Karnataka Expands Labour Welfare Fund Reach with New 2026 Amendment

In a major update for employers in Karnataka, the state government has notified the Karnataka Labour Welfare Fund (Amendment) Act, 2025 (Karnataka Act No. 05 of 2026). This amendment received the Governor’s assent on January 6, 2026, and was published in the Karnataka Gazette on January 7, 2026, making it effective immediately.

The changes aim to broaden the Act’s scope and streamline compliance in the digital age. Here are the top highlights:

• Broader Coverage for Establishments: The threshold for applicability has dropped significantly—from factories, shops, or establishments employing more than 50 workers to any establishment with 10 or more employees. This expansion brings smaller businesses under the welfare fund obligations, promoting wider worker benefits.

• Digital Payment Options Introduced: Gone are the days of mandatory cheques or crossed demand drafts. Employers can now contribute seamlessly via modern channels, including:

  • Net Banking

  • National Electronic Funds Transfer (NEFT)

  • Real Time Gross Settlement (RTGS)

  • Unified Payments Interface (UPI)

  • Demand Draft

• Immediate Effect with Flexibility: The amendments kicked in right away on publication (January 7, 2026). To ease implementation, the state government can issue clarifying orders for up to two years to address any teething issues.

Official Notification:

Karnataka LWF Amendment