TERM PAPER

OF
HUMAN BEHAVIOR IN ORGANIZATION
Voluntary retirement schemes (VRS)
Emergence
The first Voluntary Retirement (VR) Scheme was introduced in
July 2000 to enable staff of 59 grades with identified or
anticipated staff surplus to retire voluntarily with pension
benefits and compensation.

1. SHORT TITLE:

Voluntary Retirement Scheme (VRS) 2002.

(i) This scheme shall apply to all the Public Sector Undertakings
(PSUs)
Including all Cooperative Institutions of the State of Punjab. This
will
Apply to the Subsidiaries of the PSUs defined as entities in
which PSUs
and/or Govt. hold more than 50% equity.
(ii) This scheme shall come into force from the date of its
notification.

2. OBJECTIVE:
(i) To achieve optimum human resource utilization.
(ii) To optimize return on investment in PSU.
(iii) In implementing the VRS scheme, managements shall ensure
that it is
Extended primarily to such employees whose services can be
dispensed
With without detriment to the company. Care shall be exercised
to
ensure that highly skilled and qualified workers and staff are not
given
The option. As there shall be no recruitment against vacancies
arising
due to VRS, it is important that the organization is not denuded
of
talent. The managements of the PSUs shall introduce the VRS
with the
approval of their Boards and the administrative departments.
Under no
circumstances shall grant of VRS be construed as a right.

3. DEFINITIONS: In this scheme, unless the context otherwise

requires,
(a) “Public Sector Undertaking (PSU)” means an entity that is:
(i) Created under a Statute of the State Legislature; or
(ii) Created under a statute of Parliament, in which case the
Management & control vests in Govt. of Punjab or
(iii) Created under the Companies Act 1956 in which the Govt. of
Punjab, holds equity share more than 50% of those issued or
A Cooperative Society as defined under the “Punjab Cooperative
Societies Act, 1961, as amended from time to time including Apex
Cooperative Institutions.
(b) “Scheme” means Punjab State Public Sector Undertakings
Voluntary Retirement Scheme (VRS) 2002.
(c) “Employee” means a person employed on permanent/regular
basis
working against regular sanctioned graded post.
vrs-scheme.doc
-2-
(d) “Service” means a period of permanent or regular
employment
against graded post as defined in the Service Bye Laws/
Regulations
of the PSU.
(e) “Year” means a financial year commencing on 1st April and
ending
on the subsequent 31st March
(f) “Salary” means Basic Pay plus appropriate %age of DA as on
the
date of applying.

4. OPERATION OF THE SCHEME:

The Scheme shall remain in operation for 6 (six) months from the
date of
issuance of notification to this effect. The Govt may extend it
from time to
time.
(i) Within the period of operation:
(a) In the case of a PSU which does not require budgetary or any
other external support to implement the scheme, it shall come
into operation upon the approval by the Administrative
Department of a resolution of the Board of Directors that the
scheme be brought into effect with specified eligibility criteria
(b) In the case of a PSU, which requires budgetary or any other
external support to implement the scheme, it shall come into
operation only after the Department of Finance approves a
proposal of the Administrative Department.

5. ELIGIBILITY:
All persons employed on permanent/regular basis working against
regular
sanctioned graded post of Public Sector Undertakings will be
eligible to seek
Voluntary Retirement provided they have completed a minimum of
5 years of
service and have at least 5 years of service remaining before
their
superannuation.
However, the employees falling in the following categories as
determined by the concerned PSU are not eligible to seek
Voluntary
Retirement under the scheme:
(a) Specialist employees who have executed service bonds and
have not
completed the period prescribed therein;
(b) Employees serving abroad under special arrangement/bonds;
(d) Employees appointed on contract basis;
(e) Any other category of employees as may be specifically
debarred by
the Public Sector Undertaking from seeking retirement under
this
scheme.

6. AMOUNT OF EX-GRATIA:
An employee seeking Voluntary Retirement under the scheme will
be entitled
to the compensation consisting of salary of 35 days for every
completed year
of service and 25 days for every year of the balance of service
left until
superannuation. The compensation will be subject to a minimum of
vrs-scheme.doc
-4-
Rs.25,000/- or 250 days salary whichever is higher. However,
this
compensation shall not exceed 80% of the sum of the salary that
the
employee would draw at the prevailing level for the balance of the
period left
before superannuation.
In case an employee is governed by a retiring/superannuation
pension
scheme the disbursement of pension shall commence from the
month next to
the date an employee would have retired in the ordinary course.

