VSS : What is VSS & How to Calculate

Voluntary Separation Scheme (VSS) is a widely used mechanism in the Malaysian employment landscape that allows employers to offer employees the option to voluntarily leave their employment in exchange for certain benefits. This article aims to provide a comprehensive understanding of VSS under Malaysian law, including its legal framework, eligibility criteria, benefits, how to calculate VSS, and the rights and obligations of both employers and employees.

1. Legal Framework of VSS in Malaysia:

VSS is governed by the Employment Act 1955 and the Industrial Relations Act 1967 in Malaysia. These laws provide the legal framework for voluntary separation schemes and outline the rights and obligations of both employers and employees in the process.

2. Eligibility Criteria for VSS:

Eligibility for VSS may vary depending on the employer's policies and the specific circumstances surrounding the scheme. Generally, employees who meet the following criteria may be eligible for VSS:

• Length of service: Employees with a minimum period of service as determined by the employer.
• Age: Employees who have reached a certain age as specified in the VSS policy.
• Job position: Employees in specific job positions or departments as determined by the employer.

It is important for employers to clearly communicate the eligibility criteria to employees to ensure transparency and fairness in the VSS process.

3. Benefits of VSS:

The benefits offered under VSS may include:

• Severance payment: A lump sum payment based on the employee's length of service.
• Retrenchment benefits: Additional compensation provided to employees who are retrenched due to the VSS.
• Medical and insurance coverage: Continued coverage for a specified period to ensure employees' well-being during the transition period.
• Job placement assistance: Support in finding alternative employment opportunities, such as career counseling or job placement services.

The specific benefits provided under VSS should be clearly outlined in the scheme's policy to avoid any ambiguity or misunderstandings.

4. Calculating VSS:

The calculation of Voluntary Separation Scheme (VSS) benefits typically involves considering various factors, such as the employee's length of service, salary, and any additional components specified in the VSS policy. While the specific formula may vary depending on the employer's policy, here is a general approach to calculating VSS:

• Step 1: Determine the Severance Payment:
  - The severance payment is often calculated based on the employee's length of service. It may be a specified number of months' salary multiplied by the number of years of service.
• Step 2: Consider Additional Benefits:
  - In addition to the severance payment, the VSS policy may provide for other benefits such as retrenchment benefits, medical and insurance coverage, or job placement assistance. These benefits should be factored into the overall calculation.
• Step 3: Consult with Legal Advisors:
  - It is advisable for employers to consult with legal advisors or HR professionals experienced in VSS calculations to ensure compliance with Malaysian employment laws and to accurately calculate the benefits based on the specific circumstances.
  
  
  Example Calculation : 
  Let's consider an example where an employee, John, has been with the company for 15 years and has a monthly salary of RM 8,000. The VSS policy states a severance payment of 1.5 months' salary for every year of service.
• Step 1: Calculate the Severance Payment:
• Severance payment = 1.5 (months' salary) x 15 (years of service) x RM 8,000 (monthly salary)
• Step 2: Consider Additional Benefits:
• In this example, the VSS policy also provides for an additional retrenchment benefit equal to one month's salary.
• Step 3: Total VSS Calculation:
• Total VSS = Severance payment + Retrenchment benefit

Thus, John would be entitled to a total VSS amount based on the given example.

5. Rights and Obligations of Employers and Employees:

Both employers and employees have certain rights and obligations in the VSS process. Employers are responsible for providing clear and transparent information about the VSS scheme, ensuring non-discrimination in the selection of employees, and complying with legal requirements. Employees have the right to seek clarification, consult with legal advisors, and accept or reject the VSS offer based on their personal circumstances and preferences.

 

Read More on Ajobthing : 

1. 7 Simple Ways to Improve Employee Performance with KPIs
2. Compassionate Leave: A Guide for HR's in Malaysia
3. Offer Letter : What to Include in an to ensure Clarity and Transparency for Employers
4. Probation Period: Things Employers Should Avoid Doing With Probationary Employees
5. Probation Period : An Employer's Perspective

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