Voluntary Retirement Scheme(VRS) to the Employees of PSUs /Coop.Institutions and Other State Undertakings – Consolidated Guidelines –Issued.


GO.MS.NO.: 16                                         Dt.22 -3-2001

Read the following.

Ref: 1. Govt. Memo No.1038/PE I/A2/94-4,dt.23-1-96.

2. Govt. Memo No.52955/PE I/A2/97-5, dt. 01-10-1997.

3. Govt. Memo No.47538/PE I/A2/98-1, dt.26-8-98.


In the references read abve , Government have issued VRSGuidelines for implementation of VRS in all Public Sector Undertakings in the State Sector(PSUs) formed under the Companies Act, Co-operative Law Societies Registration Act etc.Keeping in view the experience gained in implementation of VRS in various PSUs, Governmentafter careful consideration issue following consolidated VRS Guidelines, in supersessionof the references read above.

2. The VRS Guidelines will be applicable to all PSUs whichinclude PEs incorporated under the Companies’ Act, Co-operative Institutions,organisations set up under seperate statutes or under the Societies Registration Act.These guidelines would also be applicable to subsidiaries of PSUs.

The focus of the VRS would essentially be on such undertakingswhich are in the process of restructing / winding up. However VRS can also be introducedby other PSUs whether or nottheyareintheprocessof restructuring / winding up. Thus profitmaking enterprises may use the VRS to reduce work force for further improving theirworking results.


ØTo improve the performance of the PSUs.

ØTo achieve the optimum level of man power in PSUs with the desirable average age mix so as to cope up with the changing needs of the society and the enterprises.

ØTo provide for necesary adjustment in the man power through redeployment so that over all levels of skills and productivity are improved.

ØTo compensate such man power as may be rendered surplus in restructuring or other exercise taken up by the Organisation, including winding up.


An employe who has been identified by the management to bebrought under the VRS can opt for the scheme within the prescribed time. If any employeewho has been identified by the management to be brought under VRS does not opt for VRS, he/ she will be retrenched under the Staff Regulations / I.D. Act.

Employees against whom disciplinary cases are pending may optforVRS and may be relieved. However their VRS benefits and quantum thereof will beconsidered based on the outcome of the disciplinary proceedings.


The scheme shall not be applicable to -

ØEmployees who are due to retire on superannuation within one year from the date of application.


ØTemporary or Casual Employees and Employees on consolidated wages.

ØEmployees on contract basis.

6. The Scheme may, at the discretion of the organisation, bewithdrawn, amended, altered or modified whether wholly or partly, at any time during theoperation thereof without any notice or assigning any reason whatsoever.


The following benefits are payable to the employees covered underthe Scheme.


The terminal benefits as statutorily due will be paid as pereligibility.

i) The balance in the P.F. Account payable as per the CPFregulation.

ii) Cash equivalent of accumulated earned leave as per the rulesof the enterprise.

iii) Gratuity as per the provisions of the Payment of GratuityAct or other aplicable Rules of the organisation.


(i) An employee who is regular or permanent, whose request forVRS is accepted would be entitled to an Ex-gratia payment equivalent to One and Halfmonths emolouments (Pay + DA) last drawn , for each completed year of service or themonthly emoluments at the time of retirement multiplied by the balance months of serviceleft before normal date of retirement whichever is less, subject to a minimum of Rs. 30,000//-(Rupees Thirty Thousand Only).

One month / three months notice pay,as per the service conditionsapplicable.

If the application of an employee opting for VRS is acceptedinstantaneously and payment is arranged by the management on the same day, the concernedindividual would be entitled for payment of ex-gratia along with pay for notice period.

Payment of ex-gratia for services rendered or left over service(which ever is less), as well as the amount payable for the Notice period should, however, not exceed the basic pay + D.A. that would have been paid to the employee who hasopted for VRS till the date of his superannuation.

Where the management takes time to take a decision on theacceptance of an application submitted by the employees for VRS and allows the noticeperiod to lapse or the employee concerned has drawn full salary during the notice periodserved by him, the pay for notice period would not be admissible as the employee hasalready drawn the salary for the notice period.

In addition the Employee and his family would also be entitltedto travel fare of the admissible class to his native place within the State of AndhraPradesh, which will be verified with reference to his L.T.C. file.

(ii) For calculation of Ex –gratia under the Scheme thefraction of service viz., 6 months and above will be treated as one year and service ofless than 6 months will be ignored.

(iii) EOL upto a period of one year will be considered forcalculation of Ex –gratia benefits, provided the Service Regulations of the concernedOrganisations permit sanction of such EOL.


