SHC orders companies to deposit Rs15bln withheld workers funds

KARACHI: The Sindh High Court (SHC) has ordered companies to deposit around Rs15 billion workers profit participation fund (WPPF) to the court authorities, vacating a three-year long stay that allowed firms to withhold the amount, official sources said on Thursday.
The SHC, in an interim order, asked the employers to deposit the WPPF with the concerned authorities by June 30. According to the court order, the companies have no legal authority to retain the funds with them.
The FBR has been trying to collect the said amount for the past three to four years. However, following the 18th amendment into the constitution in 2010, power to collect the fund from the FBR was transferred to the provinces.
But, the federal authorities continue to exercise the power of funds collection, as per the amendment, till the provinces make relevant laws. However, some companies stopped the payment to the FBR and moved to the court in 2012.
The court then granted stay on the funds collection by the FBR. The stay order continued for around two to three years. In January 2015, the Large Taxpayers Unit Karachi filed a petition against the stay, requesting the court to review the stay as corporate entities had provided the court incomplete information of the capacity of provinces to collect the fund.
The court, on June 10 hearing in the appeal filed by the FBR, directed the companies to deposit the entire amount with the Nazir of the court as they had no lawful authority to retain the amount.
Some companies paid partial amount with the FBR to avoid further litigation. However, most of the companies, which are mostly from banking and oil marketing companies, filed a review petition.
The SHC observed that employers/companies are required to retain five percent of its profit in a financial year to the WPPF. The petitioner sought that since the 18th amendment had been approved, thus the federal government could not legislate any more in respect of the workers/employees, or on the subject labour, and it is only the provincial government, which can legislate in such matters.
The petitioners/companies also contended that Sindh government had not made proper legislation. Therefore, the petitioners either cannot be asked or are not required to pay deposit such amount of WPPF to the federal government and or any of its department.
In this hearing, the attorney general of Sindh also submitted that the provincial government had initiated the process of making legislation in respect of the fund and the bill was also presented before the provincial assembly.
The court ordered the companies to deposit the withheld WPPF with Nazir of the court, who shall invest the same in some profit bearing instruments. The court allowed the companies, which had invested in scheme, to wait for maturity and pay the entire amount along with accrued mark-up.