Labour Welfare Fund (LWF): Meaning, Contributions, Benefits & Compliance

The government of India has tried to implement various statutory frameworks that tend to provide welfare schemes to workers. One such payroll statutory component that offers many socio-economic benefits to the employee is the Labour Welfare Fund (LWF). The state government has managed the LWF scheme and almost 16 states by far have enacted the Labour Welfare Fund Act. Let’s take a deeper dive into the concept of LWF and how it will benefit you.

LWF Full Form and Meaning
Applicability of the Labour Welfare Fund
What Employers Must Do to Comply with LWF
How the LWF Scheme Works in Different States
How to Register for the LWF Scheme
How to Make LWF Payments Online
Useful Resources from Asanify
Penalty for Non-Compliance
What Are the Benefits of LWF?
A Quick Summary of the Labour Welfare Fund
Frequently Asked Questions on LWF
Simplify LWF Compliance with Asanify Payroll

LWF Full Form and Meaning

The Labour Welfare Fund (LWF) is an initiative by the government of India to help and improve the living conditions of the unorganized sector. Out of 36 states and union territories, the act has been only implemented in 16 of them. Based on this act, you as an employer need to contribute a certain about on your behalf as well as on behalf of your employee. This will vary based on the state in which your company functions.

The amount to be contributed, the last date to contribute and even the penalties for not contributing differ from one state to the other. You need to check the applicability and this will depend on the state your company is registered in.

Apart from the Labour Welfare Fund, some of the other compliances for payroll that you need to be aware of are Employee State Insurance, Employee Provident Fund, Professional tax and TDS. If you are running payroll in excel, the following helps you understand the compliance calculations: how to run payroll in excel.

Applicability of the Labour Welfare Fund

Each state tend to have its own regulations and some of the states do not even collect LWF. The following table will provide an idea of the states that collect LWF and some of the states that do not collect LWF.

States that collect LWF	States that do not collect LWF
Andhra Pradesh	Arunachal Pradesh
Chhattisgarh	Assam
Haryana	Andaman and Nicobar Islands
Chandigarh	Bihar
Goa	Daman and Diu
Delhi	Jammu and Kashmir
Karnataka	Ladakh
Maharashtra	Lakshadweep
Gujarat	Jharkhand
Kerala	Manipur
Tamil Nadu	Puducherry
Madhya Pradesh	Rajasthan
Punjab	Mizoram
West Bengal	Meghalaya
Telangana	Sikkim
Odisha	Tripura
	Uttarakhand
	Uttar Pradesh
	Dadra and Nagar Haveli
	Himachal Pradesh

What Employers Must Do to Comply with LWF?

Under the labour welfare fund scheme employers of an organization are responsible for the following tasks:

Collecting LWF dues from the workers
Contributing their share towards the fund
Remitting payments to the government based on the deduction frequency before the submission deadline
Registering their organization under the Act if their state legislature has enacted it
Filing tax returns using the right forms

How the LWF Scheme Works in Different States

Since the Labor Welfare Fund tends to be under the purview of the state government, the deduction cycles tend to vary highly with each state. Here is a detailed list regarding the state-specific LWF contribution rates, the deduction frequency, applicable employees, and the deadline date for making the payment.

Andhra Pradesh

This is applicable to all employees except for those who have been employed in a part-time position or managerial capacity.

Employee contribution	Employer contribution
Rs. 30	Rs. 70

Deduction frequency	Deduction date	Submission deadline	Compliance form
Annual	31st December	31st January	Form F

Chandigarh

All employees who earn up to Rs. 15,000 per month are eligible for this LWF scheme.

Employee contribution	Employer contribution
Rs. 5	Rs. 20

Deduction frequency	Deduction date	Submission deadline	Compliance form
Monthly	Last day of each month	15th October and 15th April	NA

Chhattisgarh

In Chhattisgarh, this LWF scheme applies to all employees except for those working in an administrative or managerial capacity or are employed in a supervisory capacity earning more than Rs. 10,000 per month.

