Honda Motorcycles and Scooters India (HMSI), the second-biggest two-wheeler maker in India, is offering voluntary retirement (VRS) to its employees amid slowing demand in the country after the Covid-19 pandemic.

The company has released a circular where it said that it has introduced the voluntary retirement scheme to “realign its production strategy” and improve overall efficiency in these uncertain times, reported news agency Reuters.

Employees above the age of 40 or those who have completed a decade of service in the company are eligible to apply for VRS, reported the Business Standard newspaper.

In the internal communication to employees, HMSI said, “In order to maintain existence in this competitive two-wheeler market, it is essential to continue with high efficiency and competitiveness.”

“Therefore, keeping in view all the above reasons, the management has introduced a ‘VRS’ for all the associates who want to retire voluntarily from the company before their fixed retirement age, so that they can be relieved from the company gracefully,” the HMSI communication added.

It may be noted that the directors of the company are not eligible for the scheme. The scheme became effective from January 5 and all VRS requests will be accepted till January 23. However, the management will have full authority to modify the scheme or extend the time to receive applications for VRS.

According to the Business Standard report, the formula of the VRS package includes three months gross salary into a completed year of service, one month’s basic pay plus variable dearness allowance into remaining years of service and an ex-gratia of Rs 22,000 into a completed year of service.

As part of the scheme, the first 400 to apply for VRS will get an ‘early bird incentive’ of Rs 5 lakh. Those who miss the first 400 slots will get Rs four lakh only, the internal circular added.

It is worth mentioning that the company has also capped the maximum amount that can be given under the scheme to permanent workmen, Junior Engineer (JE) and above.

For example, the amount has been capped at Rs 72 lakh for senior manager or vice-president; Rs 67 lakh for manager; Rs 48 lakh for deputy manager and Rs 15 lakh for assistant executive.