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

Overview : This blog is about the Kerala Labour Welfare Fund (LWF). It gives detailed information about the applicability of The Kerala Labour Welfare Act on the establishment and its contribution periods, contribution rates for employees and employers, and due dates and return dates of paying employees’ and employer’s contributions toward The Kerala Labour Welfare Fund. within the prescribed period mentioned under the act. The payment of interest if any amount is not paid within the prescribed period mentioned in the act.
Introduction of the Kerala LWF
Kerala Labour Welfare Board Fund is a statutory body that commenced functioning on 1st May 1977 to promote labour welfare. The Board collects contributions from the employees and employers of the establishments and other statutory revenues under the Kerala Labour Welfare Act, 1975. As a prominent pioneer in the arena of labour welfare, the board offers a variety of benefits to its workers who are paying contributions to this fund.
Highlights of the Kerala Labour Welfare Fund (LWF)
S.No | Particulars | Key Information |
---|---|---|
1. | Governing Act | The Kerala Labour Welfare Fund Act. |
2. | Effective Date | 01 May 1977 |
3. | Applicability | The Commercial Establishments employ five 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 Kerala Shops & Establishment Act. |
5. | Contribution Rate | Section 15(1)
|
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 Kerala Welfare Fund Act, 1975
This act may be called the Kerala Labour Welfare Fund Act 1975 (Hereinafter referred to as The Act). This act covers or extends to the whole state of Kerala. This act applies to all establishments or employers where Two or more employees are working or employed during the preceding twelve months.
Establishment As Defined U/s 2(f) of The Act
There are three variations of the establishment under the Kerala Shops & Establishment Act, which includes one that grows tea, rubber, coffee, cardamom, oil palm, or cocoa. The second category is the small shops defined under the Shops Act. The last is every other commercial establishment or employer operating within Kerala. The threshold limit of employees is different for each such class of establishment, which is explained in the below table.
S.No | Type of Establishment | Employee Threshold |
---|---|---|
1. | Establishment, which is land used for growing tea, rubber, coffee, cardamom, oil palm or cocoa | Ten or More |
2. | A shop is defined under section 2(15) of the Kerala Shops and Commercial Establishments Act, 1960. A “shop” covers any premises where trade, business, or services occur, including related offices, storerooms, and warehouses. However, it excludes commercial establishments or shops attached to factories where employees already receive benefits under the Factories Act 1948. | Two or More |
3. | Any other commercial establishment or employer under section 2(4) of the Kerala Shops and Commercial Establishment Act, 1960 | Five or More |
When LWF does not apply
Suppose a commercial establishment under section 2(4) of the Kerala Shops and Establishment Act continues working with employees under five for a continuous period of not less than six 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 six months. However, the employer shall intimate the reduction in employees below five. That six months have lapsed with the reduced employee strength to the competent authority within one month from the date of such cessation.
Explanation:
- When Number of Employees Exceeds Five: Assume that a Commercial establishment u/s 2(4) of the Kerala Shops and Establishment Act had 3 (three) employees; subsequently, the number of employees increased and became 7 (Seven) in January 2024. Now, the employer is liable to contribute LWF half-yearly as of 30th June.
- When Number of Employees Reduces Below Five: If the number of employees is reduced and becomes less than Five in any month, for example, say, effective 1st March 2024, and the establishment continues working with less than Five employees for a continuous period of six months, say upto 31st August 2024, then such an establishment shall cease to be an establishment under this act with effect from 1st September 2024. Therefore, such an establishment is not required to remit the LWF contribution ending 31st December 2024.
Employee Under Section 2(d) of The Act
Employee means any person employed for hire or reward to do any work, skilled or unskilled, manual, supervisory, clerical or technical, in an establishment for an aggregate period of not less than thirty days during the preceding twelve months. But does not include:
- Any person employed mainly in a managerial capacity or
- An apprentice working on a part-time basis (Under Apprentice Act, 1961).
Employer Under Section 2(e) 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 Kerala LWF
Once workers reach Five or more on any working day during the preceding twelve months, the employer must register with the Kerala 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 Kerala Labour Welfare Board. The registration involves:
- Enter establishment and employer details.
- Make registration and create an establishment ID.
- Log in with the establishment ID.
- Filling in establishment’s and employee’s details.
- Uploading required documents.
The Contribution Rate Under the Kerala LWF
Every establishment or employer that is coverable under the Kerala LWF 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 45/- | Rs 45/- |
Employer for each such employee | Rs 45/- | Rs 45/- |
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 under section 14 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. Even if the employer continues not paying the due amounts without sufficient cause, the employer shall be charged by simple interest at the rate of nine per cent per annum from the date on which the amount fell due.
Conclusion
The Kerala 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 Kerala Labour Welfare Fund Act 1975 in simple and easy-to-understand language. The blog on Kerala 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.