The employees are offered the voluntary retirement scheme by the organization under various circumstances if the retirement is happening before the retirement date of the employee. Voluntary retirement is not a forced retirement so the employees will be provided the benefit if they are willing to get the retirement. The scheme will be provided to all of the employees who have completed 10 years of service in the organization and have an age above 40 years. You can check out the details of the Voluntary Retirement Scheme from the article provided below and we will also share with you all the benefits and features that you need to follow in order to be a part of the scheme and apply for the scheme accordingly.
About the Voluntary Retirement Scheme
A Voluntary Retirement Scheme is presented to the employee who wishes to volunteer to end the services at a particular organization before the retirement date. This scheme is also used by the company to retire the surplus staff who are working in the company over their productive tenure. The scheme is available by both public and private companies and the main objective of the development of this scheme is to provide optimum human resource utilization and provide benefits to the employee who is not able to continue their services due to any physical or mental problems that they are going through at a particular time. The implementation of this scheme is a very integrated step toward developing a proper employment force in a company.
Also Read: Atal Pension Yojana
Objective Of Voluntary Retirement Scheme
A Voluntary Retirement Scheme is a very prestigious scheme presented for companies who are suffering from a recession period and want to lay off employees but did not have an ethical way to do so. This scheme will provide you with a lot of ways through which you will be able to cut your workforce without having your employees suffer from poverty or unemployment. The employees will be able to get their fair share of money through the development of this scheme without having to worry about the unemployment state of their life. The employee will be able to get proper information related to all of the benefits of the voluntary retirement scheme through their HR and it is their free will to accept or reject the offer because this is not a forced scheme.
Features Of Voluntary Retirement Scheme
There are a lot of features that are included in the voluntary retirement scheme and some of the features are mentioned below:-
- The scheme is a voluntary retirement scheme so no employee is forced to leave his or her job in the company.
- The company will be providing the option of retirement to all of the employees who have completed 10 years of service in the organization and are above the age of 40 years.
- The company is to help in the development of human resource utilization through the development of this scheme.
- The employees will also offer compensation in a tax-free manner up to a certain amount through this scheme.
- The employees will be provided a lot of benefits such as a provident fund.
- The scheme is available for both private and public organizations.
Circumstances Applicable
Private and public sector firms can opt for VRS under the following circumstances:-
- Recession in business
- Intense competition
- Joint ventures with foreign collaborations
- Takeovers and mergers
- Obsolescence of product/technology
Compensation For Voluntary Retirement Scheme
The compensation for the voluntary retirement scheme will be calculated based on the following details:-
- The compensation under the voluntary retirement scheme is calculated on the last salary of an employee
- The payment which is offered by the company is equal to the 3-month salary of the employee for each complete year of service or the employee’s salary at the time of retirement is multiplied by the remaining months of service left before the original date of retirement
- In the case of public sector banks compensation is calculated based on 45 days of salary for every year of service or the salary for the remaining period whichever is lower
Benefits Of Voluntary Retirement Scheme
The following benefits will be provided to the people who are applicable to this scheme:-
- 45 days salary for each completed year of service or monthly emoluments at the time of retirement multiplied by the remaining months of service before the normal date of service, whichever is less.
- The employee gets a provident fund (PF) and gratuity dues.
- The compensation received at the time of VRS is tax-free up to the prescribed amount on fulfilling certain conditions.
- Companies also offer benefits packages to employees who opt for VRS. For example, the scheme may also include counseling sessions for the employee’s future; advice on managing funds received under VRS; firms may offer rehabilitation facilities to staff, etc.
Eligibility Criteria
The applicant must follow the following eligibility criteria to apply for the scheme:-
- It is applicable only to a person that has completed 10 years of service in the organization.
- The person must be above the age of 40 years.
- It applies to all employees, including workers and executives of the company, except the director of the company or cooperative society.
Also Read: National Pension Scheme
Voluntary Retirement Scheme 2023 Application Procedure
You will be applicable for the voluntary retirement scheme and you will get all of the compensation if you follow the conditions below:-
- The retiring employee shall not employ in another company or concern belonging to the same management.
- The amount receivable must not, at any point, exceed the amount equivalent to three month’s salary for each completed year of service, or salary at the time of retirement multiplied by the balance of months of service left prior to the date of retirement of the employee.
- The vacancy creates cannot be fill up by another employee.
- Public sector undertakings need the prior permission of the government before offering voluntary retirement.