VRS

External Reasons
Structural & other changes in the economy/enterprise
Rapid advances in technology
Product/process obsolescence
Materials substitution (like jute to plastics)
Chronic sickness/corporate failures
Decline in employment elasticity due to automation of routine

Internal reasons
Improper/inadequate human resource planning
Wrong selection/recruitment/placement
Inadequate training
Inadequate/improper motivation/reward systems
Substitution of labor with capital

VRS
Identify potential employees, who would opt for VRS
Identify the job where VRS should be refused
Finalize the scheme after calculating the

compensation/benefit for each employee

Get the scheme approved by the income tax authorities

In case of PSU, take the approval of the Government

VRS continued..
Take union in confidence.
Announce the scheme with availability of compensation

calculations for each employee by exhibiting an appropriate

notice on the the notice boards

Publish current mutual fund schemes-such as unit trust

schemes, SBI mutual fund on the notice boards. Educate

workers on financial management of funds.

Inform officially unions about the scheme by sending a copy

of the announcement.

VRS continued..
Hold counseling sessions. Assure workers that by accepting

VRS , he will continue to sustain a quality of life.

Provide professional assistance to employees, who accept

VRS to plan their post retirement investment.

Reasons for accepting VRS

Fear of uncertain future
Financial need
Dissatisfaction with the job
Sickness or old age
Dream of own business.
Wants to leave and settle in his own native place
Family compulsions specially in case of female workers
Fresh employment

Advantages of VRS
Offer an attractive financial compensation
Applied only to certain divisions and departments where

there is excess manpower.

It allows overall savings in the employee costs thus lowering

the overall costs

Voluntary nature of the schemes precludes the need for

enforcement which may give rise to conflicts and disputes

There is no legal obstacle in implementing VRS- as it is

predominantly in retrenchment under the labour laws.

Disadvantages
Sometimes good, capable and competent employees

normally apply for separation which may cause

embarrassment to the managements.
To a certain extent it creates fear, a sense of uncertainty

among the employees.

Trade unions protests sometimes against the operation of

such schemes, but obstructions.

Thank
You !