TL;DR
- There is no central Labour Welfare Fund Act. Every factory is caught where a State has legislated, and a shop or commercial establishment is caught once it meets that State's headcount test, which is five or more persons in Maharashtra and Delhi, ten or more in Haryana and Karnataka, and twenty or more in Andhra Pradesh.
Last updated: 16 October 2026
Quick Answer: Factories, and establishments meeting their State's headcount test, must register for the Labour Welfare Fund. The test is five or more persons in Maharashtra and Delhi, ten or more in Haryana and Karnataka, and twenty or more in Andhra Pradesh. No central Act exists, so the duty arises only where the State has legislated.
Labour Welfare Fund applicability is decided by a State enactment, not by a central one. Each Act works the same way in outline: it names the kinds of workplace it reaches, and it attaches a headcount only to the shops-and-establishments limb.
| Limb of the applicability test | What it reaches | Headcount in the definition |
|---|---|---|
| Factory | a factory, by reference to the central factories legislation named in the State Act | none stated |
| Transport and plantation | a tramway, a motor omnibus service, a motor transport undertaking, and a plantation where the State Act names one | none stated |
| Shop or commercial establishment | an establishment within the meaning of that State's Shops and Establishments Act | the State's figure: five, ten or twenty or more persons |
| Industry premises | premises where an industry under section 2(j) of the Industrial Disputes Act, 1947 is carried on, where the State Act names it | none stated |
Which Establishments Must Register for the Labour Welfare Fund?
Every factory in a State that has an Act is covered, with no minimum headcount. A shop or commercial establishment is covered only once it meets the figure in that State's definition of "establishment". Several Acts add transport undertakings, plantations and industry premises as separate limbs, each without a headcount.
The duty that follows is not a one-off certificate, and on at least one State's text no certificate issues at all. The string "registr" does not appear anywhere in the Maharashtra Act and Rules booklet: what the Board operates is an administrative allotment of an establishment code number on a proforma for new coverage. Under the State Acts and Rules the employer enrols with the State welfare board, pays both shares, files the prescribed statement and maintains the prescribed registers. In Maharashtra, rule 3-A requires the statement in Form A-1, and rule 21 requires a wage register in Form B and a consolidated register of unclaimed wages and fines in Form C, preserved for ten years.
Which Headcount Test Applies in Each State?
The headcount is a State choice, and it ranges from five to twenty. It is also a backward-looking test in most Acts, not a snapshot. Maharashtra's section 2(4)(iii) catches an establishment that employs, or on any working day during the preceding twelve months employed, five or more persons.
| State or Union territory | Enactment | Shops-and-establishments headcount |
|---|---|---|
| Maharashtra | Maharashtra Labour Welfare Fund Act, 1953, section 2(4)(iii) | five or more persons |
| Delhi | Bombay Labour Welfare Fund Act, 1953, as extended to Delhi | five or more persons |
| Haryana | Punjab Labour Welfare Fund Act, 1965, section 2(4), as substituted by Haryana Act No. 7 of 2007 | ten or more employees |
| Punjab | Punjab Labour Welfare Fund Act, 1965, section 2(4)(iii), Punjab's own text | more than twenty persons, and no shop or commercial establishment limb |
| Chandigarh | Punjab Labour Welfare Fund Act, 1965, read with section 2A | Punjab's text applies; no Chandigarh-published copy exists, so take the figure from Punjab |
| Karnataka | Karnataka Labour Welfare Fund Act, 1965, section 2(4) | ten or more persons |
| Tamil Nadu | Tamil Nadu Labour Welfare Fund Act, 1972 | five or more persons in a catering establishment |
| Andhra Pradesh | Andhra Pradesh Labour Welfare Fund Act, 1987, section 2(4)(iii) | twenty or more persons |
In Haryana the limb is wider than a shop. Section 2(4) of the Punjab Labour Welfare Fund Act, 1965, as it reads in Haryana after Haryana Act No. 7 of 2007, reaches three things.
- a factory
- any premises where an industry within the meaning of section 2(j) of the Industrial Disputes Act, 1947 is carried on
- a shop or commercial establishment under the Punjab Shops and Commercial Establishments Act, 1958 with ten or more employees
Which States and Union Territories Have a Labour Welfare Fund Act?
Only those that have passed one. Welfare of labour is a concurrent subject, and no central Labour Welfare Fund Act exists, so an employer in a State with no enactment has no welfare fund duty at all. Identifying the governing enactment for each location, against a maintained listing of Central and State Acts, comes before any threshold test.
Which Enactment Covers More Than One Jurisdiction?
One Act can govern three jurisdictions, but it no longer says the same thing in each. Section 2(1) of the Punjab Labour Welfare Fund Act, 1965 constitutes the Punjab Labour Welfare Board under section 4 for each of the States of Punjab and Haryana and the Union territory of Chandigarh. Section 2A then reads every reference to the State Government, in the application of the Act to Chandigarh, as a reference to the Administrator of that Union territory.
Does the Punjab Act Say the Same Thing in Punjab and Haryana?
No, and the divergence is the trap. The two States have amended their copies separately. Punjab's own text of section 2(4)(iii) reaches an establishment that "has been employing on any working day during the preceding twelve months more than twenty persons", and it carries no shop or commercial establishment limb at all. The ten-employee figure and the contractor limb both arrive through Haryana Act No. 7 of 2007 and apply in Haryana only. Chandigarh takes Punjab's amendment Acts by extension rather than Haryana's, and no Chandigarh-published copy exists, so read Chandigarh off Punjab's text and not Haryana's.
Delhi works the other way round. It received the Bombay Labour Welfare Fund Act, 1953 by extension, so its text is a frozen snapshot of another State's Act rather than an enactment of its own.