Employee contribution	Employer contribution
Rs. 15	Rs. 45

Deduction frequency	Deduction date	Submission deadline	Compliance form
Half-yearly	30th June and 31st December	15th July and 15th January	Form A

Delhi

All of the employees come under this LWF scheme except for those who are working in a supervisory or managerial capacity and are earning more than Rs. 2,500 per month.

Employee contribution	Employer contribution
Rs. 0.75	Rs. 2.25

Deduction frequency	Deduction date	Submission deadline	Compliance form
Half-yearly	30th June and 31st December	15th July and 15th January	Form A

Goa

This scheme applies to all employees except those who are working in a supervisory or managerial capacity and are earning more than Rs. 1,600 per month.

Employee contribution	Employer contribution
Rs. 60	Rs. 180

Deduction frequency	Deduction date	Submission deadline	Compliance form
Half-yearly	30th June and 31st December	15th July and 15th January	Form B

Gujarat

This scheme applies to all employees in Gujarat except for those working in a supervisory or managerial capacity earning more than Rs. 3,500 per month.

Employee contribution	Employer contribution
Rs. 6	Rs. 12

Deduction frequency	Deduction date	Submission deadline	Compliance form
Half-yearly	30th June and 31st December	15th July and 15th January	Form A-1

Haryana

The scheme is applicable to all employees who are employed directly by the principal employer also including the contractors. Each of the employees will contribute an amount that is equal to 0.2% of their salary or Rs. 25 to the fund each month. The employer will also contribute twice as much as the employee does.

Employee contribution	Employer contribution
Rs. 31	Rs. 62

Deduction frequency	Deduction date	Submission deadline	Compliance form
Monthly	Last date of each month	15th October and 15th April	NA

Karnataka

All those employees who are employed for salary to do any sort of work that is both unskilled or skilled, clerical or manual in an organization are applicable under this scheme.

Employee contribution	Employer contribution
Rs. 20	Rs. 40

Deduction frequency	Deduction date	Submission deadline	Compliance form
Yearly	31st December	15th January	Form D

Kerala

All the employees present under the purview of the Kerala Shops and Commercial Establishment Act, 1960 are applicable under this scheme.

Employee contribution	Employer contribution
Rs. 20	Rs. 20

Deduction frequency	Deduction date	Submission deadline	Compliance form
Monthly	Last date of each month	5th of every month	NA

Madhya Pradesh

All those employees working in Madhya Pradesh are applicable under this scheme except for those who are working in a supervisory or managerial position and are earning more than Rs. 10,000 per month.

Employee contribution	Employer contribution
Rs. 10	Rs. 30

Deduction frequency	Deduction date	Submission deadline	Compliance form
Half-yearly	30th June and 31st December	15th July and 15th January	NA

Maharashtra

There are two categories based on which the scheme works and these two categories could be given as follows:

Category 1 – The scheme is applicable to all employees except for those who are working in supervisory or managerial positions and are earning up to Rs. 3,000 per month.

Employee contribution	Employer contribution
Rs. 6	Rs. 18

Deduction frequency	Deduction date	Submission deadline	Compliance form
Half-yearly	30th June and 31st December	15th July and 15th January	Form A-1 cum return

Category 2 – All employees come under this scheme except for those who are working in supervisory or managerial positions and are earning more than Rs. 3,000 per month.

Employee contribution	Employer contribution
Rs. 12	Rs. 36

Deduction frequency	Deduction date	Submission deadline	Compliance form
Half-yearly	30th June and 31st December	15th July and 15th January	NA

Odisha

All employees except those who are working in a managerial or supervisory position in the organizations come under this scheme.

