Labour Welfare Fund :
Understand the Labour Welfare Fund and how it safeguards employees’ well-being. Learn about its benefits, contributions, and the role it plays in providing financial security, better facilities, and overall welfare for workers and their families.
Each state government managed its labour welfare fund (LWF), Employers, employees and in certain states the government of that state contribute to the Labour welfare Fund. The objective of this is to offer and take care of well-being to workers and their dependents in unorganized and organized sectors.
The state specific Labour welfare fund act governed the Labour welfare fund of it’s the state, which is different from the central ESI and EPF. Each state and union territories have their own Labour Welfare Fund rules, applicability, rates and benefits.
Applicable States :
Non-Applicable States :
Andaman and Nicobar Islands
Arunachal Pradesh
Assam
Bihar
Dadra and Nagar Haveli
Daman and Diu
Himachal Pradesh
Jammu & Kashmir
Jharkhand
Ladakh
Lakshadweep
Manipur
Meghalaya
Mizoram
Nagaland
Puducherry
Rajasthan
Sikkim
Tripura
Uttar Pradesh
Uttarakhand
What is Labour Welfare Fund?
The Labour Welfare Fund is a statutory scheme that requires both Employers and employees in certain states the government of that state contribute to the Labour welfare Fund. The objective of this is to offer housing, medical care, educational, vocational training, transport subsidies, marriage, funeral expense and recreational facilities to workers and their dependents.
Labour Welfare Act (2025) Applicability:
It is applicable in:
- 16 states out of 37 States including Union Territories (UT)
- Factories, shops and commercial establishments, depending on state rules.
- Private companies and contractor establishments employing both permanent and contract workers.
Contribution under Labour Welfare Fund in 2025
Every state has its own rule for contribution and contribution fixed. It generally includes:
- Employee contribution: A nominal amount from its wages
- Employer contribution: Often double or thrice the employee's contribution
Benefits of Labour Welfare Fund
The LWF ensures social and economic development of workers through multiple welfare activities. Key benefits include:
- It provides education assistance by providing scholarships to worker's wards.
- It provides healthcare facilities by subsidized or free maternity aid and medical treatments.
- It provides the housing schemes facilities by giving housing loans or low cost homes.
- It helps in skill development by providing training programs for workers and its dependents.
- By providing Recreational Facilities and welfare societies.
- It provides the financial help in case of disability, death or accidents.
Importance of Labour Welfare Fund in 2025
- Promotes employee satisfaction and retention.
- Provides social security in addition to EPF and ESI.
- Helps workers cope with inflation and rising living costs.
- Strengthens the employer-employee relationship.
- Improves the work-life balance of industrial workers.
FAQs on Labour Welfare Fund (LWF)
No. It is applicable only in 16 states.
The employer and employee.
It is state specific and generally differs for each state.
Yes. It is necessary for employer to pay its contribution as per state specific law, it generally double the rate of employee’s contributions.
You have to pay contribution according to your state rules; it can be monthly, yearly, half-yearly or quarterly.
Yes, in most states contract and casual workers are covered.
The respective State Labour Welfare Board.
Yes. LWF is for worker welfare schemes, while EPF and ESI are for retirement and health benefits.
The employer may face penalties, fines, and legal action.
Yes. IT Companies and offices also come under the definition of establishment under the state-specific LWF Act.
Yes, employees can directly apply for benefits to the Labour Welfare Board of the state.
Yes, salary slips show the deduction for LWF.
Not in most states. Applicability usually begins at 5 or 10 employees.
Payment can be made online through the state labour department’s portal.
Employer’s contribution is treated as a business expense under the Income Tax Act.
It provides the worker with a safety net in times of need and helps them access welfare benefits easily.