Hi, it is a good thought process from the management to work out a family relief fund for the deceased employee. I am providing an illustration for your understanding, but you can apply your own ideas to form a plan suitable for your company culture, management philosophy, etc. It also depends on the size of the total population and the salary level of employees.
Contribution Structure
Contribution can be fixed grade-wise as follows:
Managers and above - Rs.500/- X No of persons
Executives - Rs.300/- X No of persons
Workers - Rs.200/- X No of persons
Total - Rs....................
An equal amount shall be contributed by the management, and the total collection shall be handed over to the legal heirs of the deceased.
Issuing Payment to Legal Heirs
While issuing the cheque or DD to the wife of the deceased employee, it is generally better to get a NOC from other legal heirs. There used to be a problem from the parents of the deceased employee claiming a share. So, as far as the company is concerned, the wife of the deceased should get a NOC from other heirs.
Further, you can ask her to execute an indemnity bond in favor of the company to protect the company's interest in case of any dispute before any court of law claiming this amount by anyone else, such as a second wife or illegal wife, etc.
Application Process
Get an application from the legal heir to whom the benefit is to be paid, requesting financial support from the company. If you are unable to decide the authenticity of the legal heir, please advise the concerned legal heir to get a court direction.