Confused About LWF Payments Across Locations? Seeking Advice on Best Practices

Query on LWF Payment Locations

We have over 100 employees spread across three different locations (Chennai, Coimbatore, and Kerala). Until last year, we paid LWF in Chennai for all employees from these locations. Could you please advise if this practice is correct or incorrect?

Recently, our company auditor recommended that we pay LWF in the respective locations. Is this the correct approach? If so, could you please provide an explanation?

Regards,
John

State-Specific Labour Welfare Fund (LWF)

Labour offices are state-specific. How can the LWF for Kerala be deposited for the Tamil Nadu Government?

Regards,
Pon

Good question. It should be payable in the respective state so that the employees can benefit more. If there is a flood in their area, they will receive benefits from LWF like ESI. Also, if it's a factory, they will receive a towel/soap monthly. Please check the LWF website; you can easily understand that this happened 5 to 7 years ago, but the government is continuing the practice.

Your query is not clear. Please mention your company's locations and whether it falls under State Government or Central Government. How are you paying the Labour Welfare Fund to the Commissioner? The Labour Welfare Fund Organization differs from state to Central. What is your company's product? If you furnish all of this information, it will be appropriate for the experts to give their opinion. Always be free and frank while seeking any advice.

Regards,
Adoni Suguresh
Sr. Executive (Pers, Admin & Ind. Rels)
Rtd Labour Laws Consultant

Your company auditor has advised you correctly to pay the LWF in respective places. It is basically wrong to pay the LWF at one place when your establishment is located in different places, especially in three different states. I think it is more important for you to understand the very purpose of the labor welfare fund, which refers to the basic facilities provided to labor by the state in order to improve their working conditions, provide social security, and raise their standard of living, particularly for the working class in the unorganized sector.

The labor welfare fund deposited in Chennai for the workers who are working in Coimbatore & Kerala has no access to the labor welfare fund schemes available in Chennai. All three states have framed their own labor welfare funds acts for the working class in their states. Therefore, you may go through those and comply with their rules.

As regards the postings of Sh. Adoni Suguresh, I wish to clarify that the labor welfare funds run by the state government or central government are quite different and have no relevance to one another. The central government collects cess from the employers and frames various welfare schemes for the mines, beedi, and cine workers, whereas the states collect the labor welfare funds from the employers of establishments, factories, etc. to provide various labor welfare schemes to their working class, which differs from state to state.

Regards,
BS Kalsi

With regard to the above issue, LWF can be paid in Chennai even for Coimbatore employees within the same state. In Kerala, a separate LWF payment is required. We have 10 branches across Pan India. For Coimbatore employees, LWF has been paid in Chennai for the past 4 years.

PT Payment Guidelines

For PT: within the state, if we have more than two branches, then PT should be paid at the specific location.

Regards,
Krishnamurthy P.

In short, I wish to respond to your query. Your auditor has rightly pointed out that you need to pay LWF in the respective places. You may be aware that LWF is a state Act, and the rate varies from state to state. Moreover, employees will benefit under the said Act if the LWF contributions are deposited in the respective states/places where they are employed.

Hence, for different states, you have to obtain a separate registration number after fulfilling formalities for the purpose of correct compliance as well as the welfare of employees covered under the said Act.

Please let me know if all these employees are interchangeable or if they will be permanently stationed in their respective states.