1. The organisation implementing the VRS should first identify the surplus posts and staff category wise in the various departments in the organisation.(These would generally be the surplus staff, for an organisation in the process of restructuring. ) The posts and personel not identified as surplus are therefore not to be covered under the VRS.

2. The option under VRS should be offered only to such surplus employees. It has to be ensured that when the options are offered no employee other than those identified as surplus avail the option.

3. VRS designed by PSUs., should prescribe the following limits:-

a) The time limit for exercising VRS option by an employee shall be a minimum of fifteen working days and a maximum of Thirty working days.

b) A cut-off date shall be fixed by the management for calculation of VRS benefits which shall be one month after the date fixed for receipt of option.

c) Once a cut-off date is fixed and communicated to all the employees, such cut-off date shall not be changed, where the time for receipt of option under the Scheme is extended, in exceptional cases.

d) In the case of PSUs already closed, the date of closure of the Corporation shall be the cut-off date.

e) The employees whose VRS applications have been accepted shall as far as possible, be relieved on the cut-off date and in any case prior to expiry of the notice period.

f) VRS shall be implemented for a batch of employees identified under the Scheme, within the time frame set for the purpose. The new batch of employees, if any, shall be covered under the subsequent phase(s), with a fresh Cut-off Date.

4. The PSUs concerned, even if it is in the process of restructuring will invariably be required to make some financial contribution towards the VRS payments .

5. The financial contribution for VRS payments may also be met from realisations from the sale of assets.

6. After quantifying the requirement of funds for VRS payments , the organisations should first assess their own surplus funds and decide the extent to which these can be utilised to finance the VRS and for the balance amounts only they may seek help from the State Renewal Fund (SRF) and budgetary support from the Government.

7. Once the options for VRS are acepted, the related posts should be simultaneously abolished and not held in abeyance.

8. Employees retired under VRS shall not be eligible for re-employment in any Government Departments and PSUs. A formal undertaking wil be obtained by the organisation in this regard from the employee availing voluntary retirement.

9. Acceptance or rejection of request for Voluntary Retirement shall be at the sole discretion of the Organisation and it shall not be open for any employee to insist on acceptance or to seek reasons for the rejection of the request for Voluntary Retirement.

10. Once the request under VRS has been accepted by the organisation and communicated to the employees in writing it shall not be open to the employees to withdraw the request.

11. All outstanding amounts and dues payable to the organisation such as outstanding advances, loans, Co-op. Societies loans as well as monies payable under any court decree or order will be adjusted against the benefits payable under the Scheme and only the balance amount(s) if any, after all such adjustments shall be paid to the employee.


1. Each organisation as and when it proposes to reduce man-power would prepare its VRS scheme based on above guidelines and send it to the Administrative Department for approval.

2. In view of the eligibility conditions for the VRS, surplus employees from ineligible categories will be dealt with under the legal provisions of the appropriate enactments under administrative procedures of the organisation.

3. The Administrative Department would ensure that the Scheme is in confirmity with these guidelines and also examine the effort of the organisation to raise internal resources for the VRS.

4. Where no funds are required by the organisation from any external source, it may go ahead to implement the VRS after approval by Government. Wherever additional funds are required but are not available, the organisation should implement the VRS only after the funds have been tied up.

5. All the VRS claims shall be pre-audited by the Director of Treasuries & Accounts(DTA). The PSU concerned shall furnish the information as per the check list (Annexed) herewith, to the Director of Treasuries & Accounts (PPO) through the concerned Administrative Department.


These orders shall come into force with immediateeffect.







The VC & MD of SLPEs.

The MDs of Coop. Socities / Undertakings.( Throughthe Dept. of Agriculture & Cooperation)

Copy to : All the Departments of Secretariat.

SC / SF.

( For down loading or viewing the GO, please


( Director of Treasuries & Accounts).

1. Relevant Government Orders for sanction of VRS.

2. Copy of the VRS, Service Rules, Leave Rules and StandingOrders, if any, applicable to the employees.

3. SRs of all the employees duly effecting the entries in respectof EL, EOL, last pay drawn and date of retirement,etc., (complete in all respects) dulyattested by the concerned officer with office seal.

4. If any employee has availed of EOL on loss of pay, acertificate specifying such period of EOL shall be furnished

5. LPC of each employee.

6. If any charges or disciplinary proceedings are pending againstany employee who claims the VRS benefits, a certificate in this regard shall be furnished.

7. If any court cases are pending against any employee who claimsthe VRS benefits, a certificate to this effect shall be furnished.

8. Certificate to the effect that the employees who exercised theoption under the VRS are not on deputation to any other department/organisation.

9. Statement showing the amounts recoverable from the employeesby the organisation.

10. The computation statement of VRS benefits, LPC and all othercertificates mentioned above shall be duly signed by the VC & MD of the respectiveorganisation.