Wppf
7 likes11,078 views
This document outlines the key details of a Worker's Profit Participation Fund scheme in Pakistan. It defines important terms, establishes requirements for companies to contribute 5% of annual profits to the fund. A board of trustees manages the fund investments and distributions. All permanent workers are eligible for annual distributions based on their salary tiers. Upon leaving employment or retirement, workers receive their full share of accumulated assets in the fund.
Wppf
- 1. WORKER’S PROFIT PARTICIPATION FUND BY SYED MUHAMMAD IJAZ, FCA, LL.B M Yousaf Adil Saleem & Co. a member firm of Deloitte Touché Tohmatsu
- 2. Definitions Company; Means a company as defined under Companies Ordinance 1984 And Includes A body Corporate established by or under any law for the time being inforce; Any institution, organization or association whether incorporated or not, declared by Federal Government in the Official Gazette to be a company for the purposes of this Act; Profits As defined u/s 87C of companies Act-Since companies Act is not more there and in 1984’s Ordinance Net profits are not defined there this definition is redundant Worker Employee of the company including through contractor as defined under clause xxx of section 2 of the Industrial relations Ordinance, 2002
- 3. The charging provision-Section 3 Company to which scheme applies shall has to establish fund u/s 3 as soon as the accounts of the year in which the scheme become applicable are finalized but not later than 9 months from the close of the year Pay to fund subject to adjustment Not later than 9 months of close of the year 5% of its profits Furnish audited accounts to Federal Government and the Board
- 4. Management of Fund-Section 4 Board of trustee-establish within 2 months of establishment of fund Two persons elected by workers amongst themselves Two being nominated by the company one of whom shall be from accounts branch of the company Trustees shall elect for one year a person to be the chairman-alternatively amongst the trustees Procedures of the Board are defined u/s/s 3 to 11
- 5. Penalty-Section 5 Federal Govt. on default of the company can charge Rs. 5000 and Rs. 1000 for each day of default if the default continues Penalty if not paid is recoverable like a land revenue On application within a period of 6months from the date of order Federal Govt. can review the order If any defaulting employer complies strictly to the scheme and provisions so far as they are applicable then notwithstanding any thing contained in this act or scheme, penalty cannot be charged neither the company is liable to pay interest as provided in the scheme
- 6. Powers with the Federal Govt To call for information Settlement of disputes Delegation of powers Power to make rules Act to override other laws
- 7. The scheme This scheme shall apply to all companies engaged in industrial undertakings which satisfy any one of the following condition, and to such other companies as the Federal Govt. may, by notifications in the official gazette, specify in this behalf, namely:- The number of workers employed by the company at any time during a year is 50 or more The paid up capital of the company as on the last day of its accounting year is Rs. 5 m (Rs 2 M before 2006’s change) or more The value of fixed assets of the company at cost as on the last day of the accounting year is Rs. 20m (Rs. 4m before the change ) or more
- 8. Industrial undertaking means an institution, organization, enterprises or establishment which involves the use of electrical, mechanical, thermal, nuclear or any other form of energy transmitted mechanically and not generated by human or animal agency and which is engaged in any one or more of the following operations; i. …. ii. …. iii. The transformers, generation, conversion, transmission or distribution or electrical energy, including hydraulic power; and iv. ….. v.
- 9. Legal preposition Reading application of scheme with definition of industrial undertaking Remember any one condition has to met They are generating energy-The definition Have more than 5 m paid up cap-Condition Have more than 20 m cost of assets-Condition Even if workers clause is not met above 2 will be met in most cases
- 10. Fund is available for investment is company’s operations Company shall pay interest 2.5% above bank rate or 75 percent of dividend’s rate which ever is higher Incase the company issues further capital the fund shall have the first option
- 11. Distribution & Disbursement of Benefits All workers are eligible to benefits and to participate however he has to complete 6 months of employment in a year for eligibility Shares of workers shall be calculated in number of units with a face value of Rs. 10 Be divided into three parts for three categories of workers Category 1(Average monthly salary not exceeding Rs. 7500)= 4 * x Category 2 (Average monthly salary Exceeding 7500 but not Rs. 15000)= 2 * x Category 3 (Average monthly salary Exceeding 15000)= x Monthly salary be rounded to the nearest 10 Number of units available for each category be divided equally in all workers of that category No worker shall be allowed to get more than four times of the minimum wages of unskilled worker notwithstanding any thing contained in this scheme
- 12. Distribution 100% of annual income of fund +capital gains A worker who voluntarily leaves employement or terminated one 100% of net assets value in his name For continuing workers its choice for them to get their 100% share in assets every year to leave them invested Incase of retirement or death while in employment will receive 100% in net assets in his name Voluntary contributions can be made not exceeding 10% of their annual wages
- 13. Misc Fund is Exempt from Income tax (clause 9) Allowable deduction in Income tax-for companies (clause 8) Income of workers are Income tax exempt (clause 10) Audit (clause 12) This shall be in addition to other benefits that may be available to workers