What is Labour Welfare Fund?
Labour Welfare Fund is aimed to provide medical care, housing facilities, and educational and recreational facilities to labourers and their dependent family members. It is financial support for those who need it. It also works to improve working conditions, the standard of living and social security for the workers.
The Labour welfare fund act was introduced in 1953 by the Government of India and administered by the Labour Ministry of the Government of India. The act is currently implemented in 16 states of India. Under this act, both the employer and employee need to contribute a certain amount towards the welfare of the employee.
Objectives of the Labour Welfare Fund
The objectives of the Labour Welfare Fund vary from country to country, as labor laws and regulations differ across jurisdictions. However, in general, the Labour Welfare Fund aims to provide social security and promote the welfare of workers. Here are some common objectives of a Labour Welfare Fund:
Satisfactory Welfare
Providing welfare to the workers employed in the industrial establishment
Scheme administration
Administering schemes to improve standards of living for all workers
Reduce Labour Problem
Reducing labour problems at the workplace
Improve industrial relation
Improving industrial relations and reducing industrial disputes
Promoting Work-life balance
Improving work-life balance by providing flexible work arrangements, leave policies, and promoting employee wellbeing and a healthy work environment.
Providing social security
Provide financial assistance and support like medical assistance, disability benefits, pension schemes, and maternity benefits to workers during illness, disability, maternity, or retirement.
Introduction of the Labour Welfare Fund
The government of India introduced the labour welfare fund act of 1953, and it applies to all businesses with a minimum 5 number of employees. The contribution rate is likely to vary a little according to the laws of respective states. The labour welfare fund act is now implemented in 16 states of India.
The labour welfare fund act is applicable to the employees in the organization depending on their designation and wages. The implementation and the skims of the labour welfare fund may differ from state to state.
Benefits of Labour Welfare Fund
There are various schemes that are provided by the labour welfare board for the welfare of the labourer and their dependents. Here is a general idea about the support that is provided by the labour welfare board for the employees.
1. Efforts to Improve Work Conditions
The poor working conditions in an unorganized sector have always been a matter of concern. That made it the primary focus when it comes to making a scheme that can benefit employees under the labour welfare fund act.
Below are the initiatives from the government for improving working conditions. The facilities like such as transport to and from work, reading rooms and libraries for workers Vocational training, and recreational activities at the workplace for workers.
Outdoor activities such as excursions and tours under the schemes;
2. Efforts towards Improving Standard of Living
- There are many initiatives taken to improve the standard of living of the workers who provide labour in an unorganised sector. Some of these welfare schemes are listed below
- Educational facilities and scholarships for the children of the workers
- Nutritious food in the form of mid-day meals in the schools for the kids to make them enjoy school
- The labour worker’s kids who are meritorious and score above a particular percentage in their class 10th and 12th board exams
- Some scholarships are reserved for children who want to pursue MBBS
- Housing schemes that provide concessional rates to own a house for the labourer
- Workers, especially in construction industries, workers get special concessions for housing loan applications.
- Medical services for labour workers and their families employed in both the public and private sector
3. Efforts to Provide Social Security
Through the labour welfare fund act government provides social security in various forms such as medical treatment camps. Women and unemployed people in sub-subsidiary occupations can also get medical facilities with the help of the Labour welfare fund.
The fund also helps workers in unorganised sectors to get higher wages for their labour. There are also other schemes that are provided for workers in different industries.
Also Read: How to claim PF Online? Step by Step Guide
How to Calculate the Labour Welfare Fund Deductions?
The schemes under the labour welfare fund are managed by the states and respective union territories, the rules are different for the calculation. Companies with operations and offices in multiple states have to keep in mind the respective set of rules to calculate the required contribution. Here we bring together the various rules by the individual states to calculate the contribution.
Rules for Labour Welfare Fund in Maharashtra
The labour welfare fund laws in Maharashtra is applicable to all organization with minimum 5 employees working for them. The law is applicable if the company is registered in the state of Maharashtra.
- The contribution has to be done bi-annually and should be deducted from the salary of the employee for the month of June and December.
- Contribution for the first six months of the year has to be done from 30th June to 15th July
- Similarly, the contribution for the second half of the year is to be done from 30th December to 15th January.
- There are two separate slabs for the contribution and the exception is for those who are working in a managerial capacity
- Employees earning less than ₹ 3000 have to contribute ₹ 6 from their salary and their employer contributes thrice that amount (₹18) that resulting in a total amount of ₹24
- For employees earning more than ₹3000, the contribution is ₹12. The employer has to contribute thrice that amount (₹36) resulting in a total of ₹48 in contribution twice a year.
Penalties for Non-compliance
- The fine of ₹500 and/or imprisonment can be extended up to 3 months
- The fine is up to ₹1000 and/or imprisonment up to 6 months in case of repeated offence. If only a fine has to be given it cannot be lesser than ₹50.
Rules for Labour welfare fund in Andhra Pradesh
A company that is registered in the state of Andhra Pradesh and employs 20 or more people, should register for the scheme. The contribution needs to be done annually, before the 15th of January (of the next year).
The rules are applicable to companies registered in Andhra Pradesh.
