In a significant move to support workers facing job cuts, the Indian government has proposed a new financial safety net. Draft rules under the Industrial Relations Code, 2020, mandate the creation of a dedicated reskilling fund for employees who lose their jobs.
Financial Lifeline for Skill Development
The key provision states that a retrenched worker will be entitled to receive funds specifically for reskilling within 45 days of their job termination. The amount is calculated as equivalent to 15 days of the worker's last drawn wages. This initiative is designed to provide timely financial support, acknowledging that workers need structured help to transition into new roles in a rapidly changing job market.
"The fund shall be transferred by the government electronically to each of the worker accounts within 45 days of retrenchment to enable him utilise that amount for reskilling," the draft rules, which are now open for public comment, clarify. The onus of initiating this payment lies with the employer, who must electronically transfer the amount to the proposed reskilling fund within 10 days of the retrenchment.
Institutionalising Support for Career Transition
A government official explained to TOI that this fund, for the first time, 'institutionalises skilling'. It recognises that when a job role becomes obsolete, the system must do more than just offer an exit compensation; it must actively support the worker's transition. The official emphasised that the fund will be available for all levels and categories of workers, as reskilling is a universal need in today's economy.
Preference for Re-employment
Beyond the financial aid, the draft rules also outline a process to give retrenched staff a priority chance at re-employment. Employers will be required to prepare and make public a list of employees considered for retrenchment seven days in advance.
The rules further state, "When any vacancy occurs and there are workers retrenched within one year prior to the proposal for filling such vacancies, the employer shall, if such workers are citizens of India and have given willingness for employment, give them preference over others on the basis of service seniority."
This combination of immediate financial support for skill development and a structured re-employment preference system marks a proactive shift in India's labour policy. It aims to soften the blow of job loss and equip the workforce with the tools needed to adapt and re-enter the employment ecosystem.