Employee contribution	Employer contribution
Rs. 10	Rs. 20

Deduction frequency	Deduction date	Submission deadline	Compliance form
Half-yearly	30th June and 31st December	15th July and 15th January	NA

Punjab

The scheme applies to any employee who has been employed for hire or reward to do manual or clerical, skilled or unskilled work in an establishment.

Employee contribution	Employer contribution
Rs. 5	Rs. 20

Deduction frequency	Deduction date	Submission deadline	Compliance form
Monthly	Last day of every month	15th April and 15th October	NA

Tamil Nadu

All employees come under this scheme except for those who are working in a supervisory or managerial position and is earning above Rs. 15,000 per month.

Employee contribution	Employer contribution
Rs. 20	Rs. 40

Deduction frequency	Deduction date	Submission deadline	Compliance form
Yearly	31st December	31st January	Form A

Telangana

All of the employees are applicable under this scheme except for those who are working a supervisory or managerial position and is earning up to Rs. 1,600 per month.

Employee contribution	Employer contribution
Rs. 2	Rs. 5

Deduction frequency	Deduction date	Submission deadline	Compliance form
Yearly	31st December	31st January	NA

West Bengal

All employees come under this scheme except for those working in a supervisory or managerial position and is earning more than Rs. 1,600 per month.

Employee contribution	Employer contribution
Rs. 3	Rs. 15

Deduction frequency	Deduction date	Submission deadline	Compliance form
Half-Yearly	30th June and 31st December	15th July and 15th January	Form D

How to Register for the LWF Scheme

You need to register for the LWF scheme within the starting 15 days of your organization’s commencement. The registration process will vary based on the states however the information that is required to submit is going to be the same all across the states. With that being in mind let’s focus on how to register for the Labour Welfare Fund in Haryana for example.

Step 1 – Go to the Haryana’s Labour Department website. Under the section named E-services select Hry Labour Welfare Board.

Step 2 – A new instruction page will pop up. Read all the terms and conditions and click on the submit button.

Step 3 – Select the type of establishment you run and enter your Aadhaar number and establishment’s email ID. Click on the submit button. Not that if you are a worker from Haryana and would like to register yourself for the scheme then you should select Welfare Worker from the list and then proceed with the registration

Step 4 – Fill in the Basic Information form and upload your passport-sized photo. Create a password and hit Submit.

Step 5 – You will be taken to the successfully registered page and your login credentials will be shown.

How to Make LWF Payments Online

Each of the states tends to use a different website to process the LWF payments online however the standard procedure to make the payments will remain the same and could be given as follows:

Step 1 – Go to the state-specific Labour Welfare Fund website.

Step 2 – Select the LWF online payment under online services or the E-seva section

Step 3 – Login by using your establishment ID or company code and captcha

Step 4 – Once you are done the following details will be mentioned on the screen:

Company name
Company details
Company address

Step 5 – Select the payment category whether you are settling your unpaid accumulations, paying your LWF contributions, or court fines.

Step 6 – Enter the number of employees in your payroll along with the following details:

Contributors month
Institution code
Establishment type
Owner’s name

Step 7 – Once you are done click on submit. You will now be taken to the online payment page.

Step 8 – After the payment has been made successfully a confirmation challan will be sent to the registered email. Make a note of the challan details for future reference.

Useful Resources from Asanify

When you opt to use resources from Asanify There are many overall benefits you get from a payroll software and some of them are,

Helps save time
Ensures zero calculation errors
Provides security of data that wouldn’t be there in case of outsourcing
Provides the opportunity for the HR or accountant to focus on other work instead
Payroll software are generally very reliable in terms of delivery of the paycheck and other factors
But most importantly, it will help you keep track of the different payroll policies that you need to comply with, be it ESI, TDS, PF, PT or even LWF etc.

Penalty for Non-Compliance

In the case of the 1st offence- imprisonment for a term of a maximum of 3 months. (and/or) Also, a fine that can extend to Rs.500/-

For the 2nd or subsequent offences- imprisonment for a term that can be extended up to 6 months and/or with a fine which may extend to Rs.1000/-. In any case of only a fine, the fine is not to be lower than Rs.50/-.

