The “Labour Welfare Fund” is a small deduction made from workers’ salaries to support them and their families. The LWF, as the name implies, is precisely developed to improve the living and working conditions of workers in various industries throughout India. It is introduced as a legal contribution; the fund ensures that workers and their families benefit from welfare initiatives like healthcare, housing, education, and more.
As you scroll through the article, you’ll find essential information about the labour welfare fund along with its applicability, benefits, contributions, online methods, and its implementation in several Indian states.
Labour Welfare Fund in India
As said, the labour welfare fund’s (LWF) primary goal is to support and improve the workers working in several sectors. It is a statutory fund set up by Indian states under the Industrial Disputes Act of 1947 to provide welfare services and facilities to employees in both the unorganised and organised sectors. These funds are managed by the labour welfare board and are governed under the respective state legislation.
The Labour Welfare Fund is not a central scheme; it is administered by individual states like Maharashtra, Gujarat, Kerala, and Haryana. Contributions are made by employers, employees, and sometimes the state government.
What is the applicability of the Labour Welfare Fund?
The Labour Welfare Fund is applicable to workers employed in certain industries, factories, and establishments, as per the specific laws of each state. Applicability depends on several factors, such as:
- Type of industry
- Number of employees
- Nature of employment
- Location of the establishment
States like Maharashtra, Gujarat, Kerala, and Haryana have active implementations of the Labour Welfare Fund. In most cases, the Labour Welfare Fund applies to non-managerial staff and excludes those in managerial, supervisory, or administrative roles with high salaries.
Employers must register with the appropriate Labour Welfare Board and ensure compliance with the contribution schedule.
Well, the LWF is a state law; not all states implement labour welfare fund provision. This means workers of these states are not required to contribute to LWF. Some of the states which don’t collect LWF are:
- Bihar
- Uttar Pradesh
- Jharkhand
- Jammu & Kashmir
- Himachal Pradesh
- Manipur
- Meghalaya
- Mizoram
- Nagaland
- Sikkim
- Tripura
- Arunachal Pradesh
- Assam
- Lakshadweep
- Andaman and Nicobar Islands
- Chandigarh (partially applicable in some cases, but no independent LWF Act)
- Puducherry
- Dadra and Nagar Haveli
- Daman and Diu
- Ladakh
*It is advised to keep a check on the updated or amended labour laws to avoid any errors.
Which Indian states & UT provides Labour Welfare Fund?
The Labour Welfare Fund is enforced at the state level, which means not all Indian states have a welfare fund in place. Here’s a list of some Indian states and union territories that have enacted LWF laws:
- Maharashtra – The Maharashtra Labour Welfare Fund Act, 1961, focuses on industrial labour welfare with benefits like scholarships and housing aid.
- Gujarat – The Bombay Labour Welfare Fund Act, 1953, widely implemented in factories and manufacturing units.
- Kerala – The Kerala Labour Welfare Fund Act, 1976, offers social and retirement benefits tailored to plantation and unorganised sector workers.
- Haryana – The Punjab Labour Welfare Fund Act, 1965 applicable in Haryana also and widely implemented in NCR regions like Gurugram.
- Tamil Nadu – The Tamil Nadu Labour Welfare Fund Act, 1982, supports welfare for factory and construction workers.
- Punjab – The Punjab Labour Welfare Fund Act, 1965, that focuses on educational and healthcare benefits for industrial labourers.
- Karnataka – The Karnataka Labour Welfare Fund Act, 1983, applies to a wide range of industries including tech parks.
- Madhya Pradesh – The Madhya Pradesh Labour Welfare Fund Act, 1994, offers unique schemes like bicycle subsidies and financial aid for workers.
- Andhra Pradesh – The Andhra Pradesh Labour Welfare Fund Act, 1985, provides welfare support with state-funded co-contributions.
- Delhi – The Delhi Labour Welfare Fund Rules, 1997, applicable across various industries in the capital.
- Goa – The Goa Labour Welfare Fund Act, 1986,
- Chhattisgarh – The Chhattisgarh Labour Welfare Fund Act, 2008
- Odisha – The Odisha Labour Welfare Fund Act, 1991
Each state has its own rules regarding eligibility, contribution frequency, and the amount payable to the Labour Welfare Fund.
Benefits of Labour Welfare Funds
The LWF’s primary goal is to enhance the social, educational, and economic well-being of workers.
LWF Contribution
The contributions collected in the Labour Welfare Fund are used for:
- Providing financial aid during emergencies.
- Offering scholarships to workers’ children.
- Supporting maternity and healthcare costs.
- Funding housing and sanitation projects.
- Arranging skill development and training programmes.
- Organising recreational facilities for workers.
LWF for Social Security
The Labour Welfare Fund’s one of the important objectives is to safeguard the employees working in unorganised sectors. It provides social security coverage by supporting workers during job loss, injury, or retirement.
