An Overview of the Labour Welfare Fund Rules in India

NovoJuris Legal through the presentation available at our SlideShare page analyses the various labour welfare fund rules in India. A short background is provided herein: There are 16 States and Union Territories which have enacted or adopted the Labour Welfare Fund Act and corresponding Rules. These legislations aim to provide for a Board titled “State Labour Welfare Fund Board” with a fund titled “Labour Welfare Fund”. The important duties of this fund are to grant allowance for pension, maternity, marriage, treatment, education, death etc., to labourers in respective States. The Labour Welfare Fund (LWF) established by the LWF Boards, mandate three methods through which an employer is required to pay the money into the fund as below:

Methods mandated for Employers to pay monies in the LWF Description
1. Payment of Unpaid Accumulation Any wages or gratuity or bonus (excluding provident fund contributions and compensation due to injured workmen), which is not paid to the employees for a period of three (3) years will be termed as unpaid accumulation. Such unpaid accumulation is to be deposited into the respective State LWF within 30 days from the end of every quarter in a calendar year. (Example: An ex-employee’s statutory bonus in respect of previous financial year)
2. Payment of Fines realised All fines realized by way of penalty for any violation of code of conduct by employees are also required to be deposited into the respective State LWF within 30 days from the end of every quarter in a calendar year. (Example: fines realised by way of deduction of salary for late coming).
3. Payment of contribution (Employer’s share together with deductions from employee’s share Annual/half-yearly contribution is to be deducted from employee’s salary and paid into the LWF

The consequences of non-payment of fines/contribution: Where any penal interest amount is not provided, the employer is liable to be punished with imprisonment of up to three (3) months or with fine of up to INR 500 (In Punjab/Chandigarh, the penalty is up to INR 5,000). Kindly go through our SlideShare page to have a detailed understanding of the same.

Disclaimer: The compliances mentioned in this article are subject to the amendments promulgated by respective state governments.

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