7. MODE OF PAYMENT:
100% of the amount of ex-gratia payable to an employee on opting
for
Voluntary Retirement under this Scheme would be paid in cash
within 60 days
from the date of his relieving.

8. OTHER BENEFITS:
An employee whose offer for Voluntary Retirement under the
Scheme is
accepted will be eligible, apart from the ex-gratia defined above,
to any
benefit that would have been available to him upon superannuation
as per the
policy extant in the PSU prior to the date of notification of this
scheme. It is
clarified, however, that an employee shall not be eligible for both
retrenchment compensation and ex-gratia under this scheme but
shall have to
opt for one of the two
9. PROCEDURE:
(i) An eligible employee may submit request opting for Voluntary
Retirement under the scheme to the Competent Authority
through
proper channel in a prescribed proforma (Annexure-A), which
shall be
available in the PSU.
vrs-scheme.doc
-5-
(ii) The Competent Authority may after considering the
application and
after giving an opportunity to the applicant of being heard, pass a
speaking order within a period of 3 months, either accepting or
rejecting the request.
(iii) In case the Competent Authority fails to pass an order
rejecting the
request by the due date as given at sub para (ii) above, the
request
would be deemed to have been accepted and the employee would
be
retired.
(iv) A copy of every order made under paragraph (iii) above shall
be given
to the employee.
(v) An employee who is aggrieved by an order of rejection may
within
thirty days from issuance of such orders file an appeal before
the
Administrative Secretary of the Department under which the
concerned
PSU falls, whose decision shall be final and binding.
(vi) The date of acceptance of VRS by the competent authority
will be
treated as date of voluntary retirement.

10. GENERAL CONDITIONS:

(i) Arrears of wages due to general revision of pay scales etc.
shall not be
included in computing the eligible amount.
(ii) Only completed years of service shall be reckoned for arriving
at the
minimum eligible service.
(iii) Fraction of service of 6 months and above shall be reckoned
as one
year for the purpose of calculating the ex-gratia. Fraction of
service
less than 6 months will be ignored for the purpose of calculating
the
ex-gratia.
(iv) The salary shall be calculated on the basis of last salary
drawn by an
employee/officer.
(v) No employee shall be allowed to withdraw the request made
for
voluntary retirement under the scheme after it has been
accepted by
the Competent Authority.
(vi) The Competent Authority shall have absolute discretion
either to
accept or reject the request of an employee seeking Voluntary
Retirement under the scheme. The reasons for rejecting the
request of
any employee seeking Voluntary Retirement shall be recorded in
writing by the Competent Authority.
vrs-scheme.doc
-6-
(vii) All payments under the scheme and any other benefit
payable to an
employee shall be subject to the prior settlement/re-payment in
full of
loans, advances, returning of Govt.’s property and any other
outstanding due against him and payable by him to the PSU
concerned.
(viii) All payments made under the scheme shall be subject to
deduction of
tax at source as per Income Tax Act 1961 wherever applicable.
(ix) An employee who seeks voluntary retirement under this
scheme shall
not be eligible for re-employment in Govt., any PSU or any of its
subsidiaries. A complete data/record, on website of all those
employees of the Public Sector Undertakings/Corporations, who
have
availed the VRS shall be retained. While making future
recruitments no
person out of these shall be retaken in service.
(x) In the event of the death of an employee, whose request for
voluntary
retirement under the scheme has been accepted, the
compensation,
which would have become due and payable to the deceased
employee,
shall be paid to the person nominated to receive such dues.
(xi) The benefits payable under this scheme shall be in full and
final
settlement of all claims of whatsoever nature, whether arising
under
the scheme or otherwise to the employee (or his nominee in case
of
death). An employee who voluntarily retires under this scheme
will not
have any claim against the PSU concerned of whatsoever nature
and no
demand or dispute or difference will be raised by him or on his
behalf,
whether for re-employment or compensation or back wages
including
employment of any of his relative on compassionate grounds in the
service of the PSU or for any other benefits whatsoever.
(xii) The vacancy caused by Voluntary Retirement shall stand
abolished.
(xiii) The Govt. reserves the right to withdraw this scheme at any
time it
thinks fit and its decision in this respect will be final.

