Thee VRS scheme will be the third round of VRS offered by the company in four years. Tata Motors has a total of 42,597 employees and about half of its employees would be eligible based on the criteria defined by the company.
According to several people in the know, the standalone Indian company floated the VRS scheme on Friday specifying an eligibility criteria for employees who have been with the company for a period of five years and above.
The compensation extended to the employees is a combination of age and number of years served by the employee with a multiplier, say people in the know.
Historically the share of the workforce who have opted for the VRS scheme has been in single-digit percentages, it is unclear how many employees may opt for this scheme and whether the management has capped the limit.
In an official response, the company spokesperson confirmed the development and told ET Tata Motors continues to implement its turnaround plans effectively. Towards this, we are also reviewing our fixed cost structures while ensuring that our commitment towards employee welfare and wellbeing remains foremost
“As a first step and in response to employee requests, a rewarding voluntary retirement scheme (VRS) for employees and workers which creates a mutually beneficial proposition for them as well as the company has been announced. Eligible employees and workers can apply for VRS from 11th Dec 2020 to 9th Jan 2021,” said the spokesperson.
According to FY20 annual report, the white collar workforce median salary was Rs 12.03 lakh, whereas blue collared workers drew an average of Rs 6.92 lakh, both saw an increase of 5.71% and 3.9% respectively year on year in FY20
This is the third round of VRS scheme extended by the company in the last four years. Tata Motors had offered 1600 employees the VRS in November 2019, this was preceded by another in 2017.
Tata Motors’ (TML) total employee count dropped 19% YoY to 42597 in FY20 following 41% decline in the temporary workforce. The share of the temporary workforce declined to 34.5% in FY20, compared with 47.7% in the previous fiscal year.
The compensation and benefits being offered under the VRS is said to be the best in industry and include health insurance as well as guidance on financial and retirement planning, the company spokesperson said.