Haryana insists on labour fund dues as firms reel under COVID impact

Suffering from COVID fallout and reverse migration of workers, many firms are annoyed with this move

Factory labour

The statutory contribution towards the labour welfare fund in Haryana has become a headache for the state-based industries, despite a three-month moratorium granted by the state government. With a pandemic raging across the country and its subsequent fallout, the government’s move on collecting the cess has annoyed many such firms.

The Labour Welfare Board (LWB) of the state collects cesses from firms operating in the organised sector, towards a labour welfare fund that is supposed to be used during emergencies like a marriage in a worker’s family or when a worker meets with an accident. The government is now insisting that the firms should pay up their dues for the year 2019.

The Haryana government has granted three more months’ time for the companies to pay up their dues from January till December, 2019. The last date has been extended to June 30 from March 31, 2020, and Chief Minister Manohar Lal Khattar has given his consent to the LWB’s proposal for the three-month moratorium.


“I am directed to inform you that the last date for the deposition of labour welfare fund (contribution) for the year 2019 has been extended up to June 30, 2020,” the LWB said in a letter to all labour welfare officers across the state, to intimate – and act accordingly – the employers about depositing the contribution amount.

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The welfare fund is basically a share of both employees and employers, but the proportion of the share is determined by the LWB as per the Act from time to time. The proportion was last determined in March, 2019, as per which employers has to share 0.4 per cent of the gross wage, and employees 0.2 per cent. Roughly, 0.2 per cent stands close to ₹25 and 0.4 per cent to ₹50.

“Prior to March 2019, the contribution was fixed at ₹10 for the employers and ₹20 for employees. But the government changed this to percentage; 0.2 per cent for employers and 0.4 per cent for employees,” said a senior LWB official, adding that contribution and periodicity of remittance differs with every state.

“In Haryana – like Andhra Pradesh, Karnataka, Tamil Nadu and other states – the periodicity is annual. December-end is the deadline to deposit the contribution with one-month grace period, i.e. January 31. The government changed the system last year and accordingly, the software has to be updated,” said the official.

“The board extended the deadline from January 31 to March 31, 2020. In March, the nation witnessed global pandemic and nationwide lockdown,” the official added. In order to provide social security to workers, the government had also introduced the Labour Welfare Fund Act.

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As per the Act, the fund is an aid in the form of money or necessities for those in need. “It provides facilities to labourers in order to improve their working conditions, provide social security, and raise their standard of living. In case a labourer dies at their workplace, the LWB grants ₹5 lakh and if he dies somewhere else, it grants ₹2 lakh. There are 25 schemes for the welfare of labourers under this fund,” said the official.

However, the fund’s utility has been questioned time and again by the contributors – the employees and the employers. Currently, during this pandemic, when migrant workers are fleeing to their home states, fearing for their life and compromising their jobs, the state’s move to tighten noose on employers to deposit their contribution has annoyed many.

There are around 25 lakh such beneficiary-cum-workers engaged in industries in Haryana, mostly in Gurugram and Faridabad. According to the LWB, 70 to 80 per cent of workers are engaged in these two cities, and most of them have fled the state – initially by themselves and later by trains and buses arranged by the government.

“Industries remained shut during the lockdown and owners-cum-employers incurred huge losses during this time. Many are not in the condition to deposit the contribution, but they have to do so to avoid government action. Under such pressure, many owners may retrench employees,” said JN Mangla, president of the Gurgaon Industrial Association, adding that this fund has hardly been used in the right way.

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Industry owners and employees’ unions have been raising doubts over the use of the fund from time to time.

“Many workers left during the lockdown and they have not reported back after the factories resumed operations following two months of shutdown. Why should the owners pay their contribution? We will wait for the department’s next move,” said an industry owner, wishing anonymity, adding that the Haryana government did not use the fund at all during the pandemic for the migrant workers’ stay, food and safety, to retain them.

Approximately, the state collects ₹85-₹90 crore annually towards the labour welfare fund.

Kuldip Jhangu, general secretary, Trade Union Congress, Gurugram, said the government should think beyond welfare schemes for labourers. “We have demanded housing for the labourers from this fund as it has been hardly used for our welfare. Giving cycle, stipends, etc., are minor things,” he said.

“This fund is collected in the name of the workers and it should be used for them in a better way, which is missing in the state. During the pandemic, not a single rupee was used for the industrial workers. So, for us, workers, this fund means nothing at all,” said Jhangu.

Now, when most of the workers have left the cities during the lockdown and many employers are reeling under acute financial crises, will they be able to deposit the contributions?

“We have received roughly 50 to 60 per cent contribution for the year 2019, and we hope the rest will be deposited by June end,” said Amrendra Singh, chairman, LWB.

Pankaj Aggarwal, labour commissioner-cum-chief inspector of factory, said, “The fund was utilised more for the construction workers in the state, and in case of industry workers, the government made sure that they get salaries from their respective employers.”

From a larger perspective – the objective of fund collection in the name of tens of thousands of poor labourers is being defeated for years and has now been exposed by the pandemic.

The Haryana LWB has in deposit, as on date, ₹350-400 crore (in head count of 25 lakh labourers). But it is not clear how it will benefit the workers who have left jobs and fled the state after working in industries there for years.

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