11. ENABLING RULES:

(i) The Public Sector Undertakings must consider the Voluntary
Retirement
Scheme (VRS) and pass an order adopting it.
(ii) The scheme shall come into effect only after requisite
approval as laid
down in Para 4 is received. However, the PSU may circulate this
scheme & obtain response of the employees, in order to
determine the
financial and other implications.
vrs-scheme.doc
SOME OF THE EXAMPLES WHERE VRS IS INTRODUCED
Congress Party offers voluntary Retirement Scheme to
its staff to put on a youth image

New Delhi, 03 November, (Asiantribune.com): The Sonia Gandhi’s

Congress party has created a first of its kind by offering a
voluntary Retirement Scheme (VRS) to its staff. A circular issued
by the party treasurer and former federal minister Motilal Vora,
says, all statutory dues would be paid to those who opt for VRS
besides 15 days' salary multiplied by the remaining years of
service. Vora promised release of the VRS amount within 15-days
of the closure of scheme.

As the oldest political party in India, the Congress has a big

office and a huge staff. Many of them are in service for long
years.

While the reasons for the VRS are not immediately available, the
decision reflects the growing feeling a section of the Congress
efficiency has been at a premium. In fact, in the run up to the
Lok Sabha elections in May and the formation of formation of
Manmohan Singh government, sections of the Congress
establishment (All India Congress Committee, AICC) openly
complained that they were unable to leverage their strengths and
the media coverage was not reflective of the party’s stature.

The Vora circular, worded as it is in bureaucratic language doesn’t

reflect this view. It merely says the number of employees in the
AICC is more than ‘they are actually required’. It gives the
employees the ‘right to accept or reject the proposal without
assigning any reason’.
Mumbai Port Trust to unveil voluntary
retirement schemes:

Mumbai, May 1: The Mumbai Port Trust (MPT) has prepared a

voluntary retirement scheme (VRS) to scale down its large
workforce of about 31,000 employees, thus becoming the first
port in the country to do so.

"MPT is exploring the possibility of announcing the VRS in the

next few months," sources said.

"The workforce is excessive as compared to other major ports in

terms of output handled by the port," they added.

MPT officials, when contacted, said they are working on a

"strategic" plan for improving productivity and reducing costs,
which includes lowering the workforce.
GSFC announces voluntary retirement scheme
The ailing Gujarat State Financial Corporation (GSFC) Wednesday
announced a voluntary
retirement scheme for its 400-odd employees to 'reduce the
work force and curtail expenses'.
The ailing Gujarat State Financial Corporation (GSFC) Wednesday
announced a voluntary
retirement scheme for its 400-odd employees to 'reduce the
work force and curtail expenses'.
The scheme, effective from May 12, will be in operation for a
period of three months, the company
said in a release. The scheme was notified on the Bombay Stock
Exchange Wednesday.
Official sources told IANS that the state government's plan was
to achieve a staff strength of 50
through downsizing of the organisation.
A state government appointed task force, while suggesting a
restructuring of the corporation, has
called for steps, including downsizing of the organisation, to
reduce the overall administrative
expenditure.
GSFC fell into bad times towards the end of 2000 following large
scale default on loans.
In August 2001, the company discontinued its main activity of
lending and disbursement and
concentrated on recovery of past dues.
The state government had made efforts for a merger of GSFC
with the Gujarat Industrial and
Investment Corporation (GIIC). The plan was dropped due to legal
hurdles.
The company had announced a voluntary retirement scheme in
2003 too.
OTE staff agree massive voluntary retirement scheme

Greek telecoms company OTE has agreed the country's biggest

ever voluntary retirement scheme, with 6000 staff set to leave
the company at a cost of EUR1bn.

The deal will allow employees that are due to reach retirement
age by the end of 2012 to join the scheme, with 6000 of the
16,000 strong OTE workforce eligible to sign up and receive a
lump sum payment of between EUR4,500 and EUR30,000. The
company will also cover the employees' social security
contributions until they reach the state-retirement age of 65.

A spokesperson for OTE said that the agreement is the first

step to controlling the company's operations costs, and will allow
it to reach the levels of productivity enjoyed