BlueScope's early retirement scheme, being offered to most workers over 50, is a bid to "swiftly" reduce the size of the workforce and allow "redeployment" of younger employees, the company has told the Australian Tax Office.In certain divisions of the company, the scheme will be offered to all workers over 55, and all aged over 50 if they have had 20 years of service.These employees, mainly at Port Kembla but also at BlueScope's other operations, will be asked to take early retirement packages as the company is restructured in the face of tough trading conditions.They will be offered a lump sum of $8126 plus a week's pay (capped at $4064) for each year of service.In a public ruling, the ATO has decided the early retirement scheme, which came into effect on May 18, is legitimate. At least part of the payments can now be tax-free.BlueScope has told the ATO it wants to "swiftly" reduce its workforce "by voluntary means".The steelmaker is facing mounting debt as it battles the effect of a high Australian dollar on its export contracts, while at the same time paying near-record prices for iron ore and coking coal.Certain employees will be excluded from the early scheme. Those left out include workers in engineering or technical capacities at Port Kembla, as well as workers in estimation, customer service and sales with BlueScope Distribution and BlueScope Lysaghts.Managers will be eligible.The retirements will also be limited to 25 per cent of any particular team or function within the company.The ATO ruling describes the purpose of the early retirement scheme. It says the "release" of older workers will provide more opportunities for the retention and redeployment of younger workers, and reduce the need for forced redundancies."The purpose of the scheme is to reduce, swiftly and by voluntary means, the size of the company's Australian workforce in the technical, professional, administrative, managerial and other business support functions which are likely to be directly impacted by the re-organisation, while maintaining their operational capabilities which will be largely unaffected," the ATO ruling says."As the company undertakes the re-organisation, retention and development of talented employees within the younger and shorter serving classes, the release of older longer serving employees will assist by providing expanded redeployment and development opportunities for other classes of employees."This will assist the company to maintain and grow future core people and talent capability and reduce the need to terminate employees due to genuine forced redundancy."A BlueScope spokesman declined to comment yesterday.When the Mercury revealed the scheme last month, BlueScope said the moves were "similar to what we did during the global financial crisis and provide a financial incentive for eligible employees to consider voluntary early retirement".BlueScope will not reveal how many workers the scheme will apply to.BlueScope figures say the company has 3100 direct employees at the Port Kembla steelworks plus between 500 and 1000 contractors working for the company.On the same day the ATO approved BlueScope's plan it approved an early retirement scheme for aluminium maker Alcoa, which is seeking to reduce the size of its workforce in Perth.