Steel Authority of India Limited VRS Faces Backlash: 75% Compensation Clause Sparks Sharp Criticism from Employees, Unions

The Voluntary Retirement Scheme (VRS) rolled out by Steel Authority of India Limited (SAIL) has come under intense scrutiny even before its rollout on May 20, with employee unions raising serious concerns over the 75% payout clause embedded in the compensation structure.

The scheme, open for applications from May 20 to July 20, 2026, is being positioned by the management as a strategic move to reduce manpower costs and restructure the workforce. However, its design has triggered strong resistance across sections of employees and labour representatives.

“Fundamental flaw in the scheme” — BMS

The Bhartiya Mazdoor Sangh (BMS) has sharply criticised the scheme, calling the 75% payout provision a “serious anomaly” that could derail its success.

Ranjay Kumar, General Secretary of Steel Federation, stated: “The biggest irony is that whatever amount is calculated, only 75% will be paid. Earlier VRS schemes ensured full payment. Even in Rashtriya Ispat Nigam Limited (RINL)’s December 2025 scheme, full compensation was assured. This model is unlikely to succeed.”

Gujarat Formula with a Cut

SAIL has adopted the Gujarat Formula to compute VRS compensation, but with a significant modification that has raised eyebrows.

Two calculation methods have been prescribed:

• Method 1:
  • 35 days’ salary × total years of service
  • 24 days’ salary × remaining service period
• Method 2:
  • 30 days’ salary × months left until superannuation

The lower of the two amounts is selected — and only 75% of that is paid.

Additionally, the compensation is calculated solely on Basic Pay and Dearness Allowance (DA), excluding all other allowances—further reducing the final payout.

“Cost-cutting exercise, not voluntary retirement”

While SAIL maintains that the scheme is aimed at rationalising manpower, critics argue it resembles a cost-cutting mechanism disguised as a voluntary scheme.

Key concerns include:

• Irrevocable applications once submitted
• No appellate mechanism for reconsideration
• Restriction on joining other PSUs unless full compensation is refunded

These conditions, unions say, make the scheme overly restrictive and unattractive.

Eligibility conditions add to concerns

The scheme also imposes stringent eligibility criteria:

• Minimum 15 years of service
• Minimum age of 50 years
• Performance-linked credit point requirements for officers

Employees argue that such filters will limit participation and defeat the broader objective.

Unfavourable comparison with RINL

The comparison with Rashtriya Ispat Nigam Limited (RINL)’s earlier VRS scheme has intensified dissatisfaction.

Unlike SAIL’s model, RINL’s scheme reportedly assured full payout, making SAIL’s 75% cap appear significantly less attractive.

Risk of Poor Response

Initial feedback from plant units suggests:

• Employees are hesitant to opt for the scheme
• Trade unions are preparing for protest
• Trust deficit between workforce and management is widening

If these trends persist, SAIL’s VRS may struggle to achieve its intended objectives.

Bottom Line:
SAIL’s VRS, intended as a workforce optimisation tool, is facing credibility issues due to its reduced payout structure and rigid conditions. The 75% compensation clause has emerged as the central flashpoint—one that could ultimately determine whether the scheme succeeds or fails.

Editor's Note: Even as a profit-making Maharatna, Steel Authority of India Limited (SAIL) appears inexplicably fixated on shrinking its workforce, raising a fundamental question—why is a stable PSU behaving like a cost-obsessed multinational? The 75% VRS payout cap and restrictive conditions send a clear signal that cost-cutting is being prioritised over employee welfare, reinforcing the growing perception of an anti-labour approach that risks eroding trust in the very idea of a public sector undertaking.

We Report – You Decide…