ASSIGNMENT

VOLUNTARY RETIREMENT SCHEME IN INDIA

Submitted to: Submitted by:

Dr. Alok Kumar Vikram Sharma

(Associate Professor of Law) (1020181927)

HIMACHAL PRADESH NATIONAL LAW UNIVERSITY

GHANDAL, SHIMLA, P.O. SHAKRAH, SUB-TEHSIL DHAMI
DISTRICT SHIMLA, HIMACHAL PRADESH-171014
Ph. 0177-2779802, 0177-2779803, Fax: 0177-2779802
Website: http://hpnlu.ac.in
 DECLARATION

The work embodied in this Assignment titled “VOLUNTARY RETIREMENT SCHEME

IN INDIA” has been done by me and not submitted elsewhere for the award of any other
degree/certificate. All ideas and references have been duly acknowledged.

Vikram Sharma, (1020181927)

B.A.LL.B. Xth Semester
(Batch: 2018-19)

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 TABLE OF CONTENT

1. INTRODUCTION.................................................................................4

2. FEATURES OF VRS.........................................................................4-5

3. VRS IN SERVICES..........................................................................5-10

4. VRS FOR PWD...............................................................................10-12

5. CONCLUSION.....................................................................................12

6. BIBLIOGRAPHY.................................................................................13

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INTRODUCTION

There are instances when a company finds itself overstaffed. But letting go of excess staff
without valid or justified cause can lead to negative perceptions about the company. In such
cases, companies can consider reducing some of their excess staff through the Voluntary
Retirement Scheme (VRS). Offering VRS can help both public and private companies boost their
earnings and productivity while ensuring there is no negative impact due to staff reductions.

The Voluntary Retirement Scheme perks for the company and the freedom it provides to
employees make it an option that benefits both sides. It is also called as the "Golden Handshake"
between the involved parties as part of the retirement planning process.

VRS full form is Voluntary Retirement Scheme and it was introduced by the Government of
India with the objective of increasing the profitability of both public and private firms. There are
several reasons why an organization would implement VRS: first, to cut their overhead expenses,
and second, to make up for a sales drop.

VRS is used by companies to make their jobs easier, like when they merge and need to
reorganize their businesses. Moreover, technological improvements have reduced the need for
human labour. Under a VRS scheme, an employee is offered the opportunity to retire before their
retirement date.

FEATURES OF VRS

Voluntary retirement might seem like a neat trick to get out of service quickly. To fully gain the
benefit of VRS, however, employees should make themselves well aware of the machinations of
VRS. Following are the salient features of the Voluntary Retirement Scheme:

 Under a Voluntary Retirement Scheme, employees can opt for premature retirement.
 A company can't force an employee to opt for VRS.
 Voluntary retirement is offered only to those employees who have completed 10 years of
service or are above 40 years of age.

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  Voluntary Retirement Schemes can be implemented in both the public sector, as well as
private sector undertakings.
 The scheme is also known as the “Golden Handshake”.
 The main purpose behind companies offering VRS is to reduce staff strength with the
ultimate objective of reducing operational costs.
 A person taking Voluntary Retirement can't take up employment in a competing firm in
the same industry.
 In return for premature retirement, employees are offered certain benefits such as
rehabilitation facilities, financial counselling, etc.
 As monetary compensation for early retirement, employees are offered a lump sum
amount which is tax-free up to ₹5 lakh.
 Voluntary Retirement Schemes have been introduced as an optimum solution against
employee retrenchment by companies.

Voluntary Retirement Scheme is normally adopted by companies in the following situations:

 Obsolescence of product or technology

 When there is a takeover, merger or acquisition of the company
 Joint ventures with collaborations
 Recession in business
 When the company is facing intense competition

VRS IN SERVICES

Government servants may retire from service voluntarily with pensionary benefits before
attaining the age of superannuation under the following provisions of Fundamental Rules and
CCS (Pension) Rules, 1972.

