Government on Tuesday approved the proposals of Oil and Natural Gas Corporation and Indian Oil Corporation to offer voluntary retirement to their surplus staff.

"The implementation of the VRS would help the two PSUs right-size themselves in the era of competition and cost cutting," Petroleum Minister Ram Naik told PTI in New Delhi.

ONGC is expecting that at least 10 per cent of its 40,000 workforce would opt for VRS, which would entail an outgo of Rs 426 crore (Rs 4.26 billion). In the case of IOC, about 1,000 workers are expected to accept pre-mature retirement.

According to the revised proposal, the One Time VRS is intended to be applicable to those employees who have put in minimum 15 years of service and are not below the age of 40 years.

Naik said the benefit would include ex-gratia equivalent to two months' salary for each completed years of service or salary for the number of months left, whichever is less.

Additional monthly benefit equivalent to 105 per cent of the basic pay drawn on the date of voluntary retirement would be given to employees above 58 years.

However, the ministry of petroleum and natural gas has referred to the Cabinet the proposals for introduction of similar voluntary retirement schemes in HPCL and BPCL, the two refiners that are slated to be disinvested.

"Since the process of disinvestment in these two PSUs is currently on, the proposed schemes of HPCL and BPCL would be submitted to the Cabinet for appropriate decision," Naik said.