The Voluntary Retirement scheme was launched on 5th Oct 1988, in which the employee will get a voluntary retirement from the duty, before the date of his/her retirement plan. With the help of this scheme, many of the companies reduce the staff numbers. This scheme is applicable for both Private and Public working areas. The VRS is also known by the name of Golden Handshake. The government launched this scheme to solve the problem of staff retrenchment legally. Go through the article, you will get to know about its benefits, and features in detail.
About Voluntary Retirement Scheme
The VRS was famous by the name of early retirement buyout because the employee takes the retirement before the superannuation, or it is also called a golden shake because it is beneficial for both the employee or the employer.
|Scheme name||Voluntary Retirement Scheme (VRS)|
|Who can take benefit?||Employees both private or government|
|Benefits Details||Gratuity amount, PF, VL encashment, and Transfer benefits|
|Main purpose||Management of the employee rate in the company|
|Scheme comes under||Central and State Government|
|Benefit for||India based employees|
|Post Category of the article||Scheme or Yojana|
|Official Web portal||Click Here|
Objective of VRS
The main purpose of this yojana is to make retrenchment legal. However, from this scheme employer or employee wont get any losses. The employee will not suffer from any financial issues after retirement, as if they will get the PF, gratuity, or many other benefits as well. The VRS is also beneficial for the company, as it can reduce the cost. Some of the main goals of the VRS, which are as follows:
- Good management strategy of the employed management.
- Worthy return on Investment of PSU employees.
Benefits of Voluntary Retirement
There are some of the benefits are mention in the below section:
- If the employee gets retirement under the VRS, they will get the benefit of the VL encashment, Providential Fund, the benefit of transfer, and Gratuity,
- It is a humane technique, which is used to decrease the manpower legally,
- In this intense competition world, it is important for the company to manage the staff, for the growth purpose, and the save money prospecting.
- After retirement, an employee will get the benefit of some of the compensation of some of the amount which is tax-free.
- An employee who takes VRS also gets some facilities like rehabilitation, counseling services, etc.
Key Features of VRS
There are some of the key features of the Voluntary Retirement Scheme which you should be aware of, read all the features of the VRS. Before applying for retirement, all the employees must go through its key features, mention in the below blocks:
- The employee can take retirement before the date of the retirement date, there are some terms and conditions are applicable.
- This scheme is only for those employees, whose age is more than 40 years, or completed at least 10 years of the services.
- The scheme covered both the private and the government sectors.
- The VRS is also beneficial for the company, it reduces the employment cost, and increase the management of the employee in the companies.
- The candidate who gives VR is not allowed to join another firm with the same type of sector.
- VRS is not a right of the employee.
Standards to Apply for VRS
|Forms/ Rule||Eligibility||Minimum services||Notice period||Acceptance||Non- Acceptance|
|FR 56 (k)||For Group A and B candidates:- Entry in service must be before 35, or the attainment year should be 50 years.|
For Other cases:- Must attain 55 yrs of age.
|Nil||Three months||accept before the expiry of the notice period.||Suspension|
|FR 56 (m)||For Group C: They are not covered under any pension rules.||30 yrs||three months||Not necessary||Nil|
|Pension Rule 48 (1)a||All the Govt. employees incorporated under CCS pension Rule, 1972||30 yrs||three months||accept before the expiry of the notice period.||Suspension|
|Pension Rule 48 (A)||All the Govt. employees incorporated under CCS pension Rule, 1972||20 yrs||three months||accept before the expiry of the notice period.||Any Ground|
How to Apply for Voluntary Retirement Scheme
If you want a Voluntary Retirement, so you have to go to the concerned authority of the company, i.e. Head of the Department. The decision of the VR application is at the hand of the Head of the Department, whether he accepts it or rejects it. The Department Head will communicate to the employee, after the submission of the VR application form.
For more information, check dpe.gov.in
Voluntary Retirement Scheme calculation
By using the below method you can calculate the VRS of your salary:
- The VRS can be calculated on the basis of the last withdrawal salary.
- The three-month salary is equal to the VRS amount of every completed service year.
- You can calculate it y another method as well, multiple the retirement salary to the days left of the actual retirement.
Why VRS offered by Employer
Both the Private and the Government sector, the VRS can be followed in one of the following reasons which are mention below:
- At the time of the Recession,
- When competition is high,
- Foreign collaboration
- Mergers of the companies
- take over of the company,
- When an employee not updating their knowledge about technology or the product.
Why VRS offered by Employee
- Employees ask for VRS probably when they want to career change, or they have some good career change opportunity.
- When Employees are satisfied by their growth rate in the company
Reason for Accepting VRS by Employee
The employees accept the VRS, probably one of the following reasons, which are given below:
- No Job Satisfaction,
- Health Issues of the employee,
- Due to financial reasons,
- Got better Job or career opportunity,
|Department of Public Enterprises||dpe.gov.in|
|Information Page for VRS||Click Here|
|Guidelines for Voluntary Retirement Scheme or VRS||Click Here|
|FAQs on VRS||Click Here|
Voluntary Retirement Scheme FAQs
The employee will get the benefit not only for pension, but also took the advantage of gratuity, or PF.
You can calculate the VRS by multiplied the salary by the rest of the months left for your actual retirement.
Yes, but there is some limit, after that, you have to pay tax.
Tax-free is that salary in which an employer has to pay the employee salary tax.
For the VRS, the age of the candidate should be above 40.