Pension Rule Pension Rule 48

S.No FR 56 (k) FR 56(m)
48 (1) (a) (A)

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 Group ‘A & B’
officers:

i. Entered
service before
Group ‘C’ All
35 years of age All Government
Officer not Government
servants covered by
1 Eligibility governed servants
ii. Attained 50 CCS
by any covered by
years of age (Pension) Rules,
pension CCS (Pension)
Other cases: 1972
rules Rules, 1972

Attained 55
years of age

Minimum
2 None 30 Years 30 Years 20 Years
service
Notice
3 3 months 3 months 3 months 3 months
Period
Acceptance
Automatic, if
Automatic, if required but
non
non acceptance acceptance
acceptance
not Not presumed if
4 Acceptance not conveyed
conveyed required non acceptance not
before expiry
before expiry of conveyed before
of notice
notice period expiry of notice
period
period

Grounds for
5 non Suspension None Suspension Any ground
acceptance

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DOPT Instruction on Voluntary Retirement Scheme

Department of Personnel & A.R (DPAR) released the Office Memorandum No. 25013/7/77
Estt.-(A) dated 26th August 1977 with the following instructions:

The following instructions will regulate the voluntary retirement of Central Government
Servants pursuance of the Government decision on recommendations 59(1)

1. Government servants who have put in not less than 20 years qualifying service may, by
giving notice of three months in writing to the appointing authority, retire from service
voluntarily. The scheme is purely voluntary the initiative resting with the Government
servant himself. The Government does not have the reciprocal right to retire Government
servant on its own, and or this scheme.
2. The benefit of retiring pension will be admissible to Government servant retiring under
this scheme.
3. A notice of less than three months may also be accepted by the appointing authority in
deserving cases, with the concurrence of the Ministry of Finance (Department of
Expenditure).
4. If a Government servant retires under the Scheme of voluntary retirement while he is on
leave not due, without returning to duty, the retirement shall take effect from the date of
commencement of the leave not due and the leave salary paid in respect of such leave
not due shall be recovered as provided in Rule 31 of the CCS (Leave) Rules, 1972.
5. Before a Government servant gives notice of voluntary retirement with reference to these
instructions, he should satisfy himself by means of reference to the appropriate
administrative authority that he has, in fact, completed 20 years’ service qualifying for
pension.
6. A notice of voluntary retirement may be withdrawn subsequently only with the approval
of the appointing authority provided the request for such withdrawal is made before the
expiry of the notice.
7. A notice of voluntary retirement given after completion of 20 years’ qualifying service
will required acceptance by the appointing authority if the date of retirement on the
expiry of the notice would be earlier than the date on which the Government servant
concerned could have retired voluntarily under the existing rules applicable to him. ( e.g.

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 FR 56(k), Rule 48 of the Pension Rules, Article 459(1) of SSRs or any other similar
rules) such acceptance may be generally given in all cases except those (a) in which
disciplinary proceedings are pending or contemplated against the Government servant
concerned for the imposition of a major penalty and the disciplinary authority, having
regard to the circumstances of the case, is of the view that the imposition of the penalty
or removal or dismissal from service would be warranted in the case for (b) in which
persecutions is contemplated or may have been launched in a Court of Law against the
Government servant concerned. If it is proposed to accept the notice of voluntary
retirement even in such cases, approval of the Minister-in-charge should be obtained in
regard to Group ‘A’ and Group ‘B’ Government servants and that of the Head of the
Department in the cases of Group ‘C’ and Group ‘D’ Government servants. Even where
the notice of voluntary retirement given by a Government servant requires acceptance by
the appointing authority, the Government servant giving notice may presume acceptance
and the retirement shall be effective in terms of the notice unless the competent authority
issues an order to the contrary before the expiry of the period of notice.
8. While granting proportionate pension to a Government servant retiring voluntarily under
this scheme, weightage of upto five years would be given as an addition to the qualifying
service actually rendered by him. The grant, of weightage of upto five years will,
however, subject to the following conditions:
 The total qualifying service after allowing the weightage should not, in any event
exceed 30 years’ qualifying service and
 The total qualifying service after giving the weightage should not exceed the
qualifying service which he would have had, if he had retired voluntarily at the
lowest age/ minimum service limit applicable to him for voluntary retirement
prescribed under FR 56(k) or article 459 (1) of the CSRs or Rule 48 of the CCS
(Pension) Rules or any other similar rule applicable to him.
9. The weightage given under this scheme will be only an addition to the qualifying service
for purpose of pension and gratuity. It will not entitle of pension the Government
servants retiring voluntarily to any additional fixation of pay for purposes of calculating
the pension and gratuity which will be based on the actual emoluments calculated with
reference to the date of retirement.

