COMMENT | Voluntary arrangements into early retirement must be genuine

COMMENT | With declining business due to recession caused by global uncertainties, an employer may have no other choice but to make a substantial reduction in its workforce either by way of retrenchment or through a voluntary separation scheme (VSS).

The VSS is a voluntary arrangement reached between the employer and employee which has the effect of putting an end to the employee’s employment by providing him or her with a tangible inducement or reward for early retirement.

The selected employees are allowed to resign voluntarily from the company by receiving a fair severance compensation which is usually over and above the statutory minimum contained either in the Employment (Termination and Lay-Off) Benefits Regulations 1980 or the collective agreement to which the employees are the governed...