Which Employees Are Covered by the Labour Welfare Fund?
Coverage follows the State Act's definition of "employee", and that definition is narrower than headcount in some States and wider in others. Work engaged through a contractor counts in both the Maharashtra and the Punjab texts, so an establishment cannot exclude contractor-supplied workers from the test.
The cut-off that fixes coverage also differs. Haryana's contribution provision defines the relevant employee as one standing on the register of the establishment on the last working day of the month, so the month-end register governs there.
| Enactment | Counted | Not counted |
|---|---|---|
| Maharashtra Act, 1953, section 2(2) | work that is manual, clerical, supervisory or technical, engaged directly by the employer or through a contractor or any other agency | a person employed mainly in a managerial capacity; a supervisory employee drawing wages above ₹3,500 per month; an apprentice under the Apprentices Act, 1961 |
| Punjab Act, 1965, section 2(2), as it reads in Haryana | any person employed directly or through any agency, including a contractor, with or without the knowledge of the principal employer, for remuneration | no managerial, supervisory or wage exclusion appears in the definition |
| Punjab Act, 1965, section 2(2), Punjab's own text | any person employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in an establishment | no contractor or agency limb, so contractor-supplied workers are not counted on this text |
| Bombay Act, 1953, as in force in Delhi, section 2 | any person employed for hire or reward to do any work, skilled or unskilled | a person employed mainly in a managerial capacity; a supervisory employee drawing wages above ₹1,600 per month |
| Andhra Pradesh Act, 1987, section 2(2)(i) | a person employed for hire or reward in an establishment for at least thirty days in a twelve-month period | a person employed mainly in a managerial capacity; a supervisory employee drawing wages above ₹1,600 per month; apprentices and part-time workers |
Which Workers Does the Definition Exclude?
Two exclusions recur, and both are tests of function before status. The first removes a person employed mainly in a managerial capacity. The second removes a supervisory employee whose wages exceed the figure in that State's text, or who exercises functions mainly of a managerial nature by reason of the duties attached to the office.
Those wage figures have not moved together. The Delhi definition of "employee" still carries ₹1,600 per month, where Maharashtra's carries ₹3,500. The text as it reads in Haryana carries neither exclusion, so a supervisor in Haryana is counted whatever the wage. Confirming the exact definition of employee published by the Delhi Labour Welfare Board is therefore part of the applicability test, not a detail after it.
What Do Employees Get From the Labour Welfare Fund?
The Fund pays for welfare measures outside the workplace. Section 10 of the Punjab Act, 1965 and section 7 of the Maharashtra Act, 1953 both vest the Fund in the Board as trustees and list the permitted heads in almost identical terms.
- community and social education centres, reading rooms and libraries
- games, sports, excursions and holiday homes
- entertainment and recreation
- home industries for women and unemployed persons
- the cost of administering the Act
What Can the Fund Not Pay For?
Anything the employer is already obliged to provide. The proviso to section 10(2) of the Punjab Act states that the Fund shall not be utilised in financing any measure which the employer is required under any law for the time being in force to carry out. The same proviso appears in the Maharashtra Act at section 7(2).
How Is Multi-State Labour Welfare Fund Applicability Tracked?
Applicability has to be re-tested per State and per location, because four variables move independently: the enactment, the limb that catches the workplace, the headcount, and the definition of employee. A group with offices in five States is therefore running five separate tests.
Hold each State as its own obligation with a named owner, the limb it was assessed under, and the headcount evidence behind the assessment. LexComply is a software platform that maps each State obligation to the entity and location that carries it, with state-specific labour questions answered from the maintained rule sets. Payment is remitted to the board of the State that notified the enactment, and the figure is a matter for that State Government.
- For the current contribution amounts and payment dates, see the companion page on Labour Welfare Fund contributions and due dates.
- The same limb-then-threshold discipline governs ESIC applicability and its wage test.
- A new location's enrolment can be handled alongside other statutory registrations.
Common Mistakes to Avoid
- Applying a headcount to the factory limb. The factory limb in Maharashtra's section 2(4)(i), Punjab's section 2(4) and the Tamil Nadu Act carries no minimum number. The headcount attaches only to the shops-and-establishments limb.
- Treating ten or more persons as the national test, or reading Haryana's figure into Punjab. It is ten in Haryana and Karnataka, five in Maharashtra and Delhi, and twenty or more in Andhra Pradesh and in Punjab's own text. There is no single figure to apply, and one Act can carry two figures.
- Reading the headcount as a present-day snapshot. Maharashtra's section 2(4)(iii) catches an establishment that employed five or more persons on any working day during the preceding twelve months, so a single qualifying day in that window is enough.
- Assuming every State excludes supervisors above a wage limit. Section 2(2) of the Punjab Act, as substituted by Haryana Act No. 7 of 2007, carries no managerial or supervisory exclusion and no wage figure, unlike the Maharashtra and Delhi definitions.
- Assuming the four labour codes absorbed the Labour Welfare Fund. The codes that commenced on 21 November 2025 repealed named central enactments. The Fund is constituted by State legislation, such as section 3 of the Punjab Act, and continues under that text.
- Reading "wages" in a State welfare fund Act without checking the reference. Section 2(11) of the Punjab Act defines wages by reference to the Payment of Wages Act, 1936, which section 69 of the Code on Wages, 2019 repealed with effect from 21 November 2025. Confirm with the board how that reference is now read.
Legal Disclaimer
This article is general information on Indian labour welfare fund legislation as at 16 October 2026 and is not legal advice. Applicability tests, defined terms and thresholds are set and revised by individual State Governments and Union territory administrations, so verify the current position with the relevant welfare board or a qualified adviser before acting.