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10. The amount of pension to be granted after giving the weightage will be a subject to the
provisions of Rule 6 of the CCS (Pension) Rules, 1972. The pension will also be subject
to the provisions of Rules 8 and 9 of these Rules.
11. The scheme of voluntary retirement under these orders will not apply to those who retire
voluntarily under the provisions of Rule 29 of the CCS (Pension) Rules, 1972.
12. The scheme of voluntary retirement under these orders will also not apply to those
Government servants on deputation to autonomous bodies/ public undertakings etc. The
absorption of Government servants on deputation to public undertakings/ autonomous
bodies etc. in such autonomous bodies/ public undertakings etc. and the grant of
retirement benefits to them in respect of their service under government will continue to
be governed by the separate set of instructions issued by the Ministry of Finance in this
regard.
13. A Government servants giving notice of voluntary retirement may also apply, before the
expiry of the notice, for the leave standing to his credit which may be granted to him to
run concurrently with the period of notice. The period of leave, if any, extending beyond
the date of retirement on expiry of notice but not extending beyond the date on which the
Government servants should have retired on attaining the age of superannuation may be
allowed as terminal leave as per Rule 39*6) of the CCS (Leave) Rules, 1972 .the leave
salary for such terminal leave shall be payable in accordance with the provisions of the
para 5 of Ministry of Finance (Department of Expenditure) O.M. No. 16(1)E-IV(A)/76
dated the 23.12.1976.
14. Group ‘A’ Government servants retiring voluntarily under this scheme would continue to
be subject to the provisions in the Pension Rules relating to post retirement commercial
employment. However, in their cases, permission for the post retirement commercial
employment will be granted more liberally than in the case of other Govt. servants
retiring under the provisions of FR 56 or Rule 48 of the Pension Rules.

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Voluntary retirement under FR 56(k) – Special Provisions to Accept Notice

The provisions of Fundamental Rule 56(k), 56(m) and Rule 48 of CCS(Pension) Rules, 1972
relating to acceptance of request of voluntary retirement have been revisited as per the Central
Administrative Tribunal, Principal Bench judgement dated 4th August, 2010 in
O.A.No.1600/2009 filed by Shri Gopal Singh Purohit Vs UOI & Others to bring them at par
with each other.

The matter has ‘been examined in consultation with Department of Pension and Pensioners
Welfare and the Ministry of Law. FR 56(k) and 56 (m) have been amended vide Extra Ordinary
Gazette Notification No. GSR 27(E), dated 17 January 2014. It shall be open to the appropriate
authority to withhold permission to a Government servant who seeks to retire under FR 56(k) or
56 (m) in the following circumstances:

 If the Government servant is under suspension ; or

 If a charge sheet has been issued and the disciplinary proceedings are pending; or
 If judicial proceedings on charges which may amount to grave misconduct, are pending.

Explanation: For the purpose of this clause, judicial proceedings shall be deemed to be pending,
if a complaint or report of a police officer, of which the Magistrate takes cognizance, has been
made or filed in a criminal proceedings.

Voluntary retirement from persons suffering from disability

Department of Personnel and Training released the office memorandum F.No.25012/1/2015-Estt

(A-IV) dated 19th May 2015 with the subject “Request for Voluntary retirement from persons
suffering from disability – Supreme Court Order in Bhagwan Dass & Anr Vs Punjab State
Electricity Board1, in the said O.M following instruction provided.

