Labour Welfare Fund is a mandatory contribution to be deducted by the employer from the salary of the employee and deposited to the state authorities. Every HR, owner, and employee should not just keep contributing but also reap the benefits from the money you spend.
What is Labour Welfare Fund?
It is a state compliance which is different in every state according to respective legislatures. The primary objective however in every state is to improve the social, health and living conditions of the employees. Making their lives easier is the main objective of this fund.
It functions through a combination of the employees’ and employers’ contributions. It works in different regions of the states and provides various facilities to employees, ranging from health and transportation.
The fund deducted is used for the following expenditure:
- Educational facilities for the children of the workers
- Medical facilities for workers and their families
- Transport facilities for commuting to work
- Recreational facilities such as music, sports, arts, excursions etc.
- Housing facilities under this scheme offer loans to industrial workers for constructing houses at concessional rates
- Home industries and subsidiary occupations for women and unemployed persons
- Reading rooms and libraries
- Vocational training
- Nutritious food to children
This act is followed by 16 states and UTs
It is applicable to all kinds of shops and establishments except educational institutions and hospitals.
The employee limit is 10 employees or more, including contractual employees, and the contribution period is January to June.
The contribution can be made annually, half yearly or monthly. The frequency may differ depending upon the state specific act. If the frequency is half yearly the period of deduction is divided into two consecutive periods as per the date mentioned in the state specific act. The employer needs to make the deduction from the salary of the employee and submit the same to the Labour Welfare Fund board in the prescribed form before the due date.
Want to know how much you need to contribute as per your state? Here’s the LWF calculator to save your time!