Labour Welfare Fund (LWF)

What is the Labour Welfare Fund (LWF)?

LWF stands for Labour Welfare Fund. It is a statutory contribution that employees and employers pay to their state’s Labour Welfare Board, which uses it to fund welfare schemes for workers and their families.

The first Labour Welfare Fund Act was the Bombay Labour Welfare Fund Act, 1953, which later became the Maharashtra Labour Welfare Fund Act. Other states enacted their own separate Acts over the following decades, including Punjab (1965, later adopted by Haryana), Karnataka (1965), Gujarat (1953), and Delhi (1997). There is no single central Act; LWF contributions are made by employees and employers under whichever state Act applies.

Unlike PF, run nationally by the Employees’ Provident Fund Organization (EPFO), and ESI, which are governed by central laws, LWF is state-specific. Individual states have their own Labour Welfare Fund rules, which determine whether the fund applies, who is covered, the contribution amount, and how often contributions must be made. This means the LWF deduction and contribution can differ depending on the state in which an establishment operates.

The scope of the Labour Welfare Fund extends to various welfare services, including housing, family care, and health services for workers. It covers medical exams, clinics for general treatment, infant welfare, women’s education, worker activities, marriage, education, and funeral assistance.

In most states where Labour Welfare Fund applies, both employers and employees contribute. Some states may also provide government contributions or follow a different contribution structure.

For example, in Delhi, INR 0.75 employee + INR 2.25 employer + INR 1.50 government every half year.

What is LWF Deduction in Salary Slip?

LWF in your salary slip is your share of the Labour Welfare Fund. Your employer deducts it from your pay and sends it, along with the employer’s own share, to your state’s Labour Welfare Board. On a payslip, it usually appears under Deductions as LWF or Labour Welfare Fund, next to PF, ESI, and Professional Tax.

Only your share appears on the payslip. The employer pays its share on top, so it doesn’t reduce your salary. Under Maharashtra’s law, for example, the employer must pay both shares to the Board.

The amount is small, and it is not always monthly.

How often LWF shows up on your payslip depends on your state. In Haryana, Punjab, and Chandigarh, LWF deductions are generally processed monthly through payroll, subject to the applicable state requirements. In Maharashtra, Delhi, Gujarat, West Bengal, and Madhya Pradesh, it appears in June and December salaries. In Karnataka, Tamil Nadu, Andhra Pradesh, and Telangana, it appears once a year, usually in December.

If you don’t see LWF on your payslip, your state may not have an LWF law, or you may be excluded. Certain managerial and supervisory employees may be excluded under Maharashtra Labour Welfare Fund provisions, subject to the latest statutory definitions and eligibility criteria. Certain managerial and supervisory employees may not be covered under the Delhi Labour Welfare Fund based on the applicable legal definitions and exclusions.

Who Contributes to LWF: Employer and Employee Shares

LWF contribution is shared between the employee and the employer, and in some states the government contributes as well. The employer deducts the employee contribution from salary, adds the employer contribution, and deposits both with the state board.

In most states, the contribution is a fixed rupee amount per employee, regardless of their salary. Haryana is the main exception. There, the employee pays 0.2% of wages and the employer pays twice that, up to a monthly cap that is revised every January.

The employer usually pays two to three times the employee’s share: three times in Maharashtra, and twice in Karnataka. Deducting, depositing and filing returns are the employer’s legal responsibility. The employee does not need to file anything.

What is the Applicability of the Labour Welfare Fund?

The Labour Welfare Fund applicability varies by state and is determined by factors such as the number of employees, their designations, and wages. Labour Welfare Fund legislation is implemented only in selected Indian states and union territories. Applicability may vary based on state laws and subsequent amendments.

Whether an employer in an LWF state must contribute depends on three factors:

1. Number of employees: Each state sets its own threshold. Delhi covers establishments with five or more employees. Tamil Nadu covers factories, plantations, and motor transport, and shops and catering establishments with five or more employees.

2. Designation: Eligibility under Labour Welfare Fund laws varies by state. Certain managerial and supervisory employees may be excluded depending on the provisions applicable in that state.

3. Wages: In Haryana, the amount depends on wages (0.2% capped). In most other states wages only matter for the supervisor exclusion above, the contribution is a flat amount.

Note that Karnataka now covers establishments with 10 or more employees, down from ‘more than fifty’.

How Do LWF Contributions and Deductions Differ Across States?

LWF deductions vary across states, with some mandating both employee and employer contributions while others do not have LWF at all. The LWF employer and employee contribution amounts differ based on state-specific regulations.

Below we highlight the details of LWF deductions for various states and union territories. States not listed have no LWF law.

In the wage limit column, a figure is the monthly wage above which supervisory staff are excluded from LWF. Managerial staff are usually excluded at any pay, and all other employees are covered whatever they earn. “All employees” means the Act sets no wage-based exclusion.

LWF in Haryana

Haryana LWF works differently from every other state, because it is a percentage of wages. Under the Punjab Labour Welfare Fund Act 1965, as applied to Haryana, the employee contributes 0.2% of wages and the employer contributes twice that amount.

The monthly cap is linked to the consumer price index and revised every 1 January. It was INR 34 for the employee in 2025, and is INR 35 for employee and INR 70 for the employer from 1 January 2026.

Employers can deposit monthly online.

LWF in Maharashtra

Maharashtra LWF is INR 25 from the employee and INR 75 from the employer every six months, for every employee on the register on 30 June and 31 December. The employer must pay both shares to the Maharashtra Labour Welfare Board before 15 July and 15 January.

