Interested employees can apply for VRS only after completing a certain number of years at work
The Voluntary Retirement Scheme or VRS allows employees working for the government or public and private sector companies to retire before the age of superannuation at 60. The scheme provides a legal framework for appropriate compensation to those seeking early retirement.
The objective of VRS is to provide employees with an opportunity to retire from work before the superannuation age if they so desire, subject to certain conditions. All government employees and those working in the public and private sector companies can avail of VRS.
This facility also allows large corporations and loss-making companies to reduce their workforce if they feel they no longer require that much human resources for their sustenance or return to profit. It is a humane way to reduce the number of staff members as it provides suitable compensation, unlike layoffs.
However, it is not mandatory for them to opt for VRS if the employer offers such a proposal.
Employees can apply for VRS only after completing a certain number of years at work. The number of working years may vary depending on their seniority levels in the organization. Typically, those in the age group of 40-55 can be considered for VRS.
The requirement for the number of years in service may also vary for government employees. There is no minimum service requirement for Group ‘A’ and ‘B’ officers who entered service before age 35 and have attained 50 to 55 years of age. On the other hand, for Group ‘C’ officers not governed by any pension rules, the minimum service requirement is 30 years.
The benefits offered may also vary from one organization or employer to another. Generally, the compensation is paid in a lump sum, which could include the employee’s salary for the remaining period of service, along with benefits like gratuity and pension.
The employees may be required to provide a notice period before their retirement.
Generally, the common criteria for VRS include the employee’s age, years of service, performance, designation, etc.
The age for VRS usually ranges from 40-55. The minimum service requirement may also vary from one organization to another, generally around 10-15 years.
The employee’s performance also matters. Companies may consider an employee’s performance before approving VRS. The poor performers may not be eligible for the scheme.
The employee’s designation may also be considered for VRS. For example, organizations may consider senior-level employees for VRS, not junior ones.
Also, the notice period for VRS is typically around three to six months.
The companies generally consider the employee’s last drawn salary for voluntary retirement scheme compensation. In most cases, it is equivalent to three months’ salary for each year of service. Alternatively, it may be calculated by multiplying the staff’s retirement date by the remaining months of service and based on the salary at the time of retirement. However, the employees must know the rules, the severance package, and other aspects before opting for VRS.