An employee who has completed ten years of service in a particular organisation and is above 40 can apply for VRS. This scheme applies to a company's employees and executives and the cooperative society's authority. However, this will not apply to directors of a company and/or cooperative.
According to the rules of VRS, it should lead to a reduction in the overall employee strength of an organisation. A company cannot fill vacant positions with new and younger candidates. If an employee working at Public Sector Undertaking (PSU) takes a voluntary retirement, the PSU needs to get government approval before it can offer VRS to any employee.
Furthermore, firms can frame more schemes as long as they abide by the rules under Rule 2BA of the Income Tax Act. An essential guideline under Rule 2BA is that employees granted voluntary retirement cannot work in another organisation's subsidiary.