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  1 INDEX Sr no. Content Page no. 1 Introduction, Definition And Description 2 2 Other Known Terms 3 3 Voluntary Retirement Scheme (VRS) info 4 4 Circumstances for VRS 5 5 Why VRS 6 6 VRS exemption from income tax 7 7 Announcements while implementing VRS scheme 8 8 VRS benefits 9 9 Payment, Eligibility, Procedure 10  2 Voluntary Retirement Scheme WHAT IS VRS? The Voluntary Retirement Scheme (VRS) is the latest mantra of many a corporate and Public sector units. VRS is a scheme whereby the employee is offered to voluntarily retire from his services before his retirement date. Subject to certain conditions the company offers VRS to its employees It is the golden route to cut the excess flab Definition:  Voluntary retirement scheme is a method used by companies to reduce surplus staff. This mode has come about in India as labour laws do not permit direct retrenchment of unionized employees. Description:  VRS applies to an employee who has completed 10 years of service or is above 40 years of age. It should apply to all employees (by whatever name called), including workers and executives of a company or of an authority or of a co-operative society, excepting directors of a company or a co-operative society. It has to result in an overall reduction in the existing strength of employees. The vacancy caused by voluntary retirement is not to be filled up. The retiring employee shall not be employed in another company or concern belonging to the same management. The amount receivable on account of voluntary retirement of the employee does not exceed the amount equivalent to three months' salary for each completed year of service, or salary at the time of retirement multiplied by the balance months of service left before the date of retirement on superannuation of the employee. It is the last salary drawn which is to form the basis for computing the amount of payment. Most large public and private sector companies have implemented VRS in recent years.  3 OTHER KNOWN TERMS THE GOLDEN HANDSHAKE The most humane technique to retrench the employees in the company today is the voluntary retirement scheme. It is the golden handshake for the employees and the only option today for the companies to reduce organization staff. The scheme which is formally permitted by the Department of Public Enterprises and which provides the lucrative way for the employees to terminate their services and accept VRS. As the name suggests the VRS is strictly voluntary i.e. one can neither compel the workers to accept it nor apply it selectively to certain individuals. One can however choose the levels, units and age groups among whom one wants to offer VRS. The company can always accept or reject the application for the VRS. VOLUNTARY SEPARATION SCHEME VSS is a scheme where employees are allowed to resign voluntarily from the company by receiving fair compensation. The purpose of implementing VSS is to cut down the number of workers the employees will be given a reasonable compensation for resigning from the company. It is because firing employees lead to a bad reputation for the co.  4 Voluntary Retirement Scheme (VRS) In the present globalised scenario, right sizing of the manpower employed in an organisation has become an important management strategy in order to meet the increased competition. The voluntary retirement scheme (VRS) is the most humane technique to provide overall reduction in the existing strength of the employees. It is a technique used by companies for trimming the workforce employed in the industrial unit. It is now a commonly method used to dispense off the excess manpower and thus improve the performance of the organisation. It is a generous, tax-free severance payment to persuade the employees to voluntarily retire from the company. It is also known as 'Golden Handshake' as it is the golden route to retrenchment. In India, the Industrial Disputes Act, 1947 puts restrictions on employers in the matter of reducing excess staff by retrenchment, by closures of establishment and the retrenchment  process involved lot of legalities and complex procedures. Also, any plans of retrenchment and reduction of staff and workforce are subjected to strong opposition by trade unions. Hence, VRS was introduced as an alternative legal solution to solve this problem. It allowed employers including those in the government undertakings, to offer voluntary retirement schemes to off-load the surplus manpower and no pressure is put on any employee to exit. The voluntary retirement schemes were also not subjected to not vehement opposition by the Unions, because the very nature of its being voluntary and not using any compulsion. It was introduced in both the public and private sectors. Public sector undertakings, however, have to obtain prior approval of the government before offering and implementing the VRS. 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