Voluntary Retirement Scheme is an initiative taken by the government of India to increase the profitability of public and private sector companies. There are many reasons why the company thinks that there should be a reduction in the number of employees. So, with the help of the Voluntary Retirement Scheme, the strength of employees in companies can be reduced. One of the reasons to reduce the number of employees in the company is the use of modern technology, less work is needed when modern technology has opted in firms. Workers, of companies who have completed 10 years of service can take Voluntary Retirement. Directors of the company/co-operative society are not allowed to take Voluntary Retirement. To offer Voluntary Retirement to its employees, Public Sector Units (PSUs) have to take permission from the government. Click to get information related to CSC Online Registration
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What Exactly Is Voluntary Retirement Scheme
Under this scheme, the employee can take retirement from services before the retirement date. The employees who are working for years in one organization may be wanting to take up a different profession or move to a new organization. So, the Voluntary Retirement Scheme helps them to move out and settled in different environments. Voluntary Retirement will be beneficial for both the company and the employees. Voluntary Retirement Scheme will help organizations to manage costs. This scheme also helps the companies to reduce their burden of extra employees, especially at the time of a merger as it helps in organizational restructuring. This scheme is considered a legal option for companies to control costs. Voluntary Retirement is not a temporary decision it is a permanent decision for both the employee and the company.
This scheme is known as a golden handshake because in this scheme both the parties are agreed at the same point like an employee is ready to leave the organization and the company is also ready to relieve its employee. One point that is needed to be kept in mind is that the employee who is ready to take Voluntary Retirement cannot apply for work at another firm that belongs to the same organization.
Voluntary Retirement Scheme 2022 Highlights
|Name of scheme
|Voluntary Retirement Scheme
|Government of India
|To reduce the strength of employees in a company
The objective of the Voluntary Retirement Scheme
The aim of the Voluntary Retirement Scheme is to help the company to reduce the strength of its employees. There can be many reasons that a company wants to reduce its employees. One reason can be the use of modern technology or maybe the company is not financially fit to pay the salaries of its employees.
Features of Voluntary Retirement Scheme
- The employees should have completed 10 years of service.
- Under this scheme, the employee can take retirement before the retirement date.
- According to this scheme, the organizations must clear PF and gratuity dues at the time of retirement.
- Employees are not forced to take Voluntary Retirement; it is the decision of the employee only whether he wants to stay or leave the company.
- Both public and private sector companies can use benefit from the scheme.
- For a smooth retirement. the company provides many benefits to its employees at the time of retirement. Benefits like counseling sessions that will help employees to decide how to use their funds properly etc.
- The employees at the time of retirement receive compensation that is tax-free up to a certain amount.
- With the help of this scheme, the employee is free to move out of the company after completing 10 years.
- He is not forced to work in the same company till retirement age.
- It is considered an effective way to relieve employees.
- The individual can use all the funds and the amount that he receives at the time of retirement to start their own business.
- The individual is free to change his profession according to interest.
- Voluntary Retirement Scheme will help to reduce the overall cost of the company.
Situations In Which Voluntary Retirement Scheme Is Adopted
- Obsolescence of product or technology
- Takeovers and mergers
- Joint ventures with foreign collaborations
- Recession in business
- Intense competition
Eligibility Criteria of Voluntary Retirement Scheme
- The age of the employee should be at least 40 years.
- The individual should be working with the company for at least 10 years
- To take the advantage of this scheme the individual should be an employee of the company. Directors of companies or a cooperative society can not take benefit from this scheme.
Conclusion– Voluntary Retirement Scheme is the method that a company uses to reduce its surplus staff. Under the VRS, decreasing the staff will help the company to improve productivity and profits. The scheme provides flexibility to the employees, as they can opt for other professions and can also pursue their passion.