India: Nod for IOC, ONGC early retirement plans

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India: Nod for IOC, ONGC early retirement plans

Business Standard

June 25, 2003

New Delhi - The government today approved the proposals of the Oil and Natural Gas Corporation (ONGC) and the Indian Oil Corporation (IOC) for offering voluntary retirement schemes.

The schemes were in line with the guidelines of the department of public enterprises, an official press release issued today said.

As per the approved schemes, employees opting for voluntary retirement will be paid a compensation of 60 days' salary for each completed year of service or the salary for the number of service years left, whichever is less, apart from the normal retirement benefits.

The salary for the purpose of computation will consist of the basic pay and dearness allowance.

The employees opting for early retirement would also receive additional monetary benefit, the release said.

It is expected that about 2,000 employees of ONGC and 1,000 in IOC will opt for voluntary retirement under these schemes. The two companies will notify further details to their employees.

“The implementation of the VRS will help the two PSUs right-size themselves in the era of competition and cost cutting,” Petroleum Minister Ram Naik said.

According to the revised proposal, the one-time VRS will be applicable to those employees who have put in a minimum of 15 years of service and are not below the age of 40 years.

Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) have also proposed implementation of voluntary retirement schemes.

Since these two companies had been put on the block, their proposals would be submitted to the Cabinet for appropriate decision, the release said.

“Since the process of disinvestment in these two PSUs is currently on, the proposed schemes of HPCL and BPCL will be submitted to the Cabinet for an appropriate decision,” Naik said.

Employees above 54 years and up to 58 years will be entitled to 100 per cent of the basic pay, employees above 50 years and up to 54 year will get 95 per cent and those below 50 years will be entitled to 90 per cent of the basic pay.

The balance of provident fund, gratuity, cash equivalent of earned leave, encashment of half pay leave as per the relevant statutes/corporation’s rules would also be paid, Naik said.

The VRS also provides for travel expenses of employees and their family members to the place where they intend to settle down.

Moreover, medical facilities will be available to an employee retiring voluntarily after completion of 50 years of age and 20 years of service.

Sources said ONGC had calculated that if the target group of 2,000 employees continue to work with the organisation till their actual retirement, the carrying cost would be higher at Rs 825.41 crore.

The implementation of the VRS would lead to a net savings of Rs 400 crore, they said, adding the firm would fund the entire VRS outgo from internal accruals.