golden handshake News and Updates from The Economic Times Page 1

The official said 5 to 10 per cent of employees are expected to opt for VRS. IRDAI is not involved in activities like selling insurance policies, announcing bonus or investment of premiums. Public receiving such phone calls are requested to lodge a police complaint. As the rules and regulations of the scheme have been clearly indicated under the Industrial Disputes Act of 1947, there are no inconsistencies in the process and both the employee and the employer benefit from it. It is a simple, effective, and empathetic way to let go of employees and reduce the workforce strength of an organisation.

The voluntary retirement scheme is the most humane technique to provide overall reduction in the existing strength of the employees. It is a stipulation in an employment agreement which states that the employer will provide a significant severance package if the employee loses their job. A golden handshake is usually provided to top executives for loss of employment through layoffs, firing or even retirement. The voluntary retirement scheme is the most humane technique to provide an overall reduction in the existing strength of the employees. The voluntary retirement scheme is one of the most humane ways of reducing the total number of employees in an enterprise. It is beneficial for the company and helps the employee embark on a new phase of their lives with financial ease.

Any golden handshake scheme company having a net worth of USD 10 billion is eligible for bidding and a consortium of not more than four firms will be allowed to bid, it said. Public sector undertakings “are not eligible to participate” in the privatisation, the offer document said. While the Numaligarh refinery will be carved out of BPCL and sold to a PSU, the new buyer of the company will get 35.3 million tonnes of refining capacity.

The employee has not availed in the past the benefit of any other voluntary retirement scheme. Clause of section 10 of the Income-tax Act, 1961, deals with income-tax exemption on payments received at the time of voluntary retirement. Golden Handshake can informally be known as the payment which has been paid to someone because of the early retirement. All employees who have completed 45 years of age will be eligible for the scheme, according to the VRS notice accessed by PTI. The scheme is predominantly used by public and private sector companies.

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Sometimes low-level employees receive a smaller version of the golden handshake. Repatriation expenses, as payable in case of retirement, will also be paid. Employees who opt for voluntary retirement will be eligible for medical benefits under the Post Retirement Medical Benefit Scheme. Yes actually many govt employees opts for this but it is in private sectors also .

State-owned BPCL has brought in a voluntary retirement scheme for its employees ahead of the government privatising the country’s third biggest oil refiner and second-largest fuel retailer. The employees who opt for voluntary retirement cannot take up a job with the same company, its management, or a sister concern. The rise in the number of men sporting beard look and eventually adopting male grooming products was almost in tandem with formation of new male grooming startups.

The court also asked the airline to hear out the grievances of the pilots, who were engaged on contract after they superannuated, and to see whether something, like a “golden handshake”, can be done for them. The Army has a shortage of 7,912 officers and 90,640 soldiers, while the figures for the Navy are 1,190 officers and 11,927 sailors. The IAF, in turn, has a shortage of 610 officers and 7,104 airmen, said junior defence minister Ajay Bhatt, in a written answer in Rajya Sabha.

Voluntary Retirement Scheme (Golden Handshake Scheme) under Income Tax Act 1961

BPCL also owns about 16,309 petrol pumps and 6,113 LPG distributor agencies in the country. Interviewmania is the world’s largest collection of interview and aptitude questions and provides a comprehensive guide to students appearing for placements in India’s most coveted companies. Voluntary retirement is used as a way to reduce the total workforce of a company. Therefore, the company cannot hire new people in the place of the old employees who retire. The compensation paid to the employee is tax-free up to a prescribed amount. This article focuses on whether golden handshake is really what it means or just an eyewash.

• The above question is part of 35000+ General Studies MCQ Series Course on GKToday Android app.
• The employee has not availed in the past the benefit of any other voluntary retirement scheme.
• Downsizing of workforce is generally implemented through Voluntary Retirement Scheme .
• Some clauses need to be attached with this scheme to get the maximum benefits.

The above question is part of 35000+ General Studies MCQ Series Course on GKToday Android app. Golden Handshakes are often controversial and can cause upset in the general public. Payment can be made in cash, stock options, or anything else accepted in the contract.

Voluntary Retirement Scheme

It is a technique used by companies for trimming the workforce employed in the industrial unit. It is now a commonly method used to dispense off the excess manpower and thus improve the performance of the organization. It is a generous, tax-free severance payment to persuade the employees to voluntarily retire from the company. It is also known as ‘Golden Handshake’ as it is the golden route to retrenchment. A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.

Under this scheme, the organisation and its employees enter into a mutual agreement under which employees agree to voluntarily retire on payment of agreed compensation by the employer. VRS has come to be recognized as GOLDEN HANDSHAKE because of the benefits for both the employees and the employers. The employees get handsome amount under the VRS package and the employees save recurring fat wage bills in the long- run. A golden handshake is used to describe the severance package offered when an employee is retrenched, and is given only to those valued by the company, or the top brass whose offer letters have this clause built in.

