Workers Profit Participation Fund (WPPF)
WORKERS WELFARE PARTICIPATION FUND (WWF & WPPF)
Rate of contribution:
Likewise, the Federal WPPF Act, the rate of contribution remains the same i.e, 5% of profit for the year. The timeline, for payment is also the same i.e, 9 months from the close of the accounting year
Eligible Workers to benefit from WPPF:
The wage categories for the disbursement of benefits to the workers are as under:
Workers drawing average minimum monthly wages as fixed by the Government from time to time;
Workers drawing average minimum monthly wages as fixed by the Government from time to time but not exceeding Rs. 20,000;
If total income is Rs.500,000 or above then:
2% of total income of the year
· All workers are eligible to benefits and to participate, however he has a complete 6 months of employment in a year for eligibility.
· Shares of workers shall be calculated in number of units with a face value to Rs.10
· Be divided into three parts for three categories of workers:
1. Workers drawing average monthly wages not exceeding five thousand rupees.
2. Workers drawing average monthly wages exceeding five thousand rupees but not exceeding seven thousand five hundred rupees.
3. Workers drawing average monthly wages exceeding seven thousand five hundred but not exceeding ten thousand rupees. The average monthly wages shall be rounded up to the nearest Rs.10 The number of units available to each category of workers shall be divided equally among all the workers in that category to determine the share of each worker of that category.
Is WPPF Taxable?
· There is no question of taxable income limit of beneficiary of workers' participation fund. It is Flat rate @ 5% upfront at the time of disbursement to the beneficiary.
· Profit means before Taxation.
Workers Profit Participation Fund (WPPF)
What is WPPF in Pakistan?
The Companies Profits (Workers' Participation) Act, 1968 (WPPF Act) is one of those laws where the government and opposition could and should forget about their differences and legislate as soon as possible. The WPPF Act was enacted to provide for participation of workers in the profits of companies.
What is WWF and WPPF?
Workers' Welfare Fund and Workers' Profit Participation Fund are. primarily labour related legislation. Historically, they are governed by federal statutes viz.
Is WPPF Taxable?
There is no question of taxable income limit of beneficiary of workers' participation fund. It is Flat rate @ 5% upfront at the time of disbursement to the beneficiary.
Establishment of Fund. Every company to which the scheme applies shall establish a Workers' Participation Fund in accordance with the scheme as soon as the accounts for the year in which the scheme becomes applicable to it are finalized, but not later than nine months after the close of that year. subject to adjustments, if any, pay every year to the Fund not later than nine months after the close of that year five percent of its profits during such year, which shall, where the accounts have been audited by an auditor appointed under Section 23 of the Industrial Relations Ordinance, 1969 be assessed on the basis of such audit and furnish to the Federal Government and the Board, not later than nine months after the close of every year of account, its audited accounts for that year, duly signed by its auditors. The amount paid to the Fund under clause (b) of sub-section (I) in relation to a year shall be deemed to have been allocated to the Fund on the first day of the year next succeeding that year.
Management of the Fund. As soon as may be 4 [but not later than two months], after the establishment by a company of a Fund under section 3, there shall be constituted a Board of Trustees consisting of the following trustees, namely two persons elected by the workers of the company from amongst themselves; and two persons nominated by the management of the company of whom at least one shall be a person from the accounts branch of the company The person’s bolding office as trustees shall elect for one year a person to be the Chairman of the Board alternatively from amongst the trustees elected under clause (a) of sub- section (I) and those nominated under clause (b) of that sub-section, the first Chairman being from amongst the latter. A trustee shall, unless he sooner ceases to represent the interest he was elected or nominated to represent, hold office for such term and on such conditions as may be prescribed by rules. All decisions of the Board shall be expressed in terms of the opinion of the majority of the trustees and in the event of the trustees being equally divided in their opinion, the Chairman shall have and exercise a second or casting vote. The Board shall manage and administer the Fund in accordance with the provisions of this Act, the scheme and any rules made in this behalf. The Board shall, in the exercise of its powers and performance of its functions under this Act, be subject to such directions as the 1 [Federal Government] may from time to time give.
