Legal Framework and Applicability
Statutory Allocation Requirements
Pursuant to Section 234 of the Bangladesh Labour Act 2006, every company to which this chapter applies must, within nine months of the close of its financial year, contribute 5% of its net profit from the preceding year to the following funds in the specified proportions:
| Fund Type | Allocation Ratio | Statutory Reference |
|---|---|---|
| Workers Participation Fund | 80% | Section 234(1)(a) |
| Workers Welfare Fund | 10% | Section 234(1)(b) |
| Bangladesh Workers Welfare Foundation Fund | 10% | Section 234(1)(c) |
Compliance Workflow & Fund Management
Mandatory Compliance Procedures
- Board of Trustees Formation: Under Section 235, a Board of Trustees must be constituted consisting of two representatives from the management and two from the workers, with a Chairman appointed by the management.
- Investment of Fund: As per Section 240, the amounts allocated to the Fund shall be managed by the Board and may be invested in government securities or other approved schemes.
- Eligibility for Benefits: According to Section 243, every worker who has completed at least six months of service is eligible to participate in the fund.
- Penalty for Non-Compliance: Section 236 stipulates that failure to comply with the contribution requirements may result in a penalty of up to one lakh BDT, and for continuous failure, an additional fine of five thousand BDT per day.
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Schedule Legal AuditFrequently Asked Questions
Which companies are legally required to establish a WPPF?
Under Section 232 of the Bangladesh Labour Act 2006, the requirement applies to companies with a paid-up capital of at least BDT 1 crore or fixed assets exceeding BDT 2 crore on the last day of the accounting year.
What is the deadline for transferring the 5% net profit to the WPPF?
Pursuant to Section 234(1) of the Bangladesh Labour Act 2006, the company must transfer the amount within nine months of the close of the relevant financial year.
How is the WPPF distributed among workers?
According to Section 242 and the Schedule to the Act, two-thirds of the Participation Fund is distributed in equal shares in cash, and one-third is utilized for other benefits as determined by the Board of Trustees.
◆ Related Statutory Guides & Practice Insights
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