Voluntary Retirement Scheme(VRS)

•Under this scheme, the employee is offered to voluntarily retire from his services by the company before
the retirement date.
•Voluntary retirement schemes are adopted in order to reduce the strength of employees. The workers,
executives of companies, the authority of cooperative societies, etc can take voluntary retirement. Both
public and private sector companies can offer voluntary retirement schemes.
•Through voluntary retirement, the employee strength is reduced so that the company can reduce the
overall cost of the firm.
•There are many rules and regulations under voluntary retirement. One of the most basic rules is that the
employee who is retiring should not apply in another firm that belongs to the same industry.

Objective Of Voluntary Retirement Scheme

•The main objective of this scheme is to reduce the strength of employees in a company that is not able to
pay the employees due to the financial problem. By offering voluntary retirement the company can reduce
the cost.

Main features of VRS

1.Under the scheme, employees are offered to voluntary retired from the services
2.This retirement occurs before the retirement date
3.It is to be noted that voluntary retirement is not a kind of forced retirement.
4.It’s totally in the hands of employees to leave the job or to keep the job
5.It is to be noted that a voluntary retirement scheme is applied to only those employees who have
completed 10 years of service or above the age of 40 years.
4.This scheme is offered by both public and private sector company
5.This scheme is also known as a golden handshake
6.Through voluntary retirement of employees, strength is reduced in order to to reduce the cost of the firm
7.The person taking voluntary retirement is not allowed to apply in another firm that belongs to the same
industry
8.This scheme is applied to those employees that have completed 10 years of service or above the age of
40 years
9.The person taking voluntary retirement are offered various benefits by the company like rehabilitation
facilities, counseling, etc
10.The retiring employees is also offered compensation which is tax-free up to a certain amount
11. At the time of retirement provident fund and gratuity dues will be provided to the Employees

Situations In Which Voluntary Retirement Scheme Is Adopted

•Obsolescence of product or technology
•Takeovers and mergers
•Joint ventures with foreign collaborations
•Recession in business
•Intense competition
Prepared and compiled by
Vishal Soni
PCS LLB BCOM