Labour Codes: #14 Worker Re-skilling Fund – Industrial Relations Code, 2020
1) Objective
The Worker Re-skilling Fund is a statutory welfare mechanism under section 83 of the Industrial Relations Code, 2020 (IRC). It is intended to provide immediate financial support to retrenched workers so they can acquire new skills and improve employability in a changing industry environment.
2) Statutory Basis
a) Provision: Section 83, IRC.
b) Responsible authority: The appropriate Government (Central or State, as applicable) shall, by notification, set up the Worker Re-skilling Fund.
c) Utilisation: To credit an amount equal to fifteen (15) days’ wages last drawn by each retrenched worker, or such other amount as may be prescribed.
3) Funding Sources
a) Employer contribution: For each retrenched worker, an amount equal to fifteen (15) days’ wages last drawn (or as prescribed by rules) to be transferred to the Fund.
b) Other prescribed sources: May include grants, CSR contributions, levies, or any other sources notified by the appropriate Government.
4) Disbursement & Timelines
a) Flow of funds: Employer transfers the contribution to the Government-maintained Worker Re-skilling Fund account.
b) Transfer to worker: As per draft rules and government commentary, the Fund will credit the retrenched worker’s bank account — anticipated within forty-five (45) days of retrenchment, but actual timelines and process depend on the notified rules of the appropriate Government
c) Purpose of funds: To be used by the worker for skill development, training, certification, or other employability enhancement activities.
5) Difference from Retrenchment Compensation (Section 70)
|
Feature |
Worker Re-skilling Fund |
Retrenchment Compensation |
|
Legal basis |
Section 83, IRC |
Section 70, IRC |
|
Purpose |
Skill development / employability |
Compensatory payment for loss of employment |
|
Payment source |
Employer contribution + other sources, via Govt.-managed fund |
Employer direct payment |
|
Nature |
Social security / welfare |
Statutory right |
|
Form |
Routed through Govt. fund |
Paid directly by employer |
6) Employer Compliance Requirements
a) Budget for both: Employers are required to set aside budget for both Retrenchment compensation (Section 70) and the Reskilling Fund contribution (Section 83).
b) Follow jurisdictional rules: Establishments will need to adhere to timelines, payment method, and reporting as per the rules of the appropriate Government.
c) Maintain proof: Establishments will need to keep records of each contribution and transfer to the Fund for inspection.
d) Penalties: Non-compliance can attract action under the IRC’s general penalty provisions and any specific penalties notified in rules.
7) Worker Considerations
Workers should:
a) Ensure wage and bank details are correct before retrenchment is finalised.
b) Check eligibility for government-recognised training programmes linked to the Fund.
c) Be aware that this payment is for re-skilling and does not replace their right to retrenchment compensation.
8) Why This Matters for Your Business
The Worker Re-skilling Fund shifts focus from job security to employability security. Establishments which ensure timely compliance can:
a) Avoid penalties,
b) Support workforce transition, and
c) Demonstrate commitment to responsible employer practices.
9) Key Take Away:
The Worker Re-skilling Fund under the IRC, represents a progressive shift from mere compensation to future employability. Timely compliance ensures both legal adherence and goodwill. By investing in reskilling, businesses secure not just workers’ futures but also their own sustainable growth.