Beruflich Dokumente
Kultur Dokumente
VRS
Corporate is a socio- economic identity surrounded by its environment. It operates under the influences of
numerous external factors such as social, political, cultural, legal, economical, etc. Further, various passive as
well as active factors of production, play a vital role in developing a conducive internal environment for the
quantity and quality of finished products, services or both. For efficient functioning, firms usually design and
implement effective strategic tools. The passive factors are controlled and co-ordinate by active factor of
production i.e. Human Resources. But the management of the human resources is itself a complex issue. For
the purpose, the firms usually develop their own rules and regulations within the framework of legal
provisions. Accordingly, all the aspects of Human Resource management (Procurement to superannuation) are
framed within legal framework. However any change in environment requires immediate modification to
establish equilibrium. The New Economic Policy, 1991 in India introduced various changes in the Indian
economy i.e. Liberalization, Privatization and Globalization which further influenced the numerous facets of a
firm as well as its environment. The NEP 1991, on one hand, provided ample opportunities for the corporate
world, but on the other hand, the firms felt the heat of stiff competition from MNCs. Consequently,
redundancy of manpower emerged as a major issue, due to implementation of technology up gradation, cost
competitiveness, restructuring, outsourcing, closure of sick units etc. in large number of industries. Due to
global competition and fast development in technology, many companies become bankrupt, diverted their
holdings, eliminated unprofitable product line, (Das and Das 2009). In order to meet the challenge of this cut-
throat competition, the corporate world adopted various measures to right size its excessive manpower,
including Voluntary Retirement Scheme. As involuntary termination entrails heavy monetary costs and
lengthy legal battles in addition to bringing a lots of negative publicity as well as low employee morale,
organizations take great care in designing their VRS (Ratnam, 2001). Existence of protectionist labor laws,
further favored the accepted of VRS in the corporate world. The mantra of 1/4x2x4 i.e, reducing workforce to
oneforth, pay them double the wages and expects four times increase in output (Ratnam, 2001) was
implemented. Guha (1996) rightly observed that with a view to achieve the desired cost effectiveness,
downsizing of manpower has to be taken up as an indispensable exercise.
Definition Of VRS
The word retirement" implies leaving or withdrawing from employment. In the context of industrial
relations, it implies termination of employer-employee relationship at the conclusion of pre-agreed
terms/conditions or on attaining age of superannuation. Thus, voluntary retirement relates to a situation when a
worker, for one reason or other, resigns from his job and thereby terminates the employer-employee
relationship prior to the maturity of terms and conditions of employment. It is a premature termination of
employment" ( Dey and Ray, 2003).
According to Narula (2004) VRS signifies the termination of employer-employee relationship voluntarily by
worker in exchange of retirement benefits".
Voluntary means without compulsion the willingly. Therefore, Voluntary Retirement is an act on the part
of the employee to give up employment willingly and without compulsion from the employer. It is a unilateral
act on the part of an employee to cease the contract of employment with the employer (Kumar and Kumar,
2003).
So, VRS which is also known as Golden Handshake, is an independent decision of employee to end his
employment based on some decided agreement or contract, so as to terminate the legal relationship of
employer - employee.
VRS, Superannuation, Resignation, Layoff And
Retrenchment
Various terms such as Superannuation, Resignation, Layoff and Retrenchment are similar in one way to VRS,
as all of them terminate the judicial relationship between the employer and employee, but virtually different
from VRS. As Resignation is intimation in writing sent to the competent authority by the incumbent of a post,
of his intention or proposal to resign the office/post either immediately or from a future specified date. A
resignation has to be clear and unconditional (Muthuswamy and Brinda, 2006).Whereas Lay-off [Sec.2(kkk),
Industrial Dispute Act,1947] means the failure, refusal or inability of an employer to give employment to a
workman (a) whose name is borne on the muster-rolls of his industrial establishment, and (b) who has not been
retrenched. The failure, refusal, or inability to give employment may be due to-
Shortage of coal, power or raw materials, or
The accumulation of stocks, or
The breakdown of machinery, or
Natural calamity or for any other connected reasons (Kapoor,2008).
Superannuation [New Sec.2(r) as substituted by the Amendment Act of 1984]. Superannuation, in relation to
an employee, means the attainment by the employee of such age as is fixed in the contact or conditions of
service as the age on the attainment of which the employee shall vacate the employment (Kapoor,2008).
Retrenchment (Industrial Dispute Act,1947) means the termination by the employer of the service of a
workman for any reason whatsoever otherwise then as punishment inflicted by way of disciplinary action, but
does not include-
voluntary retirement of the workmen; or
Retirement of the workmen on reaching the age of superannuation if the contract of employment between the
employer and workman concerned contains a stipulation in that behalf".