Instances have come to notice where Government servants apply for voluntary retirement under
various provisions like Rules 38, Rule 48 and 48A of CCS (Pension) Rules, 1972 or Rule 56 of
the Fundamental Rule on account of hardships faced by them due to a disability, as they are
unaware of the protection provided by the Section 47 of the Persons with Disabilities (Equal

1
(2008) 1 SCC 579

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Opportunities, Protection of Rights and Full Participation) Act, 1995 (PWD Act). Section 47 of
the PWD Act, 1995 is reproduced below for reference:

“Non-discrimination in Government Employment-(1) No establishment shall dispense with, or

reduce in rank, an employee who acquires a disability during his service.

Provided that, if an employee, after acquiring disability is not suitable for the post he was
holding, could be shifted to some other post with the same pay scale and service benefits;
provided further that if it is not possible to adjust the employee against any post, he may be kept
on a supernumerary post until a suitable post is available or he attains the age of superannuation,
whichever is earlier.

No promotion shall be denied to a person merely on the ground of his disability;

Provided that the appropriate Government may, having regard to the type of work carried on in
any establishment, by notification and subject to such conditions, if any, as may be specified in
such notification, exempt any establishment from the provisions of this section.

The issue had come up in Bhagwan Dass & Anr v / s Punjab State Electricity Board2, decided
by the Hon’ble Supreme Court where the employee who had during his service suffered from
blindness, had applied for voluntary retirement. The Hon’ble Supreme court has observed that
the Petitioner was not aware of any protection that the law afforded him and apparently believed
that the blindness would cause him to lose his job, which was the source of livelihood of his
family. In those circumstances, it was the duty of the superior officers to explain to him the
correct legal position and to tell him about his legal rights.

Keeping in view the provisions of the Section 47 of the PWD Act, 1995 and the above
mentioned judgement, it has been decided that whenever a Government servant seeks voluntary
retirement citing medical grounds, or when the said notice has been submitted due to a disability,
the administrative authorities shall examine as to whether the case is covered under Section 47 of
PWD Act, 1995. In case the provisions are applicable, the Government servant shall be advised
that he/ she has the option of continuing in service with the same pay scale and service benefits.

2
(2008) 1 SCC 579

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In case a disabled Government servant reconsiders his decision and withdraws the notice for
voluntary retirement, his case shall be dealt with under the provisions of the Section 47 read with
the DOPT OM dated 25 February 2015 mentioned above. If however, in spite of being so
advised, such Government servant still wishes to take voluntary retirement, the request may be
processed as per the applicable rule.

CONCLUSION

Voluntary Retirement Scheme (VRS) refers to a program offered by organizations or companies

to their employees as an option to retire voluntarily before their normal retirement age. It is
typically aimed at reducing the workforce or restructuring the organization in a cost-effective
manner.

Under a VRS, employees who meet certain eligibility criteria are given the opportunity to retire
early. In return, they may receive various benefits, such as a lump-sum payment, enhanced
pension, extended medical benefits, or other financial incentives. The scheme is entirely
voluntary, and employees can choose whether or not to participate based on their individual
circumstances and preferences.

The implementation of a VRS can have several potential benefits for the organization, including
reducing labour costs, optimizing the workforce, and streamlining operations. Employees who
opt for the VRS may benefit from early retirement, financial incentives, and the opportunity to
pursue other interests or ventures outside of the organization.

It's important to note that the specific terms and conditions of a VRS can vary depending on the
organization and the country's labour laws. Employees considering a VRS should carefully
evaluate the offered benefits and implications before making a decision. Additionally, it's
advisable to consult with human resources or seek professional advice to fully understand the
implications of participating in a VRS.

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BIBLIOGRAPHY

STATUTE

 CCS PENSION RULES 1972

 PWD ACT 1995
 FR 56

BOOKS

 Supreme Court on Service Law Digest (1950-2017)

 Law Relating to Public Service by Samaraditya Pal

WEBSITES

 https://insider.finology.in/your-money/voluntary-retirement-scheme-vrs
 https://economictimes.indiatimes.com/
 https://pmmodiyojana.in/voluntary-retirement-scheme/

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