the ambit of the definition of Industrial Undertaking is quite large now and you may still see whether your company falls within any of them to be more comfortable regarding the applicability.
Accordingly, if your company satisfies the above, it is obliged to create two funds and pay 5% of the 'Net Profits' of the company accrued in the previous year to the  aforesaid two funds along with another fund created under Bangladesh Labour Welfare Foundation Law 2006 in the proportion of 80:10:10 respectively to the Participation Fund, Welfare Fund, and Workers' Welfare Foundation Fund as established by the government under section 14 of the Bangladesh Labour Welfare Foundation Law 2006 within nine months from the closure of every year.
As per Section 233(1) (i) as added by the BL(A)A 2013 the term 'Beneficiary' has been defined as: “any person including a probationer, who has been serving the company for at least nine-months, other than Owner or partner or any member of the governing board”  The term 'Owner' as stated above is defined in section 233(1) (EE) (as inserted by section 64(a) of the 2013 Act) in the following manner: “Owner means owner of a company or establishment or management authority or the Chief Executive or any other person substituting thereof. Any person, who falls within the definition of Beneficiary, will benefit out of the said two funds.
The funds are to be administered by a board of trustee and the funds will have to be utilised, used and administered in the manner directed in the BLA. I hope that the above shall help you to ascertain the legal position.

For detailed query contact: omar@legalcounselbd.com.