A Voluntary Separation Scheme (VSS) allows the company to reduce its manpower in conjunction with the negative business conditions. This scheme allows employees to leave the Company voluntarily and in turn receive a compensation package that was agreed upon by both parties. A VSS does not lead to termination of the employment contract by the employer. When an employee applies to join such a scheme and he is accepted, he is deemed to have voluntarily resigned. Hence, the employee would find it difficult to file a complaint at the Department of Industrial Relation that he has been dismissed without just and cause excuse.
An effective VSS must be carefully planned and implemented. An employer needs to first address a couple of issues in advance such as:-
- How do we determine whether the employee request to join the scheme is truly voluntary?
- How do we determine that the benefits offered under the scheme are just the right amount to attract employees to apply and prevent too many from applying?
- How do we determine that reasonable time limit has been provided for the employees to decide whether they are interested in joining the scheme?
- How do we determine that the reason for the scheme is properly explained to the employee both orally and by writing?
As VSS should be on a voluntary basis, the company has to ensure that there is no undue pressure for any of the employee to accept the scheme. A reasonable time limit is one that is not too long to impact the productivity of the employees and not too short to be seen as forcing them to make a quick decision. The company should first issue a memo to inform the employees of the intention of the company then verbally inform them again in a town hall session for them to understand the reason behind the VSS.
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