Labour Welfare Fund (LWF)

12843 views • 4 mins read

Labour Welfare Fund is a contribution that is managed by state authorities. It is the support extended in the form of money for those who need it. It gives facilities to the laborers to improve the working conditions, gives them social security, and raise their living standard. 

Various state legislatures have reinforced an act that focuses on the worker’s welfare and is known as the Labour Welfare Fund Act. Different services, facilities, and benefits are offered to employees from the employer’s side under this Act.

Logo Half
In this glossary of Labour Welfare Fund, you will understand about-

  • Objectives of Labour Welfare Fund
  • LWF Contribution
  • Benefits of Labour Welfare Fund Contribution
  • Scope of Labour Welfare Fund
  • LWF Compliance

Objectives of Labor Welfare Fund

The Indian Labour Welfare Fund (ILWF) is a statutory fund established in 1948 under the provisions of the Industrial Disputes Act, 1947. The ILWF is administered by the Labour Ministry of the Government of India.

The objectives of the ILWF are: 

  • To provide for the welfare of workers employed in industrial establishments; and 
  • To contribute towards the establishment and administration of schemes for providing medical relief, housing, education, and other benefits to workers and their families.

LWF Contribution

LWF contributions are done by employers operating in industrial establishments in India. The contribution rates vary depending on the size of the employer’s business. Employers with less than 100 employees pay 1% of their payroll towards the fund, while those with more than 1000 employees pay 3%. 

LWF contribution of the employers earning above Rs. 3,000/- is Rs. 12 and an employee earning upto Rs. 3000/- contributes Rs. 6 per month. The rate of contribution may vary but all these facilities are offered to employees by the employer as a means of contribution. For more detailed information, you should check labor welfare fund rates, scope, fund expenditure, and applicability.

The ILWF has disbursed over Rs. 9,000 crore for the welfare of Indian workers and their families since its inception. The fund is used to provide a range of benefits, including medical relief, housing, education, and other social security benefits.

Benefits of Labour Welfare Fund Contribution

The Labour Welfare Fund is used to finance various welfare measures for workers in the organized sector, including

  • Financial assistance to workers and their families in times of need
  • Training and skill development programs for workers
  • Medical facilities for workers and their families
  • Housing schemes for workers
  • Old age pensions and other social security measures for retired workers

There are many other benefits of labor welfare fund as mentioned below-

  • Employee- employers relations redefines
  • Work efficiency and productivity increases
  • Morale and confidence of employees boosts
  •  Social and financial benefits improve

Scope of Labour Welfare Fund

The government has introduced Labour Welfare Fund Act to assure social security to employees but somehow only 16 states have implemented this act. States, where Labour Fund Act is applicable, are as follows- Andhra Pradesh, Chandigarh, Chhattisgarh, Delhi, Goa, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Tamil Nadu, Telangana, and West Bengal.

The Labour Fund Act is not applicable to all the workers in an organization but depends on the wages and designation of employees. Additionally, the applicability of this law differs in accordance with the conditions mentioned by each state.

LWF Compliance

Complying with guidelines of the Labour Fund Act can be quite a challenge for employers. So, to overcome the challenges related to compliance, deductions, records maintenance, database management, and others, organizations can implement an HRMS system or at least payroll management software to their system

An efficient HRMS system takes care of complying with various Acts along with Labour Welfare Fund Acts and their amendments, generates challans, and keeps track of everything mandatory and necessary for the Labour Welfare Fund Act.

Read more: 4 Best Ways To Make Workplace Flexibility a Reality

Make your Payroll fun and easy!

Learn how HROne Payroll software can help you automate Payroll & stay 100% compliant!

subscription arrow

Sukriti Saini

Sukriti Saini works as a content marketing strategist at HROne. She has done Bachelors in Journalism from Delhi University and carries several years of experience in content development. HR trends, Productivity, Performance and topics related to Employee Engagement garner most of her writing interest here. During leisure, she loves to write and talk about fashion, food & life.

View all author posts →