There are many instances in which companies feel the need to reduce employee strength. For this purpose, the company takes various measures. One of these measures is a voluntary retirement scheme. Today through this article we are going to give you all the important information regarding This scheme like what is a voluntary retirement scheme? Its objective, benefits, features, need, process, etc. So if you are interested to grab every single detail regarding voluntary retirement then you have to read this article very carefully till the end.
Voluntary Retirement Scheme Key Highlights
|Name of scheme||Voluntary retirement scheme|
|Launched by||Government of India|
|Objective||To reduce the strength of employees in a company|
What Is A Voluntary Retirement Scheme?
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. This scheme is also known as a golden handshake. 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 to 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 financial problems. By offering voluntary retirement the company can reduce the cost. Under this scheme, there are many benefits that are also offered to the Employees like rehabilitation facilities to staff, advice on managing funds, etc which will automatically improve their income.
Benefits And Features Of Voluntary Retirement Scheme
- Under the scheme, employees are offered to volunteer retired from the services
- This retirement occurs before the retirement date
- It is to be noted that voluntary retirement is not a kind of forced retirement. It’s totally in the hands of employees to leave the job or to keep the job
- 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.
- This scheme is offered by both public and private sector company
- This scheme is also known as a golden handshake
- Through voluntary retirement of employees, strength is reduced in order to to reduce the cost of the firm
- The person taking voluntary retirement is not allowed to apply to another firm that belongs to the same industry
- This scheme is applied to those employees that have completed 10 years of service or above the age of 40 years
- The person taking voluntary retirement are offered various benefits by the company like rehabilitation facilities, counseling, etc
- The retiring employees are also offered compensation which is tax-free up to a certain amount
- At the time of retirement provident fund and gratuity dues will be provided to the Employees
Voluntary Retirement Direct Retrenchment
As you all know that Indian labor laws do not allow companies to directly retrench the employees and if they do so then it is strongly opposed by trade unions. Sometimes a company is in a situation of not being able to pay the employees due to financial issues. In order to cope with the situation of excess employees, a voluntary retirement scheme has been introduced. This scheme is not opposed by labor unions as employees take voluntary retirement
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
Entitlement Of Voluntary Retirement Scheme
- The retiring person will get 45 days salary for each completed year of service
Monthly emoluments at the time of retirement multiplied by the remaining months of service before the normal date of service ( whichever is less )
- Provident fund and gratuity dues will provide to the employee
- The compensation that is received by the retiring employee at the time of voluntary retirement is tax-free up to a certain amount (terms and conditions applied)
- Benefit packages are also offered to employees who opt for a scheme
Through this article, we have provided all the important information regarding the scheme. If you are still facing any kind of problem then you can ask us in the comment box. Your comment is very important to us. We will try to solve your problem. Thank You.
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