Voluntary Retirement Scheme:
VRS is a type of voluntary separate of old and unproductive employees from the organisation. It is also called Golden Hand Shake Plan. Here the organisation announces the voluntary retirement scheme and interested employees are asked to submit applications for voluntary retirement from the organisation. They are relived from the job as per the terms and conditions mentioned in the schemes. Many Banks, state government and private sector organisation have introduced such schemes in the recent period. Voluntary retirement is different from dismissal, removal and retrenchment of employees. Under VRS, handsome compensations are paid to those who opt for retirement. Thus, surplus employees are offered monetary incentives for early retirement. The incentives may be in the form of :
(a)Â Â Pension and lump sum gratuity,
(b)Â Â Loyalty bonus,
(c)Â Â Â Employee Stock Ownership Plans (ESOPs)
(d)Â Â Prices and rewards for long service in the organisation.
The basic purpose of VRS is to reduce heavy burden of unwanted manpower from the shoulders of an organisation. VRS is advocate on the following grounds:
(a)Â Â To reduce financial burden on the organisation.
(b)Â Â To reduce surplus labour.
(c)Â Â Â To ensure optimum utilization of operating manpower in an organisation.
(d)Â Â To introduce new technology in manufacturing process and also in corporate office management
(e)Â Â To introduce extensive use of computers and new techniques in information technology.
VRS is an economical and time-saving method for reducing surplus staff. Extensive use of new information technology techniques is the basic cause behind VRS. The response to VRS has been mixed in India. In SAIL as well as in banks, the scheme proved successful. However, it failed in HLL. In many organisations, competent employees opted for VRS while the incompetent ones have not opted for VRS. Voluntary retirement schemes are not successful due to inadequate employment opportunities in India. Employees are expected to plan their life carefully before they opt for VRS. In the absence of such planning, they are likely to face financial difficulties in due course. Employees normally do not respond favourably when the VRS plan is not adequately attractive on financial/monetary considerations.
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