As far as I understand, no deduction from the salary is required to be made for any contribution to the LWF. Only the unpaid dues (wages, bonus, gratuity, fine, etc.) are to be paid into the fund after the expiry of 3 years from the date on which these were drawn.
THE PUNJAB LABOUR WELFARE FUND ACT, 1965 provides the following Statement of Objects and Reasons:
Large sums of money realized by employers of establishments from their employees as fines, unpaid wages, bonus, or gratuity, which are not claimed by the latter, remain accumulated with the employers and are not properly utilized by them in the best interests of labor. This bill seeks to provide for the constitution of the Labour Welfare Fund to carry on various activities conducive to the welfare of labor through the agency of this Fund into which all such accumulations are required to be paid (Punjab Government Gazette Extraordinary, dated the 3rd of March, 1965).
Section 3 defines the LWF and this is further reflected in Section 9 of the Act.
Section 3. Welfare Fund:
(1) The State Government shall constitute a Fund called the Labour Welfare Fund and, notwithstanding anything contained in any other law for the time being in force or in any contract or instrument, all unpaid accumulations shall be paid to the Board which shall keep a separate account therefor until claims thereto have been decided in the manner provided in section 9, and the other sums specified in subsection (2) shall be paid into the Fund.
(2) The Fund shall consist of –
(a) all fines realized from the employees;
(b) unpaid accumulations transferred to the Fund under Section 9;
(c) grants and subsidies to the Board made by the State Government;
(d) all voluntary donations;
(e) any fund transferred under subsection (5) of section 10; and
(f) any sum borrowed under section 11.
(3) The sums specified in subsection (2) shall be collected by such agencies and in such manner, and the accounts of the Fund shall be maintained and audited in such manner as may be prescribed.
Section 9. Unpaid accumulations and claims thereto:
(1) All unpaid accumulations shall be deemed to be abandoned property.
(2) Any unpaid accumulations paid to the Board in accordance with the provisions of section 3 shall, on such payment, discharge an employee of the liability to make payment to an employee in respect thereof but to the extent only of the amount paid to the Board, and the liability to make payment to the employee to the extent aforesaid shall be deemed to be transferred to the Board, subject to the succeeding provisions of this section.
(3) As soon as possible after the payment of any unpaid accumulations is made to the Board, the Board shall, by notice (containing such particulars as may be prescribed) –
(a) exhibited on the notice board of the establishment in which the unpaid accumulations were earned;
(b) published in the Official Gazette and also in any two newspapers in both the regional languages of the State having large circulation in the area in which the establishment is situated or in such other manner as may be prescribed, regard being had to the amount of the claim: invite claims by employees for any payment due to them. The notice shall be inserted in the manner aforesaid in June and December of every year, for a period of three years from the date of payment of the unpaid accumulations to the Board.
(4) If any question arises whether the notice referred to in subsection (3) was given as required by that subsection, a certificate of the Board that it was so given shall be conclusive.
(5) If a claim is received, whether in answer to the notice or otherwise within a period of four years from the date of first publication of the notice in respect of such claim:
(a) where the amount of claim so received is equal to the amount deposited by the management with the Board, the amount of the claim shall be paid by the Board to the employee concerned; and
(b) in any other case, the Board shall transfer such claim to the Authority appointed under section 15 of the Payment of Wages Act, 1936, having jurisdiction in the area in which the establishment is or has been situated, and the Authority shall proceed to adjudicate upon and decide such claim. In hearing such claim, the Authority shall have the powers conferred by, and follow the procedure (in so far as it is applicable) followed in giving effect to the provisions of that Act.
(6) If the Authority aforesaid is satisfied that any such claim is valid so that the right to receive payment is established, it shall decide that the unpaid accumulations in relation to which the claim is made shall cease to be deemed to be abandoned property and shall order the Board to pay the whole of the dues claimed, or such part thereof as the Authority decides are properly due, to the employee; and the Board shall make payment accordingly:
Provided that the Board shall not be liable to pay any sum in excess of that paid under subsection (1) of section 3 to the Board as unpaid accumulations in respect of the claim.
(7) If a claim for payment is refused, the employee shall have a right of appeal to the Court of District Judge, and the Board shall comply with any order made on appeal. An appeal shall lie within sixty days of the decision of the Authority.
(8) The decision of the Authority, subject to the appeal aforesaid, and the decision on appeal shall be final and conclusive as to the right to receive payment, the liability of the Board to pay, and also as to the amount, if any.
(9) If no claim is made within the time specified in subsection (5) or a claim has been duly refused as aforesaid by the Authority or on appeal by the Court, then the unpaid accumulations in respect of such claim shall accrue to, and vest in, the State as bona vacantia, and shall thereafter, without further assurance, be deemed to be transferred to, and form part of, the Fund.