Section 83 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.
Section 83 requires the appropriate Government to set up a worker re-skilling fund, into which an employer pays fifteen days' last-drawn wages for every retrenched worker. The amount is credited to the retrenched worker's account within forty-five days of the retrenchment. Under the Central Rules, 2026, the employer transfers it within ten days.
The appropriate Government sets up the worker re-skilling fund by notification. It consists of (a) the employer's contribution 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 notifies, for every retrenched worker, in case of retrenchment only, and (b) contributions from other sources prescribed by the appropriate Government. The fund is used by crediting fifteen days' wages to the account of the retrenched worker within forty-five days of the retrenchment. Under rule 37 of the Central Rules, 2026 the employer transfers the amount within ten days of the retrenchment.
What section 83 says
| Sub-section | Rule |
|---|---|
| 83(1) | The appropriate Government shall, by notification, set up a fund called the worker re-skilling fund. |
| 83(2)(a) | The fund consists of the contribution of the employer of an industrial establishment: an amount equal to fifteen days' wages last drawn by the worker immediately before the retrenchment, or such other number of days as may be notified by the Central Government, for every retrenched worker, in case of retrenchment only. |
| 83(2)(b) | Contribution from such other sources as the appropriate Government prescribes. |
| 83(3) | The fund is utilised by crediting fifteen days' wages last drawn by the worker to the retrenched worker's account, within forty-five days of the retrenchment, in the manner prescribed. |
Chapter XI contains only this one section. It sits after the lay-off, retrenchment and closure chapters and follows the retrenchment rules in section 70 and section 79. The employer-side working falls to payroll, and our payroll compliance audit team reviews such calculations.
Points to read carefully
"Retrenchment only"
The employer contribution arises "in case of retrenchment only". The text of s.83(2)(a) does not list closure, lay-off, transfer of ownership or other terminations. For those events the compensation rules sit in section 75 and section 73. Whether an exit is a retrenchment depends on the definition in s.2(zh); see the definitions article. Our post on deemed retrenchment on non-renewal of a contract gives background from the old Act.
Whose wages, and how many days
The measure is the wages last drawn by the worker immediately before the retrenchment. "Wages" carries the s.2(zq) definition; see wages and average pay. The default is fifteen days; the Central Government may notify a different number of days for the employer contribution under (2)(a). The text does not say that such a notification has been issued, so check the Central Government's notifications before relying on the default.
A separate outgo from retrenchment compensation
The text of s.83 does not say that this contribution reduces, replaces or sets off against the retrenchment compensation under s.70(b) or s.79(9). It is an additional contribution on the face of the text. Budget for both and confirm the treatment for your establishment.
Who sets up the fund
Section 83(1) gives the duty to "the appropriate Government" by notification. Section 83(2)(b) lets the appropriate Government prescribe other sources. The fund for Central-sphere establishments is administered through the Labour Commissioner offices named in rule 37.
Central Rules, 2026: rule 37
These rules apply to Central-sphere establishments. Where the State Government is the appropriate Government, the State's own rules apply and may differ in timing, account details and process.
| Rule | Requirement (G.S.R. 342(E), 8 May 2026) |
|---|---|
| 37(1) | Every employer who has retrenched a worker in an industrial establishment 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(s) into the fund. The fund account details are to be displayed on the website of the Ministry of Labour and Employment and of the Chief Labour Commissioner (Central), and 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 fund received is transferred by those offices electronically to each retrenched worker's account within forty-five days of retrenchment, to enable the worker to use the amount for re-skilling. |
| 37(3) | The employer also submits a list with the name of each retrenched worker, the amount equal to fifteen days of last drawn wages and the worker's bank account details to the concerned Labour Commissioner office. |
Two timing points follow. The employer's window is ten days (rule 37(1)); the credit to the worker must be made within forty-five days of the retrenchment (s.83(3), rule 37(2)). Note that rule 37 speaks of "every employer who has retrenched a worker in industrial establishment" without the Chapter X limit. See rule 37 for the full text.
Payroll checklist
| Step | Action |
|---|---|
| 1 | Identify each retrenched worker and confirm it is a retrenchment, not a closure or other exit. |
| 2 | Take the wages last drawn immediately before retrenchment and compute fifteen days' wages (or any other number the Central Government has notified). |
| 3 | Transfer within ten days, electronically, to the account shown on the Labour Commissioner portal. |
| 4 | Send the list with names, amounts and bank account details. |
| 5 | Keep proof of transfer and of the list, and record the retrenchment date. |
Example. An establishment retrenches 12 workers on 10 March after following the notice and compensation rules. Each worker's last-drawn wages are known from payroll. The employer computes fifteen days' wages for each, transfers the total electronically to the designated account by 20 March, and sends the list with bank details. The Labour Commissioner office credits each worker within forty-five days of 10 March.
Penalty
The Code has no specific penalty for failure to contribute. Section 86(20) applies to contravention of "any other provision of this Code" or the rules: a fine which may extend to one lakh rupees. See section 86(7) to (20). Also check the tax treatment of the payment with our income-tax guide on retrenchment compensation.
Need help with re-skilling fund payments?
The contribution is small per worker but sits on top of compensation and notice pay, and the ten-day window is short. Our payroll compliance audit team can add the contribution to your retrenchment working, prepare the worker list with bank details and keep a dated record of each transfer. Bring your retrenchment list and last-drawn wage data.
Key takeaways
- The appropriate Government sets up the fund by notification; the employer pays fifteen days' last-drawn wages per retrenched worker (or another notified number of days).
- The contribution arises in case of retrenchment only.
- The worker's account is credited within forty-five days of the retrenchment.
- Central Rules: employer transfers within ten days and submits a list with bank account details.
- The text does not say the contribution offsets retrenchment compensation.
Read next
- Section 79: prior permission for retrenchment
- Sections 71 and 72: retrenchment procedure and re-employment
- Rule 37: worker re-skilling fund contribution
- Retrenchment compensation calculation: formula and examples
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.