HR & payroll glossary

What is LWF?Labour Welfare Fund

Labour Welfare Fund is a state-level contribution, made by employees and employers in states that have an LWF Act, to fund welfare schemes for workers.

Definition

Labour Welfare Fund contributions are set by individual state Acts. The amounts are small, but the rules differ by state: who is covered, the employee and employer shares, and whether the contribution is monthly, half-yearly or annual.

How it works

The employer deducts the employee's share from salary in the months the state specifies and adds the employer's share.
Contributions are deposited with the state Labour Welfare Board by the state's due dates.
Some states apply a wage limit; others cover all employees in covered establishments.

Why HR and payroll teams care

LWF is easy to miss because it is infrequent. A payroll that handles it state by state avoids year-end surprises during labour inspections.

Example

A half-yearly LWF state

Deductions happen only in the two months the state specifies, for example June and December.
In other months no LWF appears on the payslip.