Labour Welfare Fund

Labour welfare is an aid in the form of money or necessities for those in need. It provides facilities to labourers in order to improve their working conditions, provide social security, and raise their standard of living.

To justify the above statement, various state legislatures have enacted an Act exclusively focusing on welfare of the workers, known as the Labour Welfare Fund Act. The Labour Welfare Fund Act incorporates various services, benefits and facilities offered to the employee by the employer. Such facilities are offered by the means of contribution from the employer and the employee. However, the rate of contribution may differ from one state to another.

Labour welfare fund is a statutory contribution managed by individual state authorities. The state labour welfare board determines the amount and frequency of the contribution. The contribution and periodicity of remittance differs with every state. In some states the periodicity is annual (Andhra Pradesh, Haryana, Karnataka, Tamil Nadu etc) and in some states it is to be contributed during the month of June & December (Gujarat, Madhya Pradesh, Maharashtra etc).

The scope of this Act is extended to housing, family care & worker’s health service by providing medical examination, clinic for general treatment, infant welfare, women’s general education, workers activity facilities, marriage, education, funeral etc. State specific Labour Welfare Funds are funded by contributions from the employer, employee and in few states, the government also.

In order to provide social security to workers, the government has introduced the Labour Welfare Fund Act. This act has been implemented only in 15 states out of 34 states including union territories.

Below the states in which the Act has been implemented and not implemented, are listed

Applicable States

• Andhra Pradesh
• Chandigarh
• Chhattisgarh
• Delhi
• Goa
• Gujarat
• Haryana
• Karnataka
• Kerala
• Madhya Pradesh
• Maharashtra
• Odisha
• Punjab
• Tamil Nadu
• Telangana
• West Bengal

Not Applicable States

• Central
• Andaman and Nicobar Islands
• Arunachal Pradesh
• Assam
• Bihar
• Dadra and Nagar Haveli
• Daman and Diu
• Himachal Pradesh
• Jammu and Kashmir
• Jharkhand
• Lakshadweep
• Manipur
• Meghalaya
• Mizoram
• Nagaland
• Pondicherry
• Rajasthan
• Sikkim
• Tripura
• Uttar Pradesh
• Uttaranchal

The Labour Welfare Fund Act is not applicable to all category of employees working in the establishment. It depends upon the wages earned and designation of the employee. Also, one needs to check the total number of employees working before extending this Act to their establishment. The applicability of the Act based on the number of employees may differ depending upon state specific Act.

Contribution

The contribution in the Labour Welfare Fund may be made annually, half yearly or monthly. The frequency may differ depending upon the state specific Act. Further, if the frequency is half yearly the period of deduction shall be 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.

In general the money in the Fund may be utilized by the Board to defray expenditure on the following:

• Educational facilities for the children of the workers.
• Medical facilities for both private and public-sector employers to facilitate medical facilities for their workers and their families.
• Transport facilities to the workers for commuting to work.
• Recreational facilities in form of music, dance, drama, games, sports, paintings, etc. are usually offered to the employees to build a wholesome working environment.
• Housing facilities under this scheme offer loans to industrial workers for constructing houses at concessional rates.
• Excursions, tours and holiday homes.
• Home industries and subsidiary occupations for women and unemployed persons.
• Reading rooms and libraries.
• Vocational training.
• Nutritious food to children of employees.

Applicable Contribution

As of now only selected states and union territories in India administers Labour Welfare Fund (LWF). The following state/UTs follow LWF.

