VSS or MSS: reading the offer before you sign it

A separation scheme offer is a contract, and like most contracts it is drafted by the party who is not you. Some are generous. Some are a statutory floor with a ribbon on it. In several hundred reviews on our desk, these are the checks that decide which one is in your hands.

First: voluntary, or "voluntary"?

A VSS invites applications and reserves the company's right to accept or decline; an MSS is a negotiated exit offered to identified employees. The label matters less than the pressure: a genuinely voluntary scheme survives your taking days to consider it and declining it without consequence. An offer with an hours-long deadline, presented in the same meeting that hints your role is gone either way, is not really either — it is a retrenchment negotiating with itself, and it prices differently once you know that.

Benchmark the quantum

Your floor, if the Employment Act's First Schedule covers you with a year or more of service, is the 1980 Regulations scale — ten, fifteen or twenty days' wages per year of service by length of service, pro-rated, plus your section 12 notice entitlement. Run it through a calculator before any meeting. Market VSS practice in established companies typically runs above the floor — commonly quoted around a month per year of service in stronger schemes — and your unfair-dismissal leverage (backwages up to twenty-four months, one month per year in lieu of reinstatement) is part of what the scheme is buying. Thin quantum against strong leverage is exactly the situation where negotiation, or a decline, makes sense.

Read past the number

• The release clause. "Full and final settlement of all claims" ends your section 20 claim if signed freely. That is its purpose. Make sure the number reflects it.
• Tax treatment. Compensation for loss of employment carries a partial income-tax exemption per completed year of service; how the sum is characterised in the agreement affects the computation. Ask before signing, not at filing season.
• Restraints and clawbacks. Non-competes are generally void under section 28 of the Contracts Act 1950 — yet they still appear, alongside clawbacks triggered by vague "disparagement". Strike or narrow what should not be there.
• References and announcements. Agreed reference language costs the employer nothing and is worth a clause. Ask.

The unglamorous advice

Do not resign in anticipation of a scheme that has not been offered to you. Do not sign in the room. Do not rely on a manager's verbal assurance about what a clause "really means". And if the offer arrives while you are on medical leave or maternity leave, get advice the same week — schemes aimed at protected employees carry their own set of problems, all of them the employer's.

General information, not legal advice. We review scheme offers within two working days — sooner when the letter's deadline demands it.

Priya Manogaran

Associate, Faiza Loke & Sivam