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Voluntary Retirement Scheme 2021: VRS Benefits, Features & All Details

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There are many situations that companies feel the necessity to cut down on employee strength. To achieve this the company implements a variety of measures. One of them is a voluntary retirement program. In this article, we will provide you with all the essential information about this scheme. What exactly is a voluntary retirement plan? Its objectives benefit elements, requirements and more. If you’re looking in knowing every aspect concerning voluntary retirement, you must take the time to read this article to the very end.

What Is A Voluntary Retirement Scheme?

In this plan, employees are offered the opportunity to retire voluntarily from their employment by the company before the date on which he is scheduled to retire. The voluntary retirement plans are implemented to decrease the power of employees. Executives, employees of businesses, the authority of cooperative societies, and others are able to take the option of taking a voluntary retirement. Both private and public sector firms can provide pension plans that are voluntary. This plan is also known as the golden handshake. With voluntary retirement, employees’ strength is decreased in order to reduce the overall costs of the business. There are numerous rules and regulations that apply to voluntary retirement. One of the basic rules is that the person who is retiring shouldn’t be employed by a company that is part of the same sector.

Objective Of Voluntary Retirement Scheme

The primary goal of this program is to decrease the strength of employees working for a company that isn’t capable of paying its workers due to financial problems. By offering a voluntary retirement option, the business can cut down on costs. In this plan, you can avail a number of advantages that are provided to employees, such as rehabilitation services for employees as well as advice on managing money and other things that will increase their earnings.

Voluntary Retirement Scheme Key Highlights

Name of schemeRetirement scheme for voluntary retirement
Launched byGovernment of India
BeneficiaryCompanies
ObjectiveTo decrease the power of the employees within a company.

Benefits And Features Of Voluntary Retirement Scheme

  • In the scheme, employees can choose to retire on their own services.
  • This retirement takes place prior to the date of retirement.
  • It should be noted that voluntary retirement isn’t an alternative to forced retirement. It is entirely in the control of the employees to either quit the job or keep the position.
  • It should be noted that a retirement plan for voluntary employees can only be applied to employees who have attained 10 years of service or are older than 40 .
  • The scheme is available to both private and public sector companies.
  • The scheme is also known as the golden handshake
  • By allowing employees to retire on their own Strength is decreased so as to lower the expenses of the company.
  • A person who has taken voluntary retirement isn’t permitted to join a new company that is in the same industry.
  • This plan is applicable to employees who have completed 10 years of service , or over the age of 40 .
  • Individuals who take voluntary retirement receives various benefits from the company , including rehabilitation services and counseling
  • The retirees are given a lump sum of money that is tax-free up to an amount
  • When you retire, the gratuity and provident funds will be made available to employees.

Voluntary Retirement Direct Retrenchment

We all know that Indian labour laws don’t allow companies to directly lay off employees. If they choose to do, then they are highly opposed by the trade unions. Sometimes, companies find themselves in the position of being unable to pay employees because of financial problems. To address the problem of overworked employees the voluntary retirement plan is being implemented. The scheme is not resisted by labour unions because employees are able to retire on their own.

situationsIWhich is a voluntaryRetirement Scheme Has Been In use

  • Technology or product that is out of date
  • Fusions and takeovers
  • Joint ventures and foreign collaborations
  • Recession in the business
  • Intense battle

Entitlement Of Voluntary Retirement Scheme

  • The person who retires will receive 45 days of pay for each year of service

OR

Monthly emoluments at a time when retirement is multiplied rest of your service up to the date of normal service ( or less )

  • Gratuity and provident funds will be provided to the employee.
  • The amount of compensation paid to the employee who is retiring during the period of an option to retire is exempt from tax to an amount (terms and conditions apply)
  • Benefit packages are also available to employees who select an option

Conclusion

In this article, we’ve included all the essential details regarding the scheme. If you’re facing any issues, you can contact us via the comment section. Your feedback is crucial to us. We will do our best to resolve your issue. Thank You.

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