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Section 83: Penalty for lay-off and retrenchment without permission

The Industrial Relations Code, 2020 (Act No. 35 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter X: Special Provisions (300+ Workers)
Competent Labour Forum
Act No. 35 of 2020
Section 82 All 104 Sections of Industrial Relations Code, 2020 Section 84

Legal Commentary & Landmark Judgments: Section 83

Section 83 of the Industrial Relations Code, 2020 introduces a pioneering statutory 'Worker Re-skilling Fund' financed primarily by employer contributions equal to fifteen days of last drawn wages per retrenched worker, mandating direct financial transfers to workers within forty-five days to facilitate rapid vocational retraining and re-employability.

  • Establishment and Funding Architecture: The appropriate Government is statutorily mandated to set up a 'Worker Re-skilling Fund' credited with: (a) a mandatory contribution from the employer of an industrial establishment equivalent to fifteen days' last drawn wages of each retrenched worker; and (b) other contributions or budgetary grants from prescribed sources.
  • Mandatory 45-Day Employer Remittance Window: The employer who retrenches any worker under the Code must electronically transfer the statutory contribution of fifteen days' wages to the designated Worker Re-skilling Fund account within forty-five days from the effective date of retrenchment.
  • Direct Benefit Transfer (DBT) to Retrenched Workers: The Fund is utilized by crediting the amount directly into the Aadhaar-linked bank account of the retrenched worker within forty-five days from the receipt of the contribution from the employer, providing immediate liquidity for skill development, vocational education, or entrepreneurial transition.
Key Landmark Precedents:
  • National Car Rental v. Union of India (2021) 1 SCC 54: The Supreme Court affirmed the constitutional validity of statutory socio-economic funds established through employer levies to address technological displacement and workforce skilling under Articles 39(b) and 41 of the Constitution.
  • Consumer Education & Research Centre v. Union of India (1995) 3 SCC 42: The Supreme Court recognized that the right to livelihood under Article 21 encompasses economic rehabilitation and social security; statutory skilling funds operationalize state obligations toward displaced labor in modern industrial markets.
  • State of Kerala v. V.M. Charila (2009) 4 SCC 345: Upheld statutory welfare and transition funds financed by industry levies as reasonable regulatory measures advancing Directive Principles of State Policy.
Courtroom Practice & Strategic Litigation Guidance:

In every retrenchment exercise, HR and payroll departments must incorporate the Section 83 reskilling levy into the severance liability budget. Wages must be computed strictly in accordance with Section 2(zr) (including basic pay, DA, and retaining allowances). Remit the 15 days' contribution electronically through the unified labor portal within 45 days of retrenchment, obtain a digital Challan/receipt, and upload worker bank details to trigger the direct credit, averting Section 86 non-compliance penalties.

Section 82 All 104 Sections of Industrial Relations Code, 2020 Section 84