KARACHI: The Pakistan Telecommunication Company Limited (PTCL), after privatisation, has announced that the fourth voluntary separation scheme (VSS) for its 9,000 employees.
The PTCL management believes that this time the VSS is expected to be availed by around 3,000 employees as the scheme offers an even more attractive package than the previous schemes. The VSS would be effective from November 28, 2016 with a maximum compensation that a single employee would get is estimated at Rs 13.5 million.
“The previous VSS was greatly appreciated by employees as it offered a very lucrative package. In the last Scheme of 2014, we could not relieve all the employees, who opted for this scheme, since business could not let go of such a sizable employee base at once, and risk stalling operations. However, with the successes reaped from the previous schemes and improved company performance, PTCL was now in a better position to offer this scheme to around 3,000 employees,” said, PTCL Chief Human Resource Officer Syed Mazhar Hussain.
According to the latest VSS, regular employees would receive transition pay with a multiplier of four, whereas the New Compensation Pay Group (NCPG) employees would receive it with enhanced multiplier of six times in accordance to the years of service.
Minimum length of service for eligibility of pension has been reduced from 20 to 18 years and the retiring employees would get the pensionary benefits of additional two years of service. The allowances of six months for regular employees and 15 months for NCPG employees were also part of this lucrative package.
“The VSS is a sign of management move to improve efficiency as the PTCL has around Rs 32 billion cash on its books including cash and short term investments. Employee cost makes a considerable contribution to company’s cost of services and administrative expenses of around 23 percent and 14 percent, respectively, which totals to around Rs 14 billion,” said an analyst at Topline Research.
He further added that initial estimates provide that PTCL could potentially book a one off VSS expense on the books with a pre-tax impact of Rs1.96/share initially. This would lead the company in to loss per share for the period CY16 of Rs0.36/share. However, the VSS amount can be staggered into few years resulting in limited annual impact. The analyst believes that the reduction in operating costs would lead to improving earnings through improved efficiencies and lower salary expenses. Historically, past VSS schemes have led to reduction in salary expenses of around 5-10 percent, which would result in cost of saving of around Rs1 billion annually.
On the other hand, ex employees of PTCL while terming this VSS trap said that the scheme was just a jugglery of figures.
Ex-General Manager Operations and coordinator of PTCL pensioners Association, Muhammad Tariq Azhar, told Daily Times that the scheme was not in favour of employees just like previous ones and the company would make all efforts to spread the word against this unfair VSS.
“Workers should avail this VSS only if the PTCL pays all arrears including salary increments, allowances, Adhoc allowances from July 1, 2005 till date.”
But, the PTCL did not follow the government of Pakistan’s rules regarding yearly increment in salaries of government servants and the company did not increase salaries of its employees since July, 1, 2005, he added.
He suggests that VSS enhanced amount should be based on the Government’s current scales for civil servants according to their grades as VSS without pension is not acceptable also the pension should be paid according to Government’s retired civil servants plan.
The net commuted total amount and General Provident Fund (GPF) should not be included in VSS net amount as Commutation & GPF amount is the fundamental right of Pakistan government’s retired employees, Azhar pointed out.