During the current financial crisis, this is probably one of the most popular words people are talking about - Voluntary Separation Scheme (VSS). I’ve gone through a painful experience during the Asian financial crisis of 1997-1998. If it comes again, I’m prepared.

What is Voluntary Separation Scheme (VSS) and is it a right approach to be adopted by the companies and organization all over the world?

Voluntary Separation Scheme (VSS) is a scheme where employees are allowed to resign voluntarily from companies or organizations by receiving fair compensation. The purpose of companies implementing VSS is to cut down the number of employees working in the companies so that the overhead cost especially staff cost can be reduced. The employees will be given a reasonable compensation to resign from the company.

Normally, the companies choose not to fire their employees in order to reduce the number of employees. It is because firing employees will lead to a bad reputation to the companies. Before implementing VSS, the companies need to get approval from the government. One of the criteria the government considers in approving VSS is that the company is not making or losing money for a long period of time. By doing this, the government can ensure that the companies are not using VSS for their selfish gain.

Actually, VSS is one of the alternatives for companies to cut down the overhead cost. There are other options for companies to consider like redeployment, re-assignments, realignments, retrain for other jobs, regional postings, outplacements, etc.

There are people claiming that VSS is not an appropriate action for the companies to cut down their cost. It is mainly because some of the organizations abuse the usage of VSS for their selfish gain. These irresponsible organizations might use VSS in order to facilitate the restructure of the organization. Some companies retrenched workers not because of the economic slowdown but to facilitate the relocation of their operations to countries offering them tax-free status or cheap labor.

What say you?

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