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

Rewati Krishnan
Sanjeev Kumar |inUpdated : January 27, 2025

Overview : This blog is about the Karnataka Labour Welfare Fund, which provides detailed information about the applicability of The Karnataka Labour Welfare Act on the establishment and its exception, contribution periods, contribution rates in respect of employees and employers, due date for LWF payment/return filing under the Karnataka Labour Welfare Fund, The blog also deals with the late payment interest and penalty for non-compliance.

Introduction of Karnataka LWF

Karnataka Labour Welfare Board is constituted under the "Karnataka Labour Welfare Fund Act, 1965" and "Rules 1968". This Board primarily caters to the social security needs of the Organized sector workers. The Board receives fund contributions from employees and employers and matching contributions from the government. According to Karnataka Labour Fund Act, 1965, under section 4 and rule 10, the following members constitute the Board, and the government shall appoint them.

Key Highlights of the Karnataka Labour Welfare Fund

S.No Particulars Key Information
1.Governing ActThe Karnataka Labour Welfare Fund Act 1965.
2.Effective Date18 July 1965
3.ApplicabilityEstablishments employing fifty or more employees. (Employees of all branches, all over India shall be counted for this purpose)
4.RegistrationLWF Registration is required even if the establishment is registered under the Karnataka shops & establishment Act.
5.Contribution RateSection 7A(2)
  • Employee: ₹20/-
  • Employer: ₹40/-
6.Contribution PeriodYearly
7.Due DateYearly (1st Jan to 31st Dem): 15th Jan

Applicability of Karnataka Welfare Fund Act, 1965

This act may be called as Karnataka Labour Welfare Fund Act, 1965 (Hereinafter referred to as The Act). This act covers or extends to the whole state of Karnataka. This act applies to all establishments or employers where Fifty or more employees are working or employed.

Meaning of Establishment

Under Section 2(4) of The Act "Establishment" means a factory, Motor omnibus service, any establishment, including a society registered or deemed to be registered under the Karnataka Societies Registration Act, 1960, and a charitable or other trust, whether registered under any law applicable to such charitable or other trust or not and which employs or on any working day during the preceding twelve months employed more than fifty persons and any plantation or workshops.

Employee Under Section 2(2) of The Act

''Employee'' means any person who is employed for wages to do any work, skilled or unskilled, manual or clerical, in an establishment.

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(1) (f) of the Factories Act, 1948, as the manager 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 Karnataka LWF

Once workers reach fifty or more on any working day during the preceding twelve months, the employer must pay contributions under the Karnataka Labour Welfare Board. Even when the establishment has been registered under the Karnataka Shop and Establishment Act, it must be registered separately under the Karnataka Labour Welfare Board.

For the purpose of registration of LWF in the state of Karnataka must go to the Official Site of the Karnataka Labour Welfare Board (LWF). Enter the details regarding Employer and Establishment Details and upload the required documents regarding PAN, Registration Certificate, etc. And pay the contribution amount.

Contribution made by the employees and employer

Every establishment or employer where Fifty or more employees are employed and covered under this act needs to contribute to the Karnataka Labour Welfare Fund Act, once a year, on 31st December, for every employee.

PayerRate of contribution as of 31st December
EmployeeRs 20/-
Employer for each such employeeRs 40/-
Contribution PeriodYearly (January to December)
Due Date31st December

Last Date of Payment of Contribution

The employer shall pay the employer's contribution and the employee's contribution in respect of a year to the Board on or before 15th January of the following year by cheque, and the employer himself shall bear the expenses of remitting the contribution.

Interest on non-payment or late payment of LWF

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 due by the employer. Even if the employer continues not paying the due amounts, then the employer shall be charged by simple interest according to the amount payable by him on the last date prescribed in the notice. The period and rate of interest are mentioned below:

PeriodRate of Interest
For the First 3 Months12 % of the total amount (For each passing month) payable by the employer as of the last date prescribed in the notice sent by the Commissioner.
After 3 Months passed mentioned above18 % 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 under the proviso of the act before the Welfare Commissioner within thirty days from the payment date by clearly stating the grounds for the remission of the penalty. 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 proviso of the act. No remission shall be made without the prior sanction of the Board.

Conclusion

The Karnataka Labour Welfare Board was formed to improve the conditions of employees working in the organized sector and their legal dependents. An attempt is made to present the legal position concerning the Karnataka Labour Welfare Fund Act 1965 in simple and easy-to-understand language. The blog on Karnataka 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. For expert guidance on Labour Compliance and Registration, setindiabiz.com is your go-to partner.