Running a company efficiently requires complete dedication to achieving the goal and taking care of your employees. That’s why the state authorities introduced the act to help your employees with financial aid like loans, scholarships, pensions, etc. if they meet all the terms of the Act. Let’s move forward to know every single detail about it.
It is a government initiative designed to help and improve the living conditions of workers in India’s unorganized sector. The fund has been implemented in 16 states/union territories thus far, with different employer contribution requirements based on location.
It depends on where your company has registered, the amount to be contributed and the last date for contribution vary. The applicable penalties for noncompliance vary by state. Other than this, some other compliances that you need to be aware of are Employee State Insurance, Employee Provident Fund, Professional Tax, and TDS. These factors can be taken care of using software for running payroll in Excel.
This act provides benefits, facilities, and services that employers offer to employees. Some states provide extra funding for state-specific labour funds, in addition to employee and employer contributions. Although, it is important to understand that the rate of contribution in every state is different. The government introduced the Labour Welfare Fund Act (LWFA) in 1953 to give financial assistance to workers.
The scope of this Act extends beyond housing to family care and workers’ health. It enables the provision of infant welfare, clinics for general treatment, worker activity services, medical examinations, women’s education, etc. It is applicable in 16 states and Union territories. Before contributing, you must check the rules of this Act by the registration state of the particular company.
States use the funds differently, but some benefits are common to all.
The following states are:
Rules in Andhra Pradesh:
Rules in Chandigarh
Rules in Chhattisgarh
Rules in Delhi
Rules in Goa, Diu and Daman
Rules in Gujarat
Rules in Haryana
Rules in Karnataka
Rules in Kerala
Rules in Madhya Pradesh
Rules in Maharashtra
Rules in Odisha
Rules in Punjab
Rules in Tamil Nadu
Rules in Telangana
Rules in West Bengal
According to the Labour Welfare Fund Act, the employer and employee must contribute toward the fund. However, in practice, most employers contribute on behalf of their employees. As such, this is something you need to keep in mind when paying workers’ salaries. You must make LWF deductions for each employee before paying them their wages, and this means you make the LWF deduction before you pay an employee’s salary.
Employers typically contribute a percentage of an employee’s income to the plan, and the employer contributes double or triple this amount for each employee.
The Labour Welfare Fund Act applies only to employees whose salaries fall within the prescribed threshold and whose position is considered eligible. The employer must also ensure that his company meets the threshold number of employees so that he can avail of the Act. Furthermore, it depends on the state where the establishment is located to check the rules for it depending on the total quantity of employees.
The State Labour Welfare Board decides the contribution frequency and amount of contributions to the Labour Welfare Fund. In Karnataka, Haryana, and Tamil Nadu, which have annual contributions; Maharashtra, Gujarat, and Madhya Pradesh, which have monthly contributions; and Andhra Pradesh which has half-yearly contributions.
Hope you’ve gotten all the details about it. This fund is for the benefit of employees and workers in unorganized sectors. Employers are legally required to pay this tax or accumulated fund, which can be used to provide benefits and protection to workers in the unorganized sector.
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