Rule 37 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 37 turns the worker re-skilling fund in section 83 of the Code into a payroll task. After each retrenchment, the employer transfers an amount equal to fifteen days of the retrenched worker's last drawn wages to the fund account within ten days, and submits a list of workers and bank details. The fund is then credited to the worker within forty-five days of retrenchment.
An employer who has retrenched a worker must, within ten days of the retrenchment, electronically transfer an amount equal to fifteen days of last drawn wages of the worker into the fund account named on the websites of the Ministry of Labour and Employment and the Chief Labour Commissioner (Central). The employer also submits a list with each worker's name, the amount and bank account details. The Central labour offices then credit each worker's account within forty-five days of retrenchment for re-skilling. Central-sphere establishments only.
Section 83 in brief
Section 83 of the Industrial Relations Code, 2020 provides for a worker re-skilling fund set up by notification of the appropriate Government. The fund consists of (a) the employer's contribution of an amount equal to fifteen days' wages last drawn by the worker immediately before retrenchment, or such other number of days as the Central Government notifies, for every retrenched worker, in the case of retrenchment only; and (b) contributions from other sources the appropriate Government prescribes. The fund is used by crediting fifteen days' wages last drawn to the retrenched worker's account within forty-five days of retrenchment, in the prescribed manner. Read section 83.
Rule 37 prescribes the employer's steps. It sits alongside the retrenchment compensation in section 70(b) and, in Chapter X establishments, section 79(9): those are payable to the worker by the employer; the re-skilling contribution goes through the fund. Payroll teams should add the contribution to the retrenchment checklist. Our payroll compliance audit team can review your final-settlement process and add the fund transfer as a step with a due date.
Rule 37 at a glance
| Sub-rule | Requirement |
|---|---|
| 37(1) | Every employer who has retrenched a worker shall, within ten days from the date of retrenchment, electronically transfer an amount equivalent to fifteen days of last drawn wages of the retrenched worker or workers into the fund. The account name is displayed on the websites of the Ministry of Labour and Employment and the Chief Labour Commissioner (Central), and is maintained by the Chief Labour Commissioner (Central), or the office of the Deputy Chief Labour Commissioner (Central), the Regional Labour Commissioner (Central) or the Assistant Labour Commissioner (Central), as the case may be |
| 37(2) | The office receiving the fund transfers it electronically to each retrenched worker's account within forty-five days of retrenchment, so that the worker can use it for re-skilling |
| 37(3) | The employer also submits a list of the retrenched worker's name, the amount equal to fifteen days of last drawn wages, and bank account details, to the same office |
Two clocks, one retrenchment
| Clock | Who acts | Period from retrenchment |
|---|---|---|
| Employer transfer to fund | Employer | Within ten days (rule 37(1)) |
| Credit to worker's account | Central labour office | Within forty-five days (rule 37(2); s.83(3)) |
Rule 37(3) gives no separate deadline for the list of workers and bank details. The safe practice is to submit the list with the transfer, because the office needs the bank details to credit the worker within forty-five days.
Working out the amount
The rule says "fifteen days of last drawn wages". The Code's section 83(2)(a) allows the Central Government to notify a different number of days. The rules do not give a per-day formula. "Wages" has its own meaning in the Code, discussed in section 2: wages and average pay; use that definition and your payroll's established daily rate, and document the method.
Note that the re-skilling contribution and retrenchment compensation use different bases. Retrenchment compensation under section 70(b) is fifteen days' average pay (or other notified days) for every completed year of service or part over six months; the re-skilling contribution is fifteen days of last drawn wages per retrenched worker. Our retrenchment guide, retrenchment compensation: formula and examples, covers the old-law compensation idea for comparison. For tax on retrenchment compensation, see our guide on tax on retrenchment compensation. The Code text we have used does not address the tax treatment of the re-skilling amount.
Illustration of the arithmetic
Suppose a worker's last drawn wages are taken, on the employer's documented method, at Rs 1,000 a day. Fifteen days is Rs 15,000. That figure is an illustration only, not a rule. For ten retrenched workers with the same daily wage, the total transfer would be Rs 1,50,000, and the list must show each worker's amount.
Who is covered
Section 83(2)(a) speaks of "every retrenched worker in case of retrenchment only", and rule 37(1) says "every employer who has retrenched a worker in industrial establishment". The rule's text does not add a size threshold, so on its wording it follows retrenchment wherever the Code's retrenchment provisions apply. The rule does not apply to closure or lay-off.
Practical steps
- On the retrenchment date, note last drawn wages for each worker.
- Calculate fifteen days of those wages, using the notified number of days if any.
- Find the fund account name on the Ministry and Chief Labour Commissioner (Central) websites; the rule says it is displayed there.
- Transfer electronically within ten days.
- Submit the list with worker names, amounts and bank account details.
- Keep proof of the transfer, which shows compliance if questioned.
Example. A Central-sphere manufacturer retrenches eight workers on 1 October. By 11 October at the latest it transfers, electronically, the amount equal to fifteen days of each worker's last drawn wages to the fund account displayed on the Ministry's website, and sends the list of the eight workers with amounts and bank account details to the concerned Central labour office. The office credits each worker's account within forty-five days of 1 October. The employer keeps the transfer receipts with the retrenchment file.
What happens if the employer does not pay
The rule does not state a penalty. Section 86's general penalty for contraventions and the compounding route in section 89 are separate provisions; see section 86 for what the Code says and check which sub-section applies before drawing any conclusion.
Need help with the re-skilling fund transfer?
It is easy to overlook a small statutory transfer in the middle of a retrenchment. Our payroll compliance audit team can build the ten-day transfer, the list with bank details and the wage working into your final-settlement process.
Key takeaways
- After a retrenchment, transfer fifteen days of last drawn wages per worker to the fund within ten days.
- The fund account is shown on the Ministry of Labour and Employment and Chief Labour Commissioner (Central) websites.
- Submit a list with name, amount and bank account details.
- The Central labour office credits the worker within forty-five days of retrenchment.
- It applies to retrenchment, not closure or lay-off.
Read next
- Section 83: worker re-skilling fund
- Sections 68 to 70: conditions precedent to retrenchment
- Rules 27 to 29: notice of retrenchment, re-employment and closure
- Tax on retrenchment compensation
Disclaimer: Based on the Industrial Relations Code, 2020 (as enacted) and, where noted, the Industrial Relations (Central) Rules, 2026 (G.S.R. 342(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.