Penalty. Where a company to which the scheme applies fails to comply with any of the provisions of this Act or the scheme, every director; manager or other officer responsible for the management of the affairs of the company, shall, if the Federal Government by order so directs, pay by way of penalty a sum which may extend to 5000 rupees and, in case of a continuing failure, a further sum which may extend to one thousand rupees for every day after the first during which the failure continues.
THE SCHEDULE SCHEME (See Section 2E) . Scope of the scheme.__ The scheme applies to all companies 4* engaged in industrial undertakings which satisfy any one of the following conditions, and to such other companies as the [Federal Government] may, by notification 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.20 lakhs or more the value of the fixed assets of the company (at cost) as on the last day of the accounting year is Rs. 40 lakhs or more Provide that for the companies established on or 1st day of July 200 clause (ii) shall have effect as if for the figure and word”20 lakhs” the figure and word “5 million” were substituted clause (iii) shall have effect as if for the figure and word “40 lakhs” the figure and word “20 million” were substituted.
Investment of Fund. The amount allocated or accruing to the Fund shall be available to the company for its business operations. The company may, however, request the Board to utilize the amount in the Fund for investment under sub-paragraph (7) and the Board may decide to so invest the amount. The company shall pay to the Fund in respect of the amount in the Fund available to it for its business operations as aforesaid interest at the rate of 2- 1 / 2 % percent above the bank rate or 75 percent of the rate at which dividend is declared on its ordinary shares, whichever is higher. In case there is more than one class of ordinary shares on which different rates of dividend have been declared, then the weighted average of the different rates of dividend shall be taken for the purpose of determining the rate of interest. The interest to the Fund shall accrue on and from the first day of the year next succeeding the year in which the scheme becomes applicable to the company. Even when the company does not wish to utilize the amount available to it under sub-paragraph (1), interest at the rate aforesaid shall be payable by the company for the period between the date of allocation of any amount to the Fund and the date of its investment under sub-paragraph If, at any time after the establishment of the Fund, the company raises any additional capital, otherwise than through the issue of bonus or bonus shares, the Fund shall have the first option to convert any amount available to the company under sub-paragraph (I) or any of the assets of the Fund into ordinary equity capital up to a ceiling of 20 per cent of the paid up capital of the company prior to such conversion on 50 per cent of the additional capital, whichever is less.
Eligibility to benefits of scheme. All workers shall be eligible to the benefits of the scheme and to participate in the Fund. However, a worker not completing six 'months of employment with the company during a year of account shall not participate in the Fund in respect of that year.
Distribution of benefits to worker. The share of a worker in the annual allocation to the Fund shall be expressed in units or fractions of units (worked out to two places of decimal) of the face value of Rs.10 determined in the following manner, namely The number of available units shall be so divided into three parts for the three categories of workers mentioned below that a worker in the first of those categories gets four units for each two units that a worker in the second of those categories gets or for each one unit that a worker in the last of these categories gets.
CATEGORIES
1. Workers drawing average monthly wages not exceeding minimum wage.
2. Workers drawing average monthly wages exceeding minimum wage but not exceeding 20% of monthly minimum wage as fixed by government.
3. "Number of workers drawing average monthly wages exceeding to 20% in addition to monthly wage.
The average monthly wages shall be rounded up to the nearest Rs.10 The number of units available to each category of workers shall be divided equally among all the workers in that category to determine the share of each workers of that category."
