vrs

VOLUNTARY RETIREMENT SCHEME : 

VOLUNTARY RETIREMENT SCHEME The voluntary retirement scheme ( VRS ) is the most humane technique to provide overall reduction in the existing strength of the employees Also known as GOLDEN HANDSHAKE,a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement

Slide 2: 

Also known as GOLDEN HANDSHAKE A clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement It is a technique used by companies for trimming the workforce employed in the industrial unit. It is now a commonly method used to dispense off the excess manpower and thus improve the performance of the organization

Slide 3: 

It is a generous, tax-free severance payment to persuade the employees to voluntarily retire from the company. It is also known as 'Golden Handshake' as it is the golden route to retrenchment

REASONS FOR PROPOSING VRS :  : 

REASONS FOR PROPOSING VRS : Recession in business Downsizing Realignment of business - due to market conditions Joint-ventures with foreign collaborations Takeovers and mergers Business re-engineering process Product/Technology obsolescence

PROCEDURE : 

PROCEDURE The employer has to issue a circular communicating his decision to offer voluntary retirement scheme - mentioning therein. A :- The reasons for downsizing B :- Eligibility i.e. who are eligible to apply for voluntary retirement C :- The age limit and the minimum service period of employees who can apply (Employees who is 40 and above and those who have completed minimum 10 years of service in the establishment)

PROCEDURE(contd.): 

PROCEDURE(contd.) D:- The right of an employer to accept or reject any application for voluntary retirement E :- The benefits that are offered. It should be noted that employees who offer to retire voluntarily are entitled as per law and rules the benefits of Provident Fund, Gratuity and salary for balance of privilege leave up to the date of their retirement, besides the voluntary retirement benefits F :- The date up to which the scheme is open and applications are received for consideration by the employer

PROCEDURE(contd.): 

PROCEDURE(contd.) G :- The circular may indicate income tax incidence on any voluntary retirement benefits which are in excess of Rs . 5 lakhs , which is maximum tax free benefit under such schemes H :-It should also indicate that those employees who opt for voluntary retirement and accept the benefits under such scheme shall not be eligible in future for employment in the establishment

MERITS OF V.R.S :  : 

MERITS OF V.R.S : There is no legal obstacle in implementing VRS - as is predominantly encountered in retrenchment under the labour laws. It offers to the employee an attractive financial compensation than what is permitted under retrenchment under the law. Voluntary nature of the schemes precludes the need for enforcement, which may give rise to conflicts and disputes. It allows flexibility and can be applied only to certain divisions , departments where there is excess manpower. It allows overall savings in the employee costs thus lowering the overall costs

DEMERITS OF V.R.S :  : 

DEMERITS OF V.R.S : Uncertainty among employees.Operation of such schemes and may  Trade unions generally protests the cause disturbance in normal operations. also apply for  Some of the good, capable and competent employees may separation which may cause embarrassment to the managements

Computation of V.R.S in S.A.I.L. : 

Computation of V.R.S in S.A.I.L. Basic + DA= Rs . 7000 + Rs . 2500 = Rs . 9500 Rs . 9500/ 26 days = Rs . 365.38 (one day’s salary) Completed 32 years service. 32 Yrs. X 35 days X Rs . 365.38 = Rs . 409225.60 NOTE : ( i ) for computation of one day’s salary 26 days a month is taken. similar is for the remaining period of service left. Remaining 3 years service: 3 years X 25 X Rs . 365.38 = Rs . 27403.50

Slide 11: 

Total amount payable: Rs . 409225.60 + Rs . 27403.50 = Rs . 436629.10 Amount to be paid shall be restricted to : 3 X 12 = 36 months Total amount to be paid as VRS compensation : 36 X Rs . 9500 = Rs . 342000/-

Slide 12: 

THANKS AND REGARDS