How Can We Create a Fair VRS Scheme for Our Aging Workforce in the Newspaper Industry?

Dear HR Professionals,

We are an 80-year-old organization in the Newspaper Industry. That's the reason we have a workforce above 50 years of age. For them, we are framing a VRS Scheme. Please suggest a proper information source and assist in framing this scheme. I want it to be acceptable for both sides.

Regards,
Nikhil Kadu
nikhilkadu@indiatimes.com

Dear nikhilkadu,

How can anyone help you unless one knows the terms and conditions such as eligibility, benefits, etc., of the VR scheme that you propose to launch? It would be worthwhile if you share certain information relating to the scheme. Also, please do not say "VRS Scheme." It is either "Voluntary Retirement Scheme," "VR Scheme," or "VRS."

Warm regards.

Thank you, Sir, for updating me. Can you please tell me what information is required to provide proper guidance regarding the VR Scheme? The employee strength of the company's workforce is 28, with around 80% of them above 50 years of age and having 28 to 35 years of experience within the organization. We are seeking a solution that will be mutually accepted by both these employees and management.

Warm Regards, Nikhil Kadu
nikhilkadu@indiatimes.com

In that case, first, you'll have to decide on what benefits the management can extend. What is the retirement/superannuation age? Since 80% are above 50 years of age, what percentage of salary until the time of retirement is your management willing to give? Any other benefits?

Warm regards.

Well, sir,

I am a bit confused about which VRS pattern to follow. From the information I found online, the Gujarat Pattern offers 35 days' salary per completed year and 25 days' salary for the balance years up to superannuation as an Ex-gratia, in addition to all other benefits, including leave encashment.

Our management is interested in following the guidelines set by the labor office. Could you please suggest a suitable pattern for us to follow?

Warm regards,
Nikhil Kadu

Dear Nikhil Kadu,

Each company follows different patterns of Voluntary Retirement Scheme (VRS). To name a few:

1. A lump-sum payment which has no linkage to years of service or the remaining period of service.

2. Wages/26 x Number of days (For VRS) x Completed service.

3. Wages/26 x Number of days (For VRS) x Remaining Service.

You have to first decide your company's capacity to pay. In my opinion, you also have to obtain permission from the Income Tax department for promoting the scheme (please ask your Finance guy to check this out).

Also, try to survey the market to find out what industries have offered in the neighborhood, as generally, workmen compare this. You also have to source information through internal reliable sources (grapevine) to assess the expectations of the workmen. This is needed to moderate them if their expectations are quite high.

A word of caution, you may also lose valuable employees in the process.

Generally, VRS is applicable to employees who have served at least 10 years of service (if my memory is correct).

It will also be wise to enter into a tripartite settlement 12(3) under the Industrial Disputes Act on the terms of settlement. But beforehand, it will be beneficial to enter into a bipartite 18(1) settlement under the ID Act. This will only give you confidence to approach the Labor office for arriving at a 12(3).

Please note that strictly speaking (As per law), you are not supposed to fill up a vacancy created by VRS. In other words, VRS is promoted to remove excess workforce that is not required by the industry.

Try to find out answers to these queries, and you will be able to arrive at a solution.

M.V. Kannan

The Gujarat pattern is a tried and tested one, as well as legally compliant and fair. So you can go ahead with this.

It is not clear what you mean by "as per labour office guidelines". It seems it is about "layoff" provisions. A VR policy is a more potent and employer-friendly option that keeps the employee morale high.

Warm regards.