Hello all! :)
Recently, I was asked this question in an interview and I would like to know the answer.
Q. What is Voluntary Separation Scheme? What are the differences between Voluntary Separation Scheme and Voluntary Retirement Scheme?
Thanks,
Sumit
From India, Bhubaneswar
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7Recently, I was asked this question in an interview and I would like to know the answer.
Q. What is Voluntary Separation Scheme? What are the differences between Voluntary Separation Scheme and Voluntary Retirement Scheme?
Thanks,
Sumit
From India, Bhubaneswar
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Hi Sumit,
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 reasonable compensation for resigning from the company. It is because firing employees leads to a bad reputation for the company.
With regards,
Rajesh Chauhan
From India, Gurgaon
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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 reasonable compensation for resigning from the company. It is because firing employees leads to a bad reputation for the company.
With regards,
Rajesh Chauhan
From India, Gurgaon
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VRS is a scheme which encourages employees who are close to retirement age to take retirement voluntarily without any other force. It is done in order to bring new blood into the organization.
But I do not have much knowledge about VSS. Please shed some light on the concept.
From India, Mumbai
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But I do not have much knowledge about VSS. Please shed some light on the concept.
From India, Mumbai
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Hi Sumit,
Essentially, both VSS (Voluntary Separation Scheme) and VRS (Voluntary Retirement Scheme) are aimed at reducing the manpower in an organization by tempting an employee with compensation based on the number of years of service put in and the number of years of service left. While VSS is normally applied to all irrespective of the length of service, VRS is generally offered to those who have completed a minimum length of service. Also, for implementing VRS, the organization has to get approval from the Labor Department, and if there is a Labor Union in the organization, they must approve of the scheme too. It is also a good opportunity for productive employees who feel they are stagnating in the organization due to unfavorable promotion policies to get compensated for their stint in the organization and try their luck elsewhere. Both schemes are essentially an offer of a "golden handshake" to reduce the manpower strength in organizations. However, on the negative side, only good, employable employees leave, thus leaving the organization with deadwood.
Hope the explanation gives you some idea.
Regards,
Krishnan
From India, Madras
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Essentially, both VSS (Voluntary Separation Scheme) and VRS (Voluntary Retirement Scheme) are aimed at reducing the manpower in an organization by tempting an employee with compensation based on the number of years of service put in and the number of years of service left. While VSS is normally applied to all irrespective of the length of service, VRS is generally offered to those who have completed a minimum length of service. Also, for implementing VRS, the organization has to get approval from the Labor Department, and if there is a Labor Union in the organization, they must approve of the scheme too. It is also a good opportunity for productive employees who feel they are stagnating in the organization due to unfavorable promotion policies to get compensated for their stint in the organization and try their luck elsewhere. Both schemes are essentially an offer of a "golden handshake" to reduce the manpower strength in organizations. However, on the negative side, only good, employable employees leave, thus leaving the organization with deadwood.
Hope the explanation gives you some idea.
Regards,
Krishnan
From India, Madras
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Krishnan is right, VSS is irrespective of length of service while VRS is only near retirement after completing the stipulated length of service. Saurabh
From China, Leizhou
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From China, Leizhou
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Dear Mr. Krishnan,
Thank you for clarifying VSS and VRS. Both seem to be similar, but their meanings are different. However, for implementing VRS, we do not require permission from the labor department, even if we are downsizing manpower to meet the organization's needs. It is advisable to consult the union(s) before executing the scheme for better comprehension.
It is essential to note that the scheme is optional and constitutes a purely voluntary retirement scheme (VRS), not a Compulsory Retirement Scheme (CRS). We must carefully evaluate both the advantages and disadvantages before making a final decision.
I trust the above is satisfactory.
Thanks & Regards,
Vadlamani SR
From India, Hyderabad
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Thank you for clarifying VSS and VRS. Both seem to be similar, but their meanings are different. However, for implementing VRS, we do not require permission from the labor department, even if we are downsizing manpower to meet the organization's needs. It is advisable to consult the union(s) before executing the scheme for better comprehension.
It is essential to note that the scheme is optional and constitutes a purely voluntary retirement scheme (VRS), not a Compulsory Retirement Scheme (CRS). We must carefully evaluate both the advantages and disadvantages before making a final decision.
I trust the above is satisfactory.
Thanks & Regards,
Vadlamani SR
From India, Hyderabad
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Voluntary Retirement Scheme (VRS) is for rightsizing the workforce. All regular employees having rendered a minimum of 10 years of continuous service and are below 55 years of age are eligible for availing the facilities of VRS. It is not applicable to work-charged and Nominal Muster Roll employees, although they may have been engaged continuously for long periods.
With these restrictions, however, the problem of separating employees of sick and unviable enterprises cannot be effectively addressed. Many employees of such enterprises cannot be offered VRS due to their age, the period of service rendered in work-charged/NMR establishments, or the non-regular nature of their appointment. To resolve this problem, the Voluntary Separation Scheme (VSS) came into existence.
From India, Hyderabad
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With these restrictions, however, the problem of separating employees of sick and unviable enterprises cannot be effectively addressed. Many employees of such enterprises cannot be offered VRS due to their age, the period of service rendered in work-charged/NMR establishments, or the non-regular nature of their appointment. To resolve this problem, the Voluntary Separation Scheme (VSS) came into existence.
From India, Hyderabad
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As has been pointed out above, VRS is for downsizing (viewed by the Unions) and rightsizing (argued by the Management) of the workforce. However, for announcing any voluntary retirement scheme, the company has to follow certain procedures, including getting approval from the Labour Commissioner. Also, the company should be able to prove that they have excess workforce and that they do not plan to replace expensive workmen with cheap labor after the VRS. The minimum compensation to be paid is also laid down by the government, whereas the maximum can be fixed by the Management in consultation with the Union to attract employees to opt for VRS. The Management has the right to accept or reject the application received from any employee, though in practice, most companies do not reject applications from employees opting for VRS.
Whether it is VRS or VSS, both are supposed to be voluntary in nature. Any scheme offered for reducing the workforce that falls under the bargainable category has to be approved by the Labour Commissioner. However, companies targeting specific employees do it quietly by offering compensation to targeted employees and asking them to resign or requesting them to accept some compensation. The rules may vary marginally from state to state.
Thanks to everyone who has responded with their comments as it is always good learning.
From India, Madras
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Whether it is VRS or VSS, both are supposed to be voluntary in nature. Any scheme offered for reducing the workforce that falls under the bargainable category has to be approved by the Labour Commissioner. However, companies targeting specific employees do it quietly by offering compensation to targeted employees and asking them to resign or requesting them to accept some compensation. The rules may vary marginally from state to state.
Thanks to everyone who has responded with their comments as it is always good learning.
From India, Madras
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My view is:
There are employees who are temporary or tenure-based, so they are not expected to work until the age of retirement. Hence, they cannot retire voluntarily. VSS is for them. But when an employee is expected to work until the retirement age, VRS is offered. The essential difference is this. Since VSS can be offered to both categories of employees, these days VSS is in use instead of VRS. Besides, separation sounds better than retirement. We normally think that retirement is the end of working life, which is no longer true. Why use the term retirement then?
From India, New Delhi
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There are employees who are temporary or tenure-based, so they are not expected to work until the age of retirement. Hence, they cannot retire voluntarily. VSS is for them. But when an employee is expected to work until the retirement age, VRS is offered. The essential difference is this. Since VSS can be offered to both categories of employees, these days VSS is in use instead of VRS. Besides, separation sounds better than retirement. We normally think that retirement is the end of working life, which is no longer true. Why use the term retirement then?
From India, New Delhi
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