Labour Welfare Fund
“Labour Welfare Fund” (LWF) is a statutory endowment contributed by the Employer, Employee and, in some states, the Government. It aims to improve working conditions, provide social security and raise the living standards of labourers and workers in unorganized sectors. The quantum and periodicity of contribution are fixed by the respective State Labour Welfare Board. This page will show the exact quantum, state-wise.
What is Labour Welfare Fund?
Labour welfare is aid in the form of money or necessities for those in need. It provides facilities to labourers to improve their working conditions, provide social security and raise their standard of living.
To support this objective, various state legislatures have enacted laws focused on worker welfare, known as Labour Welfare Fund Acts. These Acts provide services, benefits and facilities to employees through contributions from employers and employees. Contribution rates may differ from one state to another.
Scope of Labour Welfare Fund Act
The scope of the Act extends to housing, family care and workers’ health services, including medical examinations, general treatment clinics, infant welfare, women’s general education, worker activity facilities, marriage, education, funeral assistance and related support. State-specific Labour Welfare Funds are funded by contributions from employers, employees and, in a few states, the Government.
Applicability of the Act
To provide social security to workers, the Government has introduced Labour Welfare Fund legislation. This Act has been implemented in 16 states out of 37 states and Union Territories.
The table below shows the states where the Act has been implemented and where it has not been implemented.
Labour Welfare Fund Applicable States
Andhra Pradesh
Chandigarh
Chhattisgarh
Delhi
Goa
Gujarat
Haryana
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Odisha
Punjab
Tamil Nadu
Telangana
West Bengal
Labour Welfare Fund Non-Applicable States and Union Territories
Central
Andaman and Nicobar Islands
Applicable State and Union Territory
Arunachal Pradesh
Assam
Bihar
Dadra and Nagar Haveli and Daman and Diu
Daman and Diu
Himachal Pradesh
Jammu and Kashmir
Jharkhand
Ladakh
Lakshadweep
Manipur
Meghalaya
Mizoram
Nagaland
Puducherry
Rajasthan
Sikkim
Tripura
Uttar Pradesh
Uttarakhand
Applicability of the Labour Welfare Fund Act
The Labour Welfare Fund Act is not applicable to all categories of employees working in an establishment. Applicability depends on the wages earned and the designation of the employee. Employers should also check the total number of employees before extending the Act to their establishment. The employee-count threshold may differ under each state-specific Act.
How Does the Process Work?
Contributions to the Labour Welfare Fund may be made annually, half-yearly or monthly. The frequency depends on the applicable state law. Where contributions are half-yearly, the deduction period is divided into two consecutive periods according to the dates specified in the state-specific Act. The employer must deduct the contribution from the employee’s salary and submit it to the Labour Welfare Fund Board in the prescribed form before the due date.
Labour Welfare Fund Expenditure
In general, the Fund may be used by the Board for:
Educational facilities for workers’ children.
Medical facilities for workers and their families in private and public-sector establishments.
Transport facilities for workers commuting to work.
Recreational facilities such as music, dance, drama, games, sports and painting.
Housing facilities, including concessional loans to industrial workers for house construction.
Excursions, tours and holiday homes.
Home industries and subsidiary occupations for women and unemployed persons.
Reading rooms and libraries.
Vocational training.
Nutritious food for employees’ children.