These rates come from the amendment which also removed the old wage-based split. Before 2024, employees paid INR 6 or INR 12 depending on whether they earned more than INR 3,000 a month.

LWF in Delhi

LWF in Delhi is the lowest in the country: INR 0.75 from the employee, INR 2.25 from the employer and INR 1.50 from the Delhi government, every six months. It applies to establishments with five or more employees and is payable before 15 July and 15 January. Employers must also file half-yearly statements by 31 July and 31 January.

LWF in Other Major States

Karnataka: INR 50 from the employee and INR 100 from the employer each calendar year, deducted in December and paid to the Karnataka Labour Welfare Board by 15 January.

Note on Kerala: the table above shows Kerala’s rate for shops and commercial establishments (₹50 each, monthly). Factories, plantations, and other establishment types follow a different structure entirely: ₹45 each, paid half-yearly before 15 July and 15 January. Confirm which category applies before using the table figure.

Tamil Nadu: INR 20 from the employee, INR 40 from the employer, and INR 20 from the government each year.

How to Calculate LWF Contributions?

Labour Welfare Fund contributions depend on factors like the size of your business and your employees’ salaries. Besides, contribution rates vary by state, with each state setting its own guidelines and limits for LWF deduction.

With that in mind, let’s understand the LWF calculation process.

The calculation depends on the applicable wage limit and contribution rate in your state. Once you determine whether an employee falls within the applicable wage limit, apply the prescribed employee and employer contribution rates to calculate the LWF contribution.

Total Contribution = Employee Contribution + Employer Contribution

• Employee Contribution = Number of employees × Employee contribution rate set by state law
• Employer Contribution = Number of employees × Employer contribution rate set by state law

Example 1: Maharashtra, an organization with 50 employees, June cycle

In this case, each employee sees INR 25 under Deductions on their June payslip.

Example 2: Haryana, one employee, 2026 cap

What Are the Benefits of the Labour Welfare Fund?

The LWF Act is designed to enhance the well-being of workers by providing access to various welfare programs. These programs cater to educational, medical, housing, and recreational needs.

Here are some of the key LWF benefits:

• Educational facilities: Funds are used to provide educational support for the children of workers to ensure access to schooling and other educational opportunities.
• Medical facilities: Workers and their families, whether employed in the private or public sector, benefit from medical services, including health camps and treatments.
• Transport facilities: Transportation services often help workers commute to and from their workplaces and reduce the burden of travel costs.
• Recreational activities: LWF funds support recreational activities such as music, dance, sports, and cultural events to enhance the working environment.
• Housing assistance: Housing schemes and support for workers
• Marriage and funeral assistance: For example, Haryana’s Kanyadaan scheme for the marriage of women workers.
• Support after job loss: Goa uses the government’s share of the fund for a Retrenched Workers Assistance Scheme.

How to claim: Apply to your state’s Labour Welfare Board, usually through its online portal, with ID proof and a payslip or employer certificate showing your LWF contributions. Some boards, such as Tamil Nadu’s pay benefits directly into the worker’s bank account.

How Do You Register For the Labour Welfare Fund?

To register for LWF, gather your employer, establishment, and employee details along with any applicable registration documents. Create an establishment account on your state Labor Welfare Board or labour department portal, complete the required form, upload supporting documents, and pay any applicable registration or contribution fees.

After submission, keep the acknowledgement number and track the application until the board verifies the details and issues the registration.

• Delhi: Delhi Labor Welfare Board
• Haryana: Haryana Labor Department e-Governance Portal
• Karnataka: Karnataka Labor Welfare Board Payment Portal
• Madhya Pradesh: Madhya Pradesh Shram Kalyan Mandal Portal
• Goa: Goa Online – Labor Welfare Board Services
• West Bengal: West Bengal Labor Department – Labor Welfare Board

What Are the Penalties for LWF Non-Compliance?

Employers must understand the LWF Act and its requirements to ensure compliance and support their workforce effectively. Failure to comply can result in the following consequences.

Each state’s act sets its own interest and penalties. Using the Maharashtra Labour Welfare Fund Act as an example:

• Interest on late payment (Section 6B): simple interest of 1.5% of the unpaid amount for each completed month for the first three months, and 2% a month after that. Delhi’s version of the Act sets lower rates of 1% and 1.5%.
• Obstruction and record-keeping offences (Section 17A): Imprisonment of up to three months, a fine of up to INR 500 or both. Repeat offences up to six months, a fine of up to INR 1,000 or both. These apply to obstructing an inspector or failing to produce records.
• Waivers: in Delhi, the Welfare Commissioner can waive penalties in cases of genuine hardship. Waivers over INR 500 need Board approval.

The employer is liable for both the employee and employer shares, so missed deductions become the employer’s cost.

How Does the Labour Welfare Fund Differ From the Provident Fund?

The Labour Welfare Fund and the Employees’ Provident Fund (EPF) serve different purposes and have distinct applicability.

Unlike EPF, Labour Welfare Fund is governed by state-specific legislation. Contribution rates, applicability thresholds, due dates, and coverage requirements vary across states.

FAQs

Is LWF mandatory for all employees?

No. LWF applies only in states that have an LWF law, and only to establishments above that state’s employee threshold, for example, five or more in Delhi and 10 or more in Karnataka. Some states exclude managerial and supervisory staff.

Can LWF be claimed back by employees?

No. LWF is not a savings account and is not refunded. Instead, workers who have contributed can apply to their state board for welfare benefits such as scholarships, medical help or marriage assistance.