Labour Welfare Fund

What Is Labour Welfare Fund?

Labour Welfare Fund (LWF) is a statutory contribution mandated by individual state governments in India under their respective Labour Welfare Fund Acts. The fund is used to finance housing, medical facilities, educational programs, recreational activities, and other welfare schemes for workers in the state.

Unlike PF and ESI which are central statutes, LWF is entirely state-governed—each state has its own act, rates, contribution frequency, and applicability criteria.

How LWF Works

LWF operates as a tripartite contribution:

1. Employee contribution: A fixed amount deducted from salary
2. Employer contribution: A fixed amount (usually higher than employee share) paid by the employer
3. State government contribution: An additional amount contributed by the state

The combined fund is managed by a state-level Labour Welfare Board that administers welfare schemes.

State-Wise LWF Rates

State	Employee (₹)	Employer (₹)	Frequency
Maharashtra	6	18	Half-yearly (June & December)
Karnataka	20	40	Annual (January)
Tamil Nadu	10	20	Annual
Delhi	1	5	Half-yearly
Andhra Pradesh	2	5	Half-yearly
Gujarat	6	12	Half-yearly (June & December)
Madhya Pradesh	10	30	Half-yearly
West Bengal	3	9	Half-yearly
Telangana	2	5	Annual
Chandigarh	5	20	Monthly

Note: Rates are subject to revision by state governments. Some states like Rajasthan and Uttar Pradesh do not have LWF legislation.

Applicability

• Not all states: LWF applies only in states that have enacted a Labour Welfare Fund Act.
• Establishment size: Some states exempt establishments below a certain number of employees (e.g., Karnataka exempts establishments with fewer than 50 employees).
• All employees: Generally applies to all employees on the payroll regardless of salary, though some states have wage ceiling exemptions.

Compliance Requirements

Requirement	Details
Registration	Employer must register with state LWF board
Deduction	Fixed amount from each employee’s salary per the schedule
Payment	Deposit contributions by the state-prescribed due date
Filing	Submit returns (Form A in most states) with employee details
Penalty	Late payment attracts interest and penalties per state rules

Key Points

• LWF amounts are small (₹1–₹40 per employee per period) but non-compliance penalties can be significant.
• The contribution is not percentage-based—it is a flat amount per employee.
• LWF is separate from and in addition to PF, ESI, and professional tax obligations.
• Some states require LWF to be deducted from contract workers as well.

How Omnivoo Handles Labour Welfare Fund

Omnivoo automates LWF compliance across all applicable states:

• State detection: Based on each employee’s work location, Omnivoo automatically determines whether LWF applies and at what rate.
• Scheduled deductions: The system deducts employee contributions at the correct frequency (monthly, half-yearly, or annually) based on state rules.
• Consolidated remittance: Omnivoo aggregates contributions across all employees in a state and remits to the respective Labour Welfare Board by the due date.
• Multi-state handling: For companies with employees across multiple states, Omnivoo manages different rates, frequencies, and filing requirements simultaneously.
• Return filing: Omnivoo prepares and files the required LWF returns with employee details for each applicable state.