What is the Labour welfare fund and what are the benefits?


Out of the 34 states in our country, the government of India has applied the Labour Welfare Fund Act in 15 states to provide social security to the workers. The labour welfare provides aid to the workers in the form of money or other necessities to improve their social life, working conditions and to raise their standard of living. 

The Labour Welfare Fund helps in providing all kind of assistance towards the welfare of the workers and to provide them with a better and quality standard of living. Growth of any kind of business or organization solely depends on their workers. Thus, proper care must be taken for them as if the workers are happy, then the efficiency and productivity will increase by itesel.

What is the Labour Welfare Fund Act?

This fund is a mandatory contribution managed by the authorities of individual states.  The labour welfare department of particular state determines the amount and the frequency of the contribution. The amount and the frequency may differ with every state. 

The Labour Welfare Acts focuses on the benefit of the workers and ensures the corporation of various services, benefits and facilities to be offered to the employees by the employers. However, this act does not apply all kind of workers in the establishment. It depends on the wages along with the designation of the worker.

All kind of labour welfare fund rules is stated by the Labour Welfare Board of the state for the interest of the employees and for providing them with better facilities.

Labour Welfare Fund Contribution

The contribution towards the fund differs from state to state and is decided by the state labour welfare department. The contribution towards the fund may be done monthly, half yearly or annually. The frequency depends on the acts specified by the state. 

The amount is deducted from the employee’s salary and is submitted within the due date to the labour welfare board. 

How the Fund of Labour Welfare can Be Used

As per the LWF act, the fund can only be used for the benefit of the workers. It can’t be used by employers for their personal or business purposes. Here are some examples of how the fund can be used for the welfare of the workers: – 

  • Medical facilities for the workers and their family members.
  • Loan facility to the worker for the construction of a house at a concessional rate.
  • Vocational training to increase the efficiency of the workers.
  • To arrange for nutritious food to the children of the employees.
  • To provide proper education for the children of the workers.
  • Transport facility to commute for the work for the workers.
  • Recreational facilities to provide an enjoyable environment to the workers.

These are the few examples of how the fund can be used for the welfare of the employees. These may be changed or modified as per labour welfare acts and rights considering the benefit of the employees.

Benefits of the Welfare Fund Act

The labour welfare fund act is solely focused on the benefit and welfare of the workers and employees. However, it has also many benefits for the employers too. The benefits to the employers may not be direct.

Here is how it is beneficial for the organization and the employers too: – 

  • Maintains Industrial Peace: – With the given facilities, the workers get proper satisfactions and it avoids any kind of strikes and other issues and maintains the peace.
  • Increases the Moral: – With the measures taken by the LWF act, the workers are more satisfied and are less indulged in any kind of destructive and anti-social works. Thus, it helps in building a high moral among the workers.
  • Less Attrition: – With the kind of facilities and benefits, workers will be more attracted in staying with the organization for a longer period. Thus, it helps in creating a permanent labour force.
  • Increase in efficiency: – With the facilities under the welfare fund act, the employees are more satisfied and happy at both home and the work place. And thus brings out the best of the performance at the work place. With the worrying of issues related to poor housings, education of children and others, the workers may not provide their best of the performance. Thus, efficient work also helps in the increase of productivity with quality.

Along with the benefit to employers and employees, it also has a huge social benefit. With a better work environment and increased efficiency of the workers, it leads to an increase in production along with the earnings of the employees. 

Thus, with increased and efficient working abilities, it leads to an increase in wages and a happier working environment along with a better standard of living and development of the society.

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