State or Union Territory	Contribution Frequency	Contribution Month(s)	Employee Contribution	Employeer Contribution	Total Contribution	Return	Due Date
Karnataka	Annual	Dec	20	40	60	Form D	15-Jan
Tamil Nadu	Annual	Dec	10	20	30	Form A	31-Jan
Andhra Pradesh	Annual	Dec	30	70	100	Form F	31-Jan
Kerala (For firms under Shops and Establishment Act)	Monthly	Jan-Dec	20	20	40	Form A	20th
Kerala (For firms under Factories Act)	Half Yearly	Jan-Dec	4	8	12	Form A	20th
Maharashtra	Half Yearly	June, Dec	06-Dec	18/36	24/48	Form A1cum Return	15 Jul, 15-Jan
Goa	Annual	Dec	120	360	480	Form B	31-Jan, 15 Jul
Delhi	Half Yearly	June, Dec	0.75	2.25	3	Form A	15-Jan
Punjab	Monthly	Apr-Mar	5	20	25	Nil	15 Oct, 15-Apr
Chandigarh (Union Territory)	Monthly	Apr-Mar	5	20	25	Nil	15 Oct, 15-Apr
Haryana	Monthly	Jan-Dec	10	20	30	Nil	31-Dec
Madhya Pradesh	Half Yearly	June, Dec	10	30	40	Nil	15 Jul, 15-Jan
Chhattisgarh	Half Yearly	June, Dec	15	45	60	Form A	31 Jul, 31 Jan
Gujarat	Half Yearly	June, Dec	6	12	18	Form A1	31 Jul, 31 Jan
West Bengal	Half Yearly	June, Dec	3	6	9	Form D	15 Jul, 15-Jan
Puducherry	Not Applicable	Not Applicable	Not Applicable	Not Applicable	Not Applicable	Not Applicable	Not Applicable
Telangana	Not Applicable	December	2	5	7	Not Applicable	31 Dec – Date of deduction 31 Jan – Last date for submission
Odisha	Not Applicable	June December	20	40	60	Not Applicable	30 June and 31 Dec – Date of deduction 15 July and 15 Jan – Last date for submission

Amendments

The Payment of Wages (Amendment) Bill, 2017

The Payment of Wages (Amendment) Bill, 2017 was introduced in Lok Sabha on February 3, 2017 by the Minister of Labour and Employment, Mr. Bandaru Dattatreya.  The Bill amends the Payment of Wages Act, 1936. The Bill replaces the Payment of Wages Ordinance, 2016 which was promulgated on December 28, 2016.

• Method of payment of wages: Under the 1936 Act, all wages must be paid either in coin or currency notes, or both. However, the employer may pay his employee’s wages either by cheque or by crediting it into his bank account, after obtaining his written authorisation.
• The Bill amends the 1936 Act to permit the employer to pay an employee’s wages: (i) in coin or currency notes; or (ii) by cheque; or (iii) by crediting them into his bank account. The Bill removes the requirement of obtaining written authorisation for payment of wages by cheque or through a bank account.
• However, the relevant central or state government may specify certain industrial or other establishments where the employer should pay his employees only by: (i) cheque; or (ii) crediting the wages in his bank account.

Wages

The Ministry of Law and Justice (Legislative Department) vide its Notification dated 16th February, 2017/Magha 27, 1938 (Saka) pursuant to receiving of the assent of the President published for general information the Payment of Wages (Amendment) Act, 2017 to amend the Payment of Wages Act, 1936 (the ‘Act’).

The Act applies in the first instance to the payment of wages to persons employed in any factory, to persons employed (otherwise than in a factory) upon any railway by a railway administration or, either directly or through a sub-contractor, by a person fulfilling a contract with a railway administration, and to persons employed in an industrial or other establishment specified in sub-clauses (a) to (g) of clause (ii) of section 2. The Act applies to wages payable to an employed person in respect of a wage period if such wages for that wage period do not exceed eighteen thousand rupees per month or such other higher sum which, on the basis of figures of the Consumer Expenditure Survey published by the National Sample Survey Organisation, the Central Government may, after every five years, by notification in the Official Gazette, specify.

By virtue of this Notification, this Amendment Act came into force on the 28th day of December, 2016. The Amendment Act substituted the exiting section 6 of the Payment of Wages Act, 1936, with the following

All wages shall be paid in current coin or currency notes or by cheque or by crediting the wages in the bank account of the employee:

Provided that the appropriate Government may, by notification in the Official Gazette, specify the industrial or other establishment, the employer of which shall pay to every person employed in such industrial or other establishment, the wages only by cheque or by crediting the wages in his bank account.”