The Karnataka Labour Welfare Fund Act, 1965 provides for the constitution of Karnataka Labour Welfare Fund for the financing of activities to promote welfare of labour in the State of Karnataka. It is applicable to all establishments, except establishments of the Central or State Governments. The Act mandates employer’s contribution, as also contribution in respect of every employee, whose name appears on the rolls of establishment as on 31st December, to be paid by the employer to the Board in respect of every year. The employer is entitled, under the Act, to recover the employee’s contribution from the employee by deduction from his wages.
The Welfare Commissioner, Karnataka Labour Welfare Board, has issued a press note clarifying that the Factories and Establishments will pay contribution to the Welfare Fund at the ratio of 20:40 (Employees Rs.20/- Employers Rs.40/-) and should remit contribution through online mode only. The last date for remittance of the contribution is 15.01.2021 for the calendar year 2020. The Welfare Commissioner has further advised that delay in payment of contribution will attract penal interest at the rate of 12% for first 3 months and after 3 months, 18% on the amount due and inspection by the Welfare Commissioner. The Establishments may deduct contribution to the Welfare Fund from the salaries of employees at the rate of Rs.20/-, along with employer’s contribution of Rs.40/- and remit the amount online on or before 15.01.2021. The deduction of employee’s contribution shall only be in respect of the employees who are on the rolls of the establishment as on 31.12.2020.
The compliance in respect of payment of contribution to the Welfare Fund is crucial to avoid risk of prosecution and payment of financial penalty by the employer.