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

Rewati Krishnan
Sanjeev Kumar |inUpdated : January 24, 2025

Overview : This blog is about the background of the Maharashtra Labour Welfare Fund (LWF), it gives detailed information about the applicability of The Maharashtra Labour Welfare Act on the establishment and its exception, contribution periods, contribution rates in respect of employees and employers, due and return dates of paying employees’ and employer’s contributions toward The Maharashtra Labour Welfare Fund, and the interests of payment is not made within the prescribed period mentioned in the act.

Introduction of the Maharashtra LWF

At the time of enactment of the Bombay Workers Welfare Fund Act, 1953, a Labour Welfare Fund was established. “Bombay Kamgar Kalyan Mandal,” established on 1st July 1953, was renamed “Maharashtra Kamgar Kalyan Mandal” after the birth of the Maharashtra state on 1st May 1960. In 1946, the Bombay Presidency recognised that the real welfare of the workers is not only the government’s responsibility but also the establishment’s responsibility where workers are employed or working.

To implement the concept of “Collective Labour Welfare” and to provide a legal mechanism, the “Mumbai Labour Welfare Fund Act, 1953 was constituted by the Bombay Labour Welfare Act in June 1953. In the beginning, the act was limited to some important labour colonies. The government created a separate welfare fund for the welfare work of the labour by ratifying the Maharashtra Labour Welfare Fund Act, 1953 in June 1953.

Key Highlights of the Maharashtra Labour Welfare Fund (LWF)

S.No Particulars Key Information
1.Governing ActThe Maharashtra Labour Welfare Fund Act.
2.Effective Date17 June 1953
3.ApplicabilityEstablishments employing five 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 Maharashtra shops & establishment Act.
5.Contribution RateSection 6BB
  • Employee: ₹25/-
  • Employer: ₹75/-
6.Contribution PeriodHalf Yearly
7.Due DateSection 6BB
  • First Half year (Jan to June): 15 July
  • Second Half Year (July to Dec): 15 Jan

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 Maharashtra Welfare Fund Act, 1953

This act may be called the Maharashtra Labour Welfare Fund Act 1953 (Hereinafter referred to as The Act). This act covers or extends to the whole state of Maharashtra. This act applies to all establishments or employers where Five 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 defined under the Motor Transport Workers Act, 1961, 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 five or more persons, including the establishments which have been granted exemption partly or wholly under the proviso to section 4 of the Bombay Shops and Establishments Act, 1948 Act.

When LWF does not apply

Suppose an establishment continues working with employees under five 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 shall intimate the reduction in employees below five. That three 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 an establishment 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 and 31st December 2024.
  • 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 August 2024, and the establishment continues working with less than five employees for a continuous period of three months, say upto 1st November 2024, then such an establishment shall cease to be an establishment under this act with effect from 1st December 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
  • as an apprentice under the Apprentice Act, l961.
  • 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

Once workers reach five or more on any working day during the preceding twelve months, the employer must register with the Maharashtra 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 Maharashtra Labour Welfare Board. The registration involves:

  • Validating PAN details.
  • Filling in establishment details.
  • Creating login credentials.
  • Uploading required documents.

Contribution made by the employees and employer

Every establishment or employer where Five or more employees are employed and covered under this act needs to contribute to the Maharashtra Labour Welfare Fund under section 6BB(2)(a) and (b) 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)
EmployeeRs 25/-Rs 25/-
Employer for each such employeeRs 75/-Rs 75/-
Due Date15 July15 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 6BB of The Act

In the case of a failure to pay any amount of the employer’s and employee’s contributions under section 6BB without sufficient cause. The Employer shall pay the Board simple interest in addition to that amount. The period and rate of interest are mentioned below:

PeriodRate of Interest
For the First 3 Months1.5 % of the total amount (For each passing month) payable by the employer as of the last date prescribed under the provisions of section 6BB(3) of the act.
After 3 Months passed mentioned above2 % 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 section 6B(2) of the act.

No remission shall be made without the prior sanction of the Board if the penalty to be remitted exceeds five hundred rupees (According to rule 4B of Maharashtra LWF Rule, 1953).

Conclusion

The Maharashtra 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 with respect to the Maharashtra Labour Welfare Fund Act 1953 in simple and easy-to-understand language. The blog on Maharashtra 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.