Application Form for Voluntary Retirement Schemes (VRS) – Companies are often faced with the need to reduce employee strength. In order to achieve this, companies take various measures. Among these measures is a voluntary retirement scheme. We are going to describe this scheme in detail in this article. We will discuss its objective, its benefits, its features, its need, its process, etc. You must read this article carefully until the end if you are interested in obtaining every single detail about voluntary retirement.
What Is A Voluntary Retirement Scheme?
The company offers the employee the option of voluntarily terminating his employment before the retirement date under this scheme. A Voluntary Retirement Scheme reduces the strength of employees. Those who work in the public and private sectors may choose to retire voluntarily. Employees, executives of companies, cooperative societies’ authorities, etc., may do so. The golden handshake is also known as a voluntary retirement scheme. Using voluntary retirement to reduce employee strength can help a company cut its overall costs. Voluntary retirement has many rules and regulations. It is essential that a retiring employee does not apply for a job within the same industry as the one he or she is retiring from.
Objective Of Voluntary Retirement Scheme
This scheme is designed to reduce the number of employees in a company that cannot pay its employees due to financial difficulties. By offering voluntary retirements, the company can cut its costs. Employees will also receive many benefits under this scheme, such as rehabilitation facilities, financial advice, and more, which will increase their income automatically.
Voluntary Retirement Scheme Key Highlights
Name of scheme
Voluntary retirement scheme
Government of India
To reduce the strength of employees in a company
Benefits And Features Of Voluntary Retirement Scheme
- A voluntary retirement scheme is offered to employees under the scheme.
- Prior to the retirement date, this retirement occurs.
- A voluntary retirement is not a forced retirement; it is entirely up to the employee whether or not to leave.
- Those employees over the age of 40 with at least ten years of service are eligible for voluntary retirement.
- Companies in both the public and private sectors offer this scheme.
- Golden handshake is another name for this scheme.
- A company reduces costs by reducing strength through voluntary retirement of employees.
- A person who takes voluntary retirement is not allowed to apply for a job at another firm in the same field
- Over 40-year-old employees or those with 10 years of service are eligible for this scheme.
- In addition to rehabilitation facilities and counseling, the company offers various benefits to those taking voluntary retirement.
- As part of the retirement package, retiring employees will also receive tax-free compensation.
- Employees will receive their retirement benefits and gratuity dues at the time of retirement.
Voluntary Retirement Direct Retrenchment
As you all know that Indian labor laws do not allow companies to directly retrench their employees and if they do so, unions will strongly oppose it. As a result of financial difficulties, a company is sometimes unable to pay its employees. A voluntary retirement scheme has been introduced to deal with excess employees. Since employees choose to retire voluntarily, labor unions are not opposed to this scheme.
Situations In Which Voluntary Retirement Scheme Is Adopted
- Technology or product obsolescence
- Takeovers and mergers
- Joint ventures with foreign collaborations
- Recession in business
- Intense competition
Compensation For Voluntary Retirement Scheme
- An employee’s last drawn salary is used to calculate the compensation under the voluntary retirement scheme
- It is calculated by multiplying the employee’s salary at the time of retirement by the number of months left before retirement or the employee’s salary at the time of retirement by the remaining months of service.
- Compensation is calculated at 45 days for every year of service in a public sector bank or at the lower of the salary or salary for the remaining period.
Benefits Provided To Employees Who Opts For Voluntary Retirement Scheme
- If the employee has completed one year of service before the normal date of retirement, he or she will be entitled to 45 days’ salary, or 45 times the monthly emoluments at the time of retirement.
- A provident fund and gratitude dues will also be paid to the employee
- If a voluntary retirement compensation is received up to a prescribed amount, it is tax-free
- Employees who opt for voluntary retirement are also provided with benefit packages by companies
Conditions On Which Employee Can Opt For Voluntary Retirement
- Recession in business
- Intense competition
- Joint venture with foreign collaboration
- Takeover and merger
- Obsolescence of product or technology
VRS Eligibility Criteria
- At least 40 years of age is required of the applicant
- A minimum of 10 years’ experience is required for the applicant
- The scheme can only be used by employees of the company; directors and cooperative societies are the only exceptions.
Entitlement Of Voluntary Retirement Scheme
- For each completed year of service, the retiring employee receives 45 days’ salary
Amount multiplied by the number of months of service remaining until the normal date of retirement (whichever is less)
- Gratuity dues and provident fund contributions will be provided to employees.
- Employees who retire voluntarily receive tax-free compensation up to a certain amount (terms and conditions apply).
- Employees who opt for a benefit plan also receive a package of benefits.
Hopefully, we have filled you in on all the important details regarding the scheme. Should you have any questions, please comment below. Your comment is very important to us. We will do our best to help you.