Sail's Voluntary Retirement Scheme

The Voluntary Retirement Scheme Contd...

The new scheme, like the old one was a deferred payment scheme, with extra carrots like a 5% increase in monthly benefits for each of the three age groups. By September 1999, over 4,000 employees opted for the new scheme. About 1,700 employees opted for VRS in the Durgapur steel plant while in the Bhilai, Bokaro and Rourkela steel plants. The number varied between 400 and 700. In September 2000, SAIL announced yet another round of VRS, in a bid to remove 10,000 employees by the end of March 2001.

The company planned to approach financial institutions for a credit of Rs 5 billion. Pande said: "We are awaiting the government nod for the VRS scheme, drawn on the pattern of the standard VRS by department of public enterprises.

We expect to get the clearance by the end of the month." On February 08, 2001, SAIL ended its four year recruitment freeze by announcing its plans to fill up more than 250 posts at its various plant sites in both technical and non-technical categories.

According to a senior SAIL official: "This recruitment is being done to ease the vacancies created due to natural attrition and those that arose after the previous VRS."

The Persuasion

In mid 1998, in a bid to convince its employees to accept VRS, SAIL highlighted six 'plus' points of VRS, in its internal communique, Varta. They were as follows:

• During the next 4-5 years, SAIL has to reduce its workforce by 60,000 for its own survival. Employees with chronic ailments, and habitual absentees, who add to low productivity, have to go first – maybe, with the help of administrative actions.
• The employees may have to be transferred to any other part of the country in the larger interest of the company.
• For those who started their career as healthy young men 25-30 years ago, the VRS will take care of their financial worries to a great extent, and they can discharge their domestic duties more comfortably.

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Case Details

Case Code : HROB002
Themes: HR Practices and Policies
Case Length : 07 Pages
Period : 1999-2001
Organization : SAIL
Pub Date : 2001
Teaching Note : Available
Countries : India
Industry : Metals & Mining

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