Various names have been given to this exercise of removing employees like cost-cutting, removing non-performers which have been affecting almost all the sectors, including the public sector undertakings and government departments. And the immediate victims of the economy measures are the employees, who are being made to pay with their jobs, security, status, etc. Usually a large or small payment is made by a company to a senior executive upon termination of employment even before the contract ends. And these PSUs adopt golden handshake policy to ward off their staff once and for all under the Voluntary Retirement Scheme in the state and the central government sectors and pink slips in the corporate world. It is observed that the employees opting for VRS are generally over 45 years of age and they normally do not plan for their retirement as they still have many more years of service. And it is then that such people suddenly find themselves in a helpless position and find it difficult to think about their future.

J&K introduces Golden Handshake scheme for PSU employees

It is seen that most of the time, they can’t decide about the few lakhs of rupees they get by way of compensation package. And so end up burning their fingers by starting business ventures without proper planning and in the worst case, use the money for wine and in the other vices. A Golden Handshake Scheme is related to retirement taken by a worker voluntarily. It is a clause from the contract of an executive employment that offers the executive with an important severance package if in case the executive loses the job through job restructuring, firing, or even voluntarily retirement. This can be in the form of equity, cash or other benefits.The term Golden Handshake was coined around 1960 in Britain. Golden Handshake can be referred to as the payment that is paid to someone because of the early retirement.

The compensation for voluntary retirement is calculated on the last drawn salary of an employee. In the case of public sector banks, the compensation is calculated based on 45 days of salary for every year of service or the salary for the remaining period, whichever is lower. VRS has been used in India as a part of downsizing strategy to cut the size of the wage bill. VRS has been executed in both public and private sector undertakings by offering attractive sepration package known as ‘golden handshake’. Such organisations include public sector banks, TISCO, SAIL, Bajaj, Auto, Philips India, Hindustan Unilever Ltd.etc. The voluntary retirement scheme is the most useful technique to provide overall reduction in the existing strength of the employees.

BPCL has a market capitalisation of about Rs 97,247 crore and the government stake at current prices is worth over Rs 51,500 crore. The successful bidder will also have to make an open offer to other shareholders for acquiring another 26 per cent at the acquisition price. Since the human resource team of the company has to convince the trade unions about the need for implementing voluntary retirement, the process is transparent with no discrepancies.

However, it is important to know how the compensation is calculated to ensure that one knows what they are getting into. It is essential to note that even though the method is used as a way to decrease the workforce, the scheme differs from a regular termination. The final decision to opt for voluntary retirement lies with the employee. An employee who has worked with a company for a minimum of 10 years and is over the age of 40 can also apply for VRS. The government has terminated 34 PPP projects in the roads sector costing over Rs38,000 crore through a ‘golden handshake’. Downsizing of workforce is generally implemented through Voluntary Retirement Scheme .

The employee can opt for benefits such as counselling, rehabilitation, etc. to facilitate a smooth transition into retirement. This section helps you understand the amount of money that you could invest in either equity or debt as per your risk preference. The questions posted on the site are solely user generated, Doubtnut has no ownership or control over the nature and content of those questions.

The scheme offers the employee their provident fund as well as gratuity. When a person crosses this milestone, they can retire from work obligations and spend the golden years of retirement pursuing their hobbies and interests. However, in the case of voluntary retirement, a person retires in their 40s or 50s. Those who opt for the scheme will receive a golden handshake, which can go up to a maximum of 100 months’ gross salary and an additional compensation of up to Rs 3.5 lakh. The armed forces are now close to finalising the long-pending package to make short-service commission more attractive for bright youngsters. Ray optics is valid when characteristic dimensions class 12 physics CBSEGive 10 examples for herbs , shrubs , climbers , creepersTropic of Cancer passes through how many states?

However, it has some disadvatages also like efficient employees may leave the firm and inefficient may stay back which would reduce the skill base of the firm, VRS might increase the workload of existing employees if it is used to cut the pay bills. This joint venture will have a capacity of 1.5 million tonnes, which later both companies can decide to further enhance. The bidding will be a two-stage affair, with qualified bidders in the first EoI phase being asked to make a financial bid in the second round.

Typically, `golden handshakes’ are offered only to high-ranking executives by government organizations, public sector and state government sectors and may entail a value measured in lakhs of rupees. In some high-profile instances, executives cashed in their stock options, while under their stewardship their companies lost millions of dollars and thousands of workers were laid off. The voluntary retirement scheme is used by organisations as a way to cut down the number of employees. It is also referred to as the golden handshake and is a cordial way for companies to let go of some of their employees. Many big enterprises from the private and public sector resort to the scheme. However, in order to make sure that no company misuses it, the Industrial Disputes Act of 1947 mandates certain stipulations that all organisations must follow under the voluntary retirement scheme.

The scheme is also voluntary, so there are no objections from the trade unions either. The only exceptions are directors of a company or a co-operative society. Get answers to all your questions regarding claims, their submission and settlement. Yes siddhant, actually many goverment employess opts for this but it is private sectors also .