Your Advocate

Query

I have been in the financial sector for a long time. As a banker, am I eligible for Workers Profit Participatory Fund (WPPF)? The points that I ponder as follows:

If Banks are not exempted from the Labor Act 2006 and its subsequent amendments and everyone [except mentioned in the amended regulation] is eligible, then why private and foreign banks have not declared WPPF? What can be the implication on banks if not declared? Since the claim is passed through Law and amended further to clarify, are banks in breach, in view of legal and ethical grounds?

Response

Thank you very much for your query. As far as banking companies are concerned, it is indeed a debatable area with regards to which we, as legal practitioners, are waiting for a judicial clarification just as many of you are.

In my opinion the laws are, however, quite clear. According to Section 232(1) of the Bangladesh Labour Act, 2006 (as amended till 2013 and hereinafter referred to as 'the BLA'), Workers' Participation in the Company's Profits (hereinafter referred to as 'WPPF') shall be formed by every “company or establishment which fulfils any of the following conditions:

- the paid up capital of the establishment 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.” [Quoted from the BLA]

This section is basically the amended version, brought about in the 2013 Amendment to the BLA. Prior to the 2013 Amendment, this section used to stipulate that WPPF shall be formed by “all establishments which are engaged in industrial undertaking which fulfil any of the following conditions…” [Quoted from the BLA; underline added] As you would see, the underlined phrases were omitted in the 2013 Amendment. As a result, under the BLA, as it stands at present, a company need not be an 'industrial undertaking'; it only needs to fulfil either of the two aforesaid conditions to be obligated to form a WPPF.

What seems perplexing at times is that, although the term 'industrial undertaking' was omitted from Section 232 (which deals with the applicability of WPPF) its definition contained in section 233(1)(g) was nonetheless amended. The term 'industrial undertaking' also does not appear elsewhere throughout the BLA. It is humbly submitted that such is an error in the law. What stands it that, irrespective of a company's status of industrial undertaking, WPPF becomes mandatory only if the company fulfils either of the conditions given in section 232(1). Even if a bank would still want to rely on falling within the scope of 'industrial undertaking' to question whether WPPF is obligatory on it, it can be safely said that in the 2013 Amendment the said term was amended to unequivocally include 'banks' into its ambit. As such, banks are clearly industrial undertakings.

Having said the above, insofar as the BLA is concerned, banks must establish and maintain WPPF and whosoever falls within the meaning of 'beneficiary' shall be entitled to the bank's profit in the proportion and manner as encompassed in the BLA. However, this conflicts with section 11 of the Banking Companies Act, 1991 (as amended till 2013 and hereinafter referred to as 'the 1991 Act'). Section 11 of the 1991 Act prohibits banking company from employing or continuing the employment of “any person whose remuneration or part of whose remuneration takes the form of commission or of a share in the profit of the company”. This, in essence, may mean that a banking company cannot form WPPF. 

This conflict led to a series of discussions and debates amongst the banking companies and its employees and entailed communications from banking companies seeking clarifications from different government offices. Considering the differences in views, opinions and decisions, the banking companies began the practice of not forming WPPF. Amongst many, one of the prime contentions in support of this practice is that, the 1991 Act is a special law while the BLA is a general law. As such, special law shall have prevalence over the general law and, therefore, banking companies need not form WPPF.

However, I am of a different view. Firstly, there is an aspect of law known as implied repeal. The 1991 Act, being an older legislation than the BLA (enacted in 2006) may have impliedly repealed this provision contained in section 11 of the 1991 Act. This is further reaffirmed by the fact that when the 2013 Amendment was brought, the term 'industrial undertaking' was amended to specifically include 'banks'. The most recent law takes precedence over the old ones by virtue of the rule of implied repeal. Furthermore, the fact that it is a widely accepted practice and that questions have been raised to the government offices, does not override the applicability of a piece of legislation by default. To stop or stay the application of a provision of legislation, one has to seek orders from the proper forum: the High Court Division. Until and unless such an order clarifying, limiting or staying the applicability of provisions of the BLA in relation to WPPF is passed, the legislation should continue to apply.

Therefore, my view is that banks are under an obligation to form WPPF as per the BLA.

For detailed query contact: omar@legalcounselbd.com.