In states like Kerala, the Labour Welfare Fund Kerala is used to cover medical expenses, marriage assistance, and old-age pensions. Similarly, the Haryana Labour Welfare Fund extends benefits like educational incentives and medical subsidies.
LWF for Employers
While the labour welfare fund has a direct benefit for the employees, somewhere it benefits employers indirectly, such as:
- Enhanced Employee Morale
- Better Industrial Relations
- Compliance Benefits
- Public Image & CSR
By contributing to the Labour Welfare Fund, employers not only fulfil a legal obligation but also invest in a stable and more motivated workforce.
Ratio Contribution of Labour Welfare Funds
As mentioned above, the contribution in LWF is shared among employees, employers, and, in some cases, the state government. Yet, the contribution ratio varies by state. The contribution is calculated based on the employee’s income. Employers usually have to contribute double the amount compared to employees. If the employee LWF contribution is ₹2, the employer contributes ₹4, that makes the total ₹6.
Here’s an overview of some state-specific contribution structures:
- Maharashtra Labour Welfare Fund:
Employee – ₹12, Employer – ₹36 (biannually) - Gujarat Labour Welfare Fund:
Employee – ₹6, Employer – ₹18 (biannually) - Kerala Labour Welfare Fund:
Contribution depends on monthly wages and the number of working days. - Haryana Labour Welfare Fund:
Employee – ₹10, Employer – ₹20 (monthly) - Delhi Labour Welfare Fund:
Employee – ₹0.75 per month, Employer – ₹2.25 per month (paid annually in December)
*It is advised to keep a check on the updated or amended labour laws to avoid any errors.
Need for Auditing
The law being so important for the workers, regular auditing is significant to maintain transparency and accountability and ensure the proper use of funds.
Online Methods for Labour Welfare Funds
The digitalisation of government services has enabled employers to submit LWF contributions online. Most states now provide an online portal for this purpose.
For instance:
- The Maharashtra Labour Welfare Fund portal allows employers to generate challans and make payments online.
- The Gujarat Labour Welfare Fund Board provides a digital interface for registration and LWF remittance.
- Labour Welfare Fund Kerala and Haryana Labour Welfare Fund also support online applications and payment systems.
These online platforms facilitate:
- Easy registration and renewal
- Online submission of returns
- Payment tracking
- Downloadable receipts
Employers are encouraged to use digital channels for efficient and timely compliance with Labour Welfare Fund regulations.
Liabilities of the Employers in Labour Welfare Funds
Employers have the following responsibilities under the Labour Welfare Fund regulations:
- Registering with the state Labour Welfare Board.
- Deducting the correct amount from employees’ wages.
- Matching the employer’s contribution as mandated.
- Timely deposit of contributions to the Labour Welfare Fund.
- Maintaining accurate records and returns.
Not following the rules and regulations will eventually lead to penalties, legal action, and disqualification from receiving government benefits or contracts.
Penalties In Labour Welfare Fund
While we discussed the liabilities of the LWF for the employer, let’s look at if one fails to comply with Labour Welfare Fund rules, what serious consequences could be attracted. Common penalties include:
- Monetary fines for delay or non-payment.
- Legal proceedings under state laws.
- Interest on unpaid amounts.
- Suspension of business operations in extreme cases.
For example, if an employer in Haryana fails to pay the dues under the Haryana Labour Welfare Fund, they may be fined and required to pay the outstanding amount with interest. Similar rules apply in Maharashtra, Gujarat, and Kerala.
Conclusion
Through this blog, we aim to help both; employees and employers know the importance and properly understand the labour welfare fund. LWF workers will eventually benefit from the support mechanisms put in place for their development and security. And employers can ensure better compliance while contributing to the welfare of their workforce. Whether you are dealing with the Haryana Labour Welfare Fund, Maharashtra Labour Welfare Fund, Gujarat Labour Welfare Fund, or Labour Welfare Fund Kerala, the intent remains consistent — to improve the quality of life for the labour force through structured and sustainable welfare efforts.
Frequently Asked Questions (FAQs)
What is the amount of the Labour Welfare Fund contribution?
The contribution is calculated on the basis of employees income. Employers usually have to contribute double amounts as compared to the employees.
How is the Labour Welfare Fund amount calculated?
The Labour Welfare Fund (LWF) amount is calculated based on state-specific rules, typically under the State Labour Welfare Fund Act. Contributions are made by both employers and employees, and the amount can vary on factors like salary, designation, and the size of the employer's business. However, some employers also calculate it on the basis of the number of working days.
How to apply for the Labour Welfare Fund?
Employers need to register with the state’s Labour Welfare Board through online or offline modes. Once registered, they can make periodic contributions and file returns as required. Employees usually do not need to apply directly but can claim benefits through their employer or the board.
Are there any online options for LWF payments?
Yes, many states like Maharashtra, Gujarat, Kerala, and Haryana offer online portals for Labour Welfare Fund payments. These platforms support digital challan generation, payment processing, and compliance reporting.
