Fingers crossed, CDBL employees wait for court decision on profit shares

Following objections from the government's commercial audit directorate and instructions from the securities regulator, the Dhaka Stock Exchange (DSE) in principle has retreated from its plan not to share its 2019-20 fiscal year's profit with employees.

Meanwhile, Central Depository Bangladesh Ltd (CDBL), the depository service provider to the country's capital market, has written to its regulator that as the matter is sub judice, it is waiting for the court verdict.

More than five dozen CDBL employees are excited to know what is going to happen on the next court date, 31 March, as each of them will receive more than Tk20 lakh as their shares in the employer company's net profits over the last four fiscal years.

Bangladesh Labour Act says if a company makes annual profits of over Tk1 crore, it must set aside 5% of that to share with its employees. Also, 80% of the profit set aside must be equally distributed among permanent employees other than a very few in the top management, while the remaining 20% needs to be equally deposited in an internal welfare fund and the government's central workers' welfare fund.  

Bangladeshi exporters, energy companies, and banks have managed to obtain exemptions from complying with this profit-sharing provision as exporters highlight their cost competitiveness factors, while banks and private sector power producers and energy companies argue that the majority of their employees do not belong to the working class and should not get the annual profit share on top of their already sufficient salaries and bonuses.

DSE, which saw a stressful year in 2020, kept provisions of Tk2.66 crore for its employees but wrote to the labour ministry and the finance ministry for their opinions on an exemption.

On the other hand, its weaker peer Chittagong Stock Exchange (CSE) is happily disbursing employees' profit shares. 

But CDBL, being the most profitable capital market infrastructure company, had not disbursed any profit share among its employees since 2014 when the labour act made the creation of workers profit participation fund a must for all eligible companies.

The well-off company – owned by some of the country's banks, insurers, listed companies, and also the two bourses – initially used to set aside 5% of the annual profits under certain accounts headline but did not disburse that.

But for the last two years, it has not even been keeping any provisions for that.

Former CDBL employees in labour court

In 2018, Md Shafiul Al Mamun, a former CDBL executive for system operation, filed a lawsuit with the labour court against his employer demanding more than Tk16 lakh as his share in annual profits for the two previous applicable years.

In the middle of last year, the court ordered the CDBL to pay him more than Tk21 lakh as unpaid profit share and court fees.  

CDBL immediately filed an appeal against the order with the superior labour court and there have already been several hearings.

However, as the appeal court judge died from Covid-19, the verdict was delayed and following the appointment of a new judge, the case may be up for a further hearing or the verdict on 31 March.

Mamun, who started at CDBL in 2010 and resigned at the end of 2017, is now working abroad.

But his legal representative is fighting the case and they also wrote to the Bangladesh Securities and Exchange Commission on 28 February seeking its intervention in the matter.

On the basis of government's commercial audit objections, the BSEC on 25 February asked both DSE and CDBL to comply with the workers profit-sharing law and give immediate feedback.

DSE Chairman Md Eunusur Rahman told The Business Standard upon BSEC instructions, the DSE board in principle decided to comply with the relevant clauses of the labour act but the profit set aside would not be disbursed without discussing the matter with the BSEC chairman.     

CDBL Managing Director and CEO Shuvra Kanti Choudhury declined to comment on the matter.

However, seeking anonymity, one of CDBL board members told The Business Standard the act is being partially imposed across the economy.

He also said before enforcing profit sharing with a few better-paid executives, the government should bring the large number of labourers at export-oriented factories and firms under the facility who are also being poorly paid.

The correspondent talked to five CDBL employees in recent weeks and each of them sounded annoyed with their employer's attitude that deprived them of a fair incentive for good work.