- The contribution has to be made by all the organizations with 20 or more employees
- The labour welfare fund contribution has to be done once a year
- The contribution for all employees except those who are working in managerial positions or have a salary higher than ₹1600 is ₹30
- The employer contribution to the labour welfare fund is ₹70
Penalties for Non-compliance
There is provision for a fine of ₹500 and/or imprisonment that can be extended to 3 months period.
On further violation of the rules for the labour welfare fund, the imprisonment is extendable to 6 months and/or a fine up to ₹1000.
If the punishment is only fine it cannot be less than ₹50.
Gujarat and its LFT rules
The contribution under Gujarat’s LFT is applicable to the organizations registered in the state of Gujarat. This is a bi-annual contribution for applicable organizations at the end of the months of June and December.
- The first contribution has to be done between 30th June to 15th July, and the second contribution has to be done from 30th December to 15th January
- The contribution amount is deducted from employees’ salaries for June and December every year
- For every employee, the contribution is ₹6 and the employer contribution is Twice that amount which is ₹12 therefore the total amount of contribution becomes ₹18.
Penalties for Non-compliance
- The punishment of the fine for a person cannot be less than ₹20000
- When the offence is consistent then the daily fine cannot be less than ₹1000
Rules for Labour welfare fund in Kerala
The rules under the labour welfare fund are applicable to any organization registered in the state with a minimum of two employees.
- The contribution to the labour welfare fund has to be made every month and it should be paid before the 5th of next month
- The contribution for the employees is ₹4 and the contribution by the employer is ₹8 for every month
- There are exceptions for the contribution including those who are working in a managerial capacity, apprentice or part-time workers
Penalty for the violation of rules
- The penalty occurs in case of obstructing the inspector while he exercises his duties
- Imprisonment of a term of up to 6 months and/or a fine of ₹500 can be the punishment for cases of obstructing the inspector while exercising their duties.
Rules for Labour welfare fund in Tamil Nadu
Welfare Fund rules are applicable for an organization that has registered in the state with 5 or more employees. The rules are as follows.
- The payment has to be made once a year at the beginning of next year before the 31st of January
- The contribution for all employees is ₹10 and the contribution by the employer has to be ₹20
- The employees for whom contribution need not be made are those who are working in a managerial capacity or earn more than ₹ 15000
Penalty for the violation of rules
- For the first-time offence, imprisonment can be extended to a period of 3 months and/or a fine of up to ₹500
- For the second and subsequent offence of the labour welfare fund rules imprisonment can be extended up to 6 months and /or the fine may extend to ₹10000
- In cases where the person has to pay only a fine, it can not be lower than ₹50.
Rules for Labour welfare fund in West Bengal
The welfare Fune policy is applicable;e to companies in West Bengal that have a minimum 10 or more employees. The rules are as follows.
- The contribution has to be made twice a year. The 1st is made from the 30th of June to the 15th of July and the second contribution is between the 30th of December and to 15th of January
- Contribution for all employees is ₹ 3 and payment by the employer is ₹ 15
- An exception is made for those in a managerial capacity or who earn wages more than ₹ 1600.
Penalty for the violation of rules
- Imprisonment for a term that can be extendable to 3 months and/or a fine that can be extendable to ₹ 500
- For repeated offences, the imprisonment can be extended up to 6 months and/or a fine which may extend up to ₹1000
- When only a fine has to be paid by the offender it cannot be less than ₹50
Rules for Labour welfare fund (LWF) in Karnataka
Rules for Labour welfare fund applicable to companies in Karnataka with 50 or more employees. The rules are as follows.
- Contributions for the scheme have to be made annually, before the 15th of January.
- Payment for all employees is ₹20 and for employers ₹40 resulting total of $60
Penalty for the violation of rules
- The imprisonment for a term of up to 3 months and/or a fine of up to ₹500
- For repeated offences, the fine can extend to ₹1000 and imprisonment can go up to 6 months.
- If only the fine payable by the person can not be lower than ₹50
Rules for Labour welfare fund (LWF) in Delhi
Rules of Labour welfare fund for the Companies registered in Delhi with five employees need to follow LWF. The rules are following,
- The contributions have to be made twice every year on 30th June and 31st December for employee share and employer share can be submitted up to 15th of respective next month
- Contribution for all employees has to be ₹0.75 and of employer ₹2.25
- Those who are working in a managerial capacity or earn more than ₹2500 don’t need to make the contribution
- The contribution of the Delhi government is twice the contribution for employees (₹1.50)
Penalty for the violation of rules
- Violation of rule, fined up to Rs.5,000/- but not less than Rs.2,500/.
- For the second time violation, offences imprisonment for a term of three months, you have to face a fine up to a minimum of 3000 to Rs.10,000/- or with both.
Haryana
Rules of Labour welfare fund for the Companies registered in Haryana with five employees need to follow LWF. The rules are following,
- The employee is ₹ 0.2% of the salary or any remuneration subject to a limit of ₹25
- The employer contribution is twice the amount contributed by employees.
Penalty for the violation of rules
- Violation of rule, fined up to Rs.5,000/- but not less than Rs.2,500/.
- For the second time violation, offences imprisonment for a term of three months, you have to face a fine up to a minimum of 3000 to Rs.10,000/- or with both.
At the End
Labour Welfare Fund is the essential things that vary from one state to another states. It is important for every state to keep track of updates in the laws so that people won’t have to face penalties.
