Write short notes on Voluntary Retirement Scheme (VRS).
Answers
Answer:
Explanation:
Definition: Voluntary retirement scheme is a method used by companies to reduce surplus staff. This mode has come about in India as labour laws do not permit direct retrenchment of unionized employees.
Description: VRS applies to an employee who has completed 10 years of service or is above 40 years of age. ?It should apply to all employees (by whatever name called), including workers and executives of a company or of an authority or of a co-operative society, excepting directors of a company or a co-operative society.
It has to result in an overall reduction in the existing strength of employees. ?The vacancy caused by voluntary retirement is not to be filled up. The retiring employee shall not be employed in another company or concern belonging to the same management. The amount receivable on account of voluntary retirement of the employee does not exceed the amount equivalent to three months' salary for each completed year of service, or salary at the time of retirement multiplied by the balance months of service left before the date of retirement on superannuation of the employee. It is the last salary drawn which is to form the basis for computing the amount of payment.
VRS - Company offers a scheme by which surplus manpower is reduced. It involves lucrative economic package offered to those who opt to get out. It is beneficial to an employee since he gets a huge sum of money in single stroke, which he invests and earns recurring interest month after month. Moreover, if he is really a person to be worth hired, can get placed in similar industry or any other industry for a reasonably good salary; this is an additional income.