Disbursement of benefits The disbursement of the benefits from the fund shall be as under 100 % per cent of the annual income of the Fund, including capital gains realized, shall be distributed each year to workers in proportion to their units of entitlement A worker who voluntarily leaves the employment of the company or whose services are terminated shall be entitled to receive 100 per cent, of the net asset value of the units standing in his name. A worker who continues in the service of the company shall be entitled to receive 100 per cent of the net asset value of the units in his name each year or he may choose to leave his share in the Fund Provided that a worker while in employment may choose to encash all the units standing in his name at any time at his discretion A worker, in the event of his retirement or, his nominated beneficiary, in the event of the worker's death (from whatsoever cause) while in the employment of the company, shall receive 100 % per cent of the, net asset value of the units standing in. the worker's name.
Definition of the net asset value of the unit To determine the net asset value of a unit; the total net assets of the Fund, namely, market value of the securities, cash and other assets resulting from the investment and re-investment, capital accretion thereto and all incomes of any kind rising there from shall be divided by the number of units in the Fund. Net asset value of the entire Fund shall be computed once every year and each worker's unit entitlement determined at the same time. Additional units will be given to the workers according to the amount they voluntarily contribute to the Fund.
Employee's own contribution A worker may voluntarily choose to contribute a part of his wages, cash bonus, dividend or interest to the Fund. For each unit of contribution, he shall receive credit for 1-1/4 units. Contribution received during the course of a year of account shall, however, be deemed to be contribution received on the last day of that year. if at any time a worker chooses to leave the employment of the company or 4 [his services are terminated or in the event of his retirement or death or' on the expiry of three years from the date he voluntarily chooses to contribute a part of his wages, cash bonus, dividend or interest to the Fund, he, at his option, or, in the event of his death, his nominated beneficiary, may,] receive the net asset value of the units representing his contribution. The contribution by a worker in any one year of account shall not exceed 10 per cent of his annual wages during such year.
ELIGIBILITY CRITERIA OF SCHOLARSHIP
The Education Section of WWF is providing free of cost quality education (under matric and post metric) to workers’ children of Industrial Workers of Islamabad based Industries, which includes admission fee, tuition fee, books, stationery, uniform and pick & drop facility to the students upto under-matric level.
While admission fee, tuition fee, transport charges, hostel/ messing charges, registration fee, examination fee, library fee, Lab fee, Computer fee and a fixed monthly stipend is also being paid to the students of Post-matric level.
Applications of scholarship are received from workers of Islamabad based Industries which are scrutinized by the scrutiny committee, arranged by the section as per terms and conditions and eligibility criteria.
Establishment- Definition and Registration
a) As defined under section 2 (f) of Workers Welfare Fund Ordinance and Section 2 (b) of Companies Profit (Workers’ Participation) Act, 1968.
b) Public Sector Organizations which are contributing through transfer of left out amount under clause (a) of paragraph 4 (d) of Companies Profit (Workers’ Participation) Act, 1968.
c) Establishment must be registered under Factories Act, 1934/Mines Act, 1923/Shops and Establishment Ordinance, 1969.
d) Establishment must be registered with EOBI or Social Security Institution.
Other Terms and Conditions
Further terms & conditions for the award of scholarships to the children of the workers failing under Cat-II & III are as follows:
a) Prior clearance of National Testing Service (NTS) examination, if compulsory under the HEC regulations or any other preliminary test, for getting admission.
b) Student will take admission only in HEC approved courses.
c) Student will take/ study all subjects in a semester offered by Public/ Private College / University etc. as the case may be, and, complete its course within the approved minimum time frame by the HEC, for the said course. In case, a student fails to complete his course within the approved time frame of the HEC, his case can be reviewed on the basis of solid reasons submitted by the student duly verified by the Public/ Private College/ University etc. as the case may be, and supported with the documentary evidence.
d) The student once registered in a course will not be allowed to change the selected discipline.
e) Only one Post-Graduation Level course will be financed by WWF.
f) In principle, the applicability of the scholarship scheme is up to the level of Post-Graduation. However, award of scholarship beyond Post-Graduation level courses will be considered on case to case basis and will be allowed only with the prior approval of the Chairman (WWB) or Secretary (WWF), as the case may be.