The Worker Re-skilling Fund

In one line

When a worker is retrenched, the employer must put fifteen days' of his last-drawn wages into a Government fund, and that sum must be credited to the worker's own account within forty-five days so that he can retrain.

In exam wording: section 83 of the Industrial Relations Code 2020 requires the appropriate Government to set up by notification a fund called the worker re-skilling fund, consisting of the contribution of the employer of an industrial establishment of an amount equal to fifteen days' wages last drawn by the worker immediately before the retrenchment, or such other number of days as the Central Government may notify, for every retrenched worker in the case of retrenchment only, together with contributions from such other sources as the appropriate Government may prescribe; and provides that the fund shall be utilised by crediting fifteen days' wages last drawn by the worker to his account, within forty-five days of the retrenchment, in the prescribed manner.

Why the law has this at all

Retrenchment compensation under section 70(b) does one thing: it gives a worker money to live on while he looks for another job. It assumes there is another job of the same kind for him to find.

That assumption is often false, and section 83 is an admission of it. A packing-line worker whose plant automates is not out of work because trade is slow. He is out of work because the job he can do has stopped existing. Fifteen days' pay for each of his years will keep him for some months and will not make him employable again.

So the Code adds a second payment with a different purpose. Section 70(b) is compensation for what he has lost. Section 83 is money for what he needs next: a sum, credited to his own account, so that he can retrain rather than merely wait.

And the design tells you the policy behind the whole Code. The other Chapters make it easier for an employer to shed labour than the repealed Act did: the Chapter X threshold rose from one hundred to three hundred, and fixed term employment now ends without retrenchment at all. Chapter XI is the counterweight offered in exchange. Whether it is an adequate one is the standing criticism, and a student should say so.

Some words this chapter uses

Re-skilling means training a person in a different skill from the one he has, as opposed to improving the skill he already has.

Wages last drawn is the measure section 83 uses. It is what the worker was actually being paid immediately before the retrenchment, and it is not the same as "average pay", which is what section 70(b) uses.