What Are the Benefits of LWF?

The LWF scheme tends to offer a lot of benefits to not just the employers but also their workers.

Benefits for Employees

Here’s a list of the major Labour Welfare Fund benefits for employees.

Benefit Type	Benefits available for employees
Medical	Medical facilities which also include dental care for workers and their dependents.Monetary benefits for death on duty.Funeral benefits.Three-wheeled cycle that helps workers with disabilities.
Food	There is nutritious food for employees and their children.
Recreation	You get an easy access to activities such as painting, playing sports, music, dance, etc.
Other benefits	Vocational training and access to reading rooms and libraries.Housing loans under concessional rates.
Education	Scholarships, stationery, and uniforms for workers’ dependents.
Transport	Financial assistance to buy a cycle.· Free bus for mine workers to commute to their workplaces.

Benefits for Employers

Employers also get an equal share of benefits through an LWF scheme. Here are a few of them listed below:

Morale boost: Employees are considered to be the face of the organization. When they have access to recreational activities and skill development courses, it tends to boost their confidence. This in turn also reflects positively on the organization.

Increased productivity at work: Improved standards of working and living conditions will also motivate employees to work efficiently.

Better employee retention: 96% of the employees tend to say that the empathy and care hey get from employers are one of the major driving factors for them to work. Implementing a well-structured LWF scheme will show them that you care about their well-being.

A Quick Summary of the Labour Welfare Fund

The Labour Welfare Fund (LWF) is a statutory payroll contribution designed to ensure social security and better working conditions for laborers. This fund provides various benefits to workers and their dependents, including medical care, educational support, transportation assistance, and recreational activities.

Both employers and employees contribute to the LWF. Businesses operating in states where the LWF is implemented are required to register under the scheme and make regular contributions. It’s important to note that contribution rates and deduction cycles vary by state. Failure to pay or delayed payments can result in substantial fines and damage a company’s reputation.

Simplify LWF Compliance with Asanify Payroll

Always staying on top of compliance especially when it comes to payroll laws is important if you want to successfully run an organization. There are many rules involved and a silly mistake could cost your firm a huge amount. That’s why we at Asanify have brought to you simplified payroll software which also has completely automated statutory compliance.

Asanify allows you to automatically calculate both employer and employee LWF contributions and deduction frequency based on your work location.
Deducting contributions from your employees’ salary automatically before you start with the processing of pay runs on Asanify.
Keeping your business accounts clean with real-time deduction summaries along with payroll cost summary graphs.
Enabling LWF for your organization with a single click
Contributions to the fund depend on both the employees’ salary along with the state regulations. Disabling or enabling LWF at the employee level with Asanify.

FAQs

What is LWF in salary?

The Labour Welfare Fund (LWF) is a statutory fund that has been established and managed by state governments in India. Its purpose is mainly to provide welfare benefits, such as healthcare, food provisions, and financial assistance, to eligible employees. Contributions to the fund are typically shared between both employers and employees.

What is the frequency of LWF deduction?

The frequency of Labour Welfare Fund (LWF) deductions tends to vary across different states in India. While some states, such as Karnataka, deduct the contribution annually typically before December 31^st, other states may require deductions on a monthly or half-yearly basis.

What are the Labour Welfare Fund contribution rates?

Labour Welfare Fund (LWF) contribution rates are not uniform across India and vary from state to state. Typically, the contribution involves a nominal amount, with both employers and employees contributing either a fixed sum or a percentage of wages.

For example, in Haryana, the employer’s monthly contribution is Rs. 62 per employee, while the employee contributes Rs. 31. In Tamil Nadu, the employer contributes Rs. 40 per employee per month, with the employee contributing Rs. 20.

Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant or Labour Law expert for specific guidance.

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