Worker Re-skilling Fund: Employer Contribution

Contribution and credit at a glance

Section 83 ties the employer's payment to the worker's last-drawn wages and puts a hard credit deadline on the money reaching the worker. The table sets out both, with a note on which parts the government can vary.

Grounded in Section 83, Industrial Relations Code, 2020. This table carries no illustrative figures; the worked example below uses assumed wages, which are clearly marked.

The rule in plain words

Chapter XI of the Industrial Relations Code, 2020 creates a dedicated pool called the worker re-skilling fund. The appropriate Government sets this fund up by issuing a notification, so the fund comes into being once that notification is made.

The employer's duty is triggered by retrenchment. For every worker who is retrenched, and only in a case of retrenchment, the employer contributes an amount equal to fifteen days of the wages the worker last drew immediately before the retrenchment. The Central Government may, by notification, set a number of days other than fifteen, so the day-count that applies is the figure in force at the time.

The money does not stay in the pool indefinitely. The fund is used by crediting fifteen days of the worker's last-drawn wages to that retrenched worker's own account, and this credit must happen within forty-five days of the retrenchment. The exact manner of crediting is left to the rules.

• Trigger: retrenchment of a worker, and retrenchment only.
• Employer pays: fifteen days of the worker's last-drawn wages for each retrenched worker, or the day-count the Central Government notifies.
• Worker receives: fifteen days of last-drawn wages credited to the worker's account within forty-five days of the retrenchment.

A worked example (illustrative figures)

The Code fixes the contribution as fifteen days of last-drawn wages, but it does not state any rupee figure, because the amount depends on each worker's pay. The numbers below are illustrative only and are used to show the arithmetic; they are not statutory amounts.

If the Central Government notifies a day-count other than fifteen, the multiplier changes accordingly. The provided law does not define how the daily wage is derived, so the daily figure here is an assumption made only to complete the sum.

• Assume, only for illustration, that a retrenched worker's last-drawn wage works out to Rs 600 per day.
• Fifteen days of last-drawn wages equals 15 times Rs 600, that is Rs 9,000 (illustrative).
• The employer contributes that Rs 9,000 to the worker re-skilling fund for this one retrenched worker.
• Fifteen days of last-drawn wages, the same Rs 9,000 in this illustration, is credited to the worker's own account within forty-five days of the retrenchment.

Exceptions and fine print

• The contribution attaches to retrenchment only. Section 83 does not extend this particular fifteen-day contribution to other ways in which employment might end.
• The fifteen-day figure is a default that the Central Government can change by notification, so it may not always read fifteen.
• Besides employer contributions, the fund may draw on other sources, but those are only the sources prescribed by the appropriate Government and are not listed in the Code itself.
• The way the wages are credited to the worker's account is left to the rules, so the operational steps come from subordinate legislation, not from the words of Section 83.
• The provided text does not define wages or how a daily rate is calculated, so those inputs must be taken from the relevant definitions and rules and should not be assumed.
• Section 82 applies certain provisions of Chapter IX, namely its sections 66, 71, 72, 73 and 76, to establishments covered by this Chapter; the content of those cross-referenced sections is outside the text used for this page.

What an employer must do

• Treat every retrenchment as a contribution event and identify each retrenched worker.
• For each such worker, compute an amount equal to fifteen days of the wages last drawn immediately before the retrenchment.
• Contribute that amount to the worker re-skilling fund set up by the appropriate Government.
• Track the retrenchment date, because the forty-five day window for crediting the worker runs from it.
• Check for any Central Government notification that changes the number of days from fifteen, and apply the day-count in force.
• Follow the appropriate Government's rules for the manner of crediting and for any other prescribed contributions to the fund.

What a worker can do

• If you are retrenched, expect fifteen days of your last-drawn wages to be credited to your own account.
• Expect that credit to reach you within forty-five days of the retrenchment.
• Note that the amount is measured on the wages you last drew immediately before the retrenchment.
• Check the appropriate Government's notification and rules for the account and manner in which the credit is made, and whether the day-count has been revised from fifteen.

How the fund is set up and funded

The fund is not automatic. The appropriate Government brings it into being by notification, and only then does the pool exist. Once set up, Section 83(2) fills it from two kinds of inflow: the employer's retrenchment contribution of fifteen days of last-drawn wages for each retrenched worker, and any other sources the appropriate Government prescribes. The Code names those other sources only in general terms, leaving the specifics to what is prescribed by rules.

Frequently asked questions