The Karnataka Labour Welfare Fund (Amendment) Act, 2025 has come into force with effect from 7 January 2026, pursuant to Notification No. DPAL 82 SHASANA 2025 issued by the Government of Karnataka.
This amendment marks a significant expansion of the Act’s applicability, coupled with a shift towards digitised and streamlined compliance mechanisms. Employers operating in Karnataka are required to immediately reassess coverage and ensure compliance under the revised framework.
Key Highlights of the Amendment
1. Expanded Coverage Threshold
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The applicability threshold has been substantially reduced.
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The Act now applies to establishments employing 10 or more employees, as against the earlier threshold of 50 or more employees.
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This change brings a large number of SMEs and mid-sized establishments within the ambit of the Labour Welfare Fund.
2. Enhanced Employer Compliance Obligations
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Covered employers are required to:
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Register under the Karnataka Labour Welfare Fund, where not already registered
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Deduct and contribute Labour Welfare Fund contributions for all eligible employees
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Maintain appropriate records and ensure timely compliance
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Failure to comply may expose employers to statutory penalties and enforcement action during inspections or audits.
3. Introduction of Online Payment Modes
To facilitate ease of compliance, the amendment formally recognises digital modes of contribution payment, including:
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Net Banking
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NEFT
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RTGS
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UPI
This move aligns the Labour Welfare Fund framework with the Government’s broader digital governance and compliance simplification initiatives.
4. Immediate Effect
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The amendment is effective immediately from 7 January 2026.
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There is no transition or grace period specified in the notification.
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Employers are therefore expected to take prompt corrective and compliance action.
What Employers Should Do Now
✔ Review current employee strength establishment-wise in Karnataka
✔ Identify coverage under the revised 10-employee threshold
✔ Complete registration under the Labour Welfare Fund, if newly covered
✔ Align payroll systems for correct deduction and contribution
✔ Switch to approved online payment modes for contributions
Compliance Advisory
Employers who were earlier outside the scope of the Act must treat this amendment as a priority compliance item. Early action will help avoid last-minute non-compliance risks, interest, or penalties.
Notification :- LWF-KARNAKATA
