The New Labour Codes, effective from 21 November 2025, bring wide changes in employment rules, working conditions, and social security. One of the most important reforms is the Reskilling Fund, introduced under the Industrial Relations (IR) Code, 2020. With job cuts becoming common across sectors, this fund aims to provide support to workers who lose their jobs.
Under the new rules, if a worker is retrenched, the employer must pay an amount equal to 15 days of the worker’s last drawn wages. This payment must be made within 45 days of retrenchment.
The idea behind this contribution is simple. Workers who lose their jobs should receive some immediate financial support. This money is meant to help them learn new skills, upgrade their abilities, or prepare for different job roles in the changing job market.
For retrenched workers, the fund offers short-term relief at a difficult time. Losing a job often brings financial stress, and the reskilling amount acts as a buffer while they search for new opportunities.
More importantly, the money is intended to support skill development, which can help workers stay relevant in a fast-changing job environment shaped by technology, automation, and industry restructuring. By learning new skills, employees stand a better chance of finding employment again.
The reform does increase costs for employers because they must contribute extra money when retrenching workers. This may make companies more cautious about hiring or restructuring.
However, in the long run, the system aims to benefit the entire labour market. As more retrenched employees gain new skills, industries gain access to a more capable and updated workforce.
New Labour Codes 2025 operate through three layers:
Only the central framework has been activated so far. The detailed rules on how the reskilling fund will be operated and delivered are expected soon. These rules will explain the process for workers to receive their payments.
Read more: New Labour Codes 2025: 2-Day Full and Final Settlement Rule for All Employees.
The Reskilling Fund is one of the most meaningful reforms under the new labour codes. While it may increase short-term costs for employers, it aims to provide safety and support to retrenched workers at a time when job security is uncertain. Over time, the fund is expected to strengthen India’s labour market by helping workers upgrade their skills and improve their chances of re-employment.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Published on: Dec 2, 2025, 11:59 AM IST
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