Complete Guide To Gujarat Labour Welfare Fund (LWF), Its Applicability, Registration, Due Dates, Contribution Rate & Penal Interest

Overview : This blog is about the Gujarat Labour Welfare Fund (LWF). It gives detailed information about the applicability of The Gujarat Labour Welfare Fund Act on the establishment and its exception, contribution periods, contribution rates in respect of employees and employers, the due date of LWF payment and return filing dates of paying employees’ and employer’s contributions toward The Gujarat Labour Welfare Fund, and the interests thereon in case non-payment or delay in payment of LWF beyond the prescribed period.
Introduction of the Gujarat LWF
The Gujarat Labour Welfare Act 1953 is an adaptation of the Bombay Labour Welfare Fund Act 1953 with certain modifications which came into force with effect from 17th June 1953. The Gujarat Labour Welfare Board, a statutory Body established under the Bombay Labour Welfare Fund Act, 1953 (extended to the whole state of Gujarat since October 1962), conducts activities for the benefit of industrial workers.
Key Highlights of the Gujarat Labour Welfare Fund (LWF)
S.No | Particulars | Key Information |
---|---|---|
1. | Governing Act | The Gujarat Labour Welfare Fund Act. |
2. | Effective Date | 17 June 1953 |
3. | Applicability | Establishments employing ten or more employees (Employees of all branches, all over India, shall be counted for this purpose). |
4. | Registration | LWF Registration is required even if the establishment is registered under the Gujarat shops & establishment Act. |
5. | Contribution Rate | Section 6B(2)
|
6. | Contribution Period | Half Yearly |
7. | Due Date |
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For businesses looking to ensure compliance with this Act, it's essential to understand its scope and requirements. Know more about LWF compliance.
Applicability of Gujarat Welfare Fund Act, 1953
The Gujarat Labour Welfare Fund Act 1953 (Hereinafter referred to as The Act), covers or extends to the whole state of Gujarat. This act applies to all establishments or employers where Ten or more employees are working or employed during the preceding twelve months.
Establishment As Defined U/s 2(4)
Establishment Under Section 2(4) of The Act: “Establishment” means a factory, a tramway or motor omnibus service or any establishment within the meaning of the Bombay Shops and Establishments Act, 1948, which employs, or on any working day during the preceding twelve months, employed ten or more persons.
When Gujarat LWF does not apply
Suppose an establishment continues working with employees under ten for a continuous period of not less than three months. Such an establishment shall cease to be an establishment for the act with effect from the beginning of the next month following the expiry of the said period of three months. However, the employer must report/ intimate the reduction in employees below ten to the welfare commissioner.
Explanation
- When Number of Employees Exceeds Ten: Assume that an establishment had 3 (three) employees; subsequently, the number of employees increased and became 12 (Twelve) in January 2024. Now, the employer is liable to contribute LWF half-yearly as of 30th June and 31st December 2024.
- When Number of Employees Reduces Below Ten: If the number of employees is reduced and becomes less than ten in any month, for example, say, effective 1st August 2024, and the establishment continues working with less than ten employees for a continuous period of three months, say upto 31st October 2024, then such an establishment shall cease to be an establishment under this act with effect from 1st November 2024. Therefore, such an establishment is not required to remit the LWF contribution for the period ending on 31st December 2024.
Employee Under Section 2(2) of The Act
“Employee” means any person who is employed for hire or reward to do any work, skilled or unskilled, manual, clerical, supervisory, or technical, in an establishment directly by the employer or through the contractor or any other agency. But does not include:
- Any person employed mainly in a managerial capacity or
- A supervisory capacity draws wages exceeding three thousand and five hundred rupees monthly.
Employer Under Section 2(3) of the Act
“Employer” means any person who employs either directly or through another person, either on behalf of himself or any other person, in an establishment and includes, In a factory, any person named under section 7(i) (f) of the Factories Act, 1948 as the manager, or/and In any establishment, any person is responsible to the owner for the supervision and control of the employees or the payment of wages.
Registration Under Gujarat LWF
Once workers reach ten or more on any working day during the preceding twelve months, the employer must register with the Gujarat Labour Welfare Board to contribute to the LWF. They must register separately under the Labour Welfare Board, apart from the Shops & Establishment Act registration.
To register, the entity needs to follow the registration process mentioned in the user manual on the Official website of the Gujarat Labour Welfare Board. The registration involves:
- Enter PAN details.
- Filling in establishment details.
- Creating login credentials.
- Uploading required documents.
The LWF Contribution Under Gujarat LWF
Every establishment or employer where Ten or more employees are employed and covered under this act needs to contribute to the Gujarat Labour Welfare Fund under section 6B(2) of the act. Every establishment or employer needs to contribute LWF two times a year, first on 30th June and second on 31st December, in respect of every employee and an employer for each such employee.
Payer (Contributor) | Rate of contribution as of 30th June (First half) | Rate of contribution as of 31st December (Second half) |
---|---|---|
Employee | Rs 6/- | Rs 6/- |
Employer for each such employee | Rs 12/- | Rs 12/- |
Due Date | 15 July | 15 January |
Payments must be made by 15th July and 15th January, respectively. To avoid penalties, ensure timely submission of contributions. For assistance, explore Payroll Compliance Services.
Interest on Contribution made under section 6C(2) of The Act
If the employer does not pay the whole or any part of the contribution amount or any other amount that he had to pay by the act. The Welfare commissioner may serve a notice regarding payment of the due by the employer along with interest for delay or non payment of the LWF dues within the prescribed timeframe under the act. The interest rate differs based on the delay in making the LWF dues. The interest rates chargeable are as follows.
Period | Rate of Interest |
---|---|
For the First 3 Months | 12% Per annum of the total amount of contribution not paid or late paid from the date prescribed in the demand notice issued by the welfare commissioner. |
After 3 Months | 18% per annum of the total amount (For each passing month) payable by the employer when he continues to default on the payment of that amount. |
The employer can apply for a waiver of the penalty (Penal Interest) under the proviso of the act before the Welfare Commissioner by clearly stating the grounds for remission. If the Welfare Commissioner is satisfied that non-payment of dues was due to circumstances beyond the employer's control. In that case, the Welfare Commissioner shall remit a part or whole of the penalty under the act.
Conclusion
The Gujarat Labour Welfare Board was formed to improve the conditions of employees working in the organised sector and their legal dependents. An attempt is made to present the legal position concerning the Gujarat Labour Welfare Fund Act 1953 in simple and easy-to-understand language. The blog on Gujarat LWF is about the employer's responsibility to follow all the rules and regulations regarding the contribution payments and other dues mentioned in the act in the interest of their employees to the fund.