In 1985, the Government of Kerala promulgated the Kerala Motor Workers’ Welfare Fund Act to provide for the constitution of a Fund to promote the welfare of private motor transport workers in the State. It came into force on 27.06.1985. The Kerala Motor Transport Workers’ Welfare Fund Scheme framed under the above Act came into force on 11.07.1985 vide G.O. (Rt.) No. 1036/85/LBR dated 29.06.1985. The Act covers all the motor transport undertakings except those covered under the Employees Provident Fund & Miscellaneous Provisions Act. 

Even though the act came into force in 1985 only a limited number of workers joined the scheme till 2005. Many of the employers adopted money-evading practices by exploiting loopholes in the welfare fund act. In order to fulfil the very purpose of the act and to avoid the anomaly the government amended the Act in 2005. As per the provisions of the amended Act payment of welfare fund has been made a mandatory provision for the acceptance of motor vehicles tax.. The government made such an amendment in order to bring all the motor workers under the shadow of the welfare fund. As per the provisions of the amended Kerala motor transport workers welfare fund act the government categorized the motor vehicles and fixed the quantum of amount and also fixed the minimum number of workers required for each type of vehicle.