Should Private Companies Introduce a Benevolent Fund for Immediate Support After Employee Deaths?

Dear CiteHR Senior Members,

Benevolent Fund / Adarsha Nidhi

It is a welfare fund contributed by both the employees and the company to help the family or nominee of a deceased employee. When all other benefits take time to reach the dependent or nominee of the deceased employee, a part of this fund (say Rs. 10-30,000) is released to them on the same day of the incident to take care of immediate expenses. This scheme would be a great help, and employees will feel a sense of belonging. Many central government companies have this scheme, whereas it is not available in many private companies. It is not clear if there is any specific reason for HR not introducing this scheme in many companies. Since a lot of employees work in private companies and incidents of death are also there, including accidental death outside the company premises, in which case the company may not extend help as obliged to do in the case of on-duty accidental death, implementing such a welfare scheme in companies where a minimum of 100 employees are working can give immediate help to the family members or relatives of the deceased at a critical time. If the employee is covered under ESI, then, in the case of death, ESI will pay Rs. 10,000 towards funeral expenses. Some companies also pay funeral expenses.

Request: Senior members to give suggestions and comments about HR introducing the Benevolent/Adarsh Nidhi Fund as a welfare scheme in private companies.

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Regards, HR Consultant, Hospet

Welfare Scheme Methods

This is indeed a very good welfare scheme. There are two methods of implementing this. One is to make a standard contribution of, say, Rs. 50 per month. This amount is decided based on factors such as the average number of deaths in the last 3-5 years, the capacity of members to pay, the proposed relief amount, and the number of employees opting in. The net amount is deposited in the bank, and when the death of an employee is reported, the relief amount is handed over to the bereaved family by the representatives of the Welfare Committee.

The other method is to make a monthly deduction depending on the number of deaths occurring in the month. In this method, the management advances the relief amount, which is then recouped from the salary of the contributing members. Both methods have their own advantages and disadvantages. However, providing immediate relief and a substantial amount to meet sudden expenses would be a significant help to the bereaved family. My experience with the second method has been highly satisfying.