Dear Experts, please advise here.
XYZ Company plans to restructure its current salary components due to the expected implementation of the labor code. These changes will have a few impacts on their take-home pay. The company has already issued appointment letters to all employees and now wants to make these changes. The new changes will be communicated to all employees via meetings, and the company has an HRIS tool where it has access to all employees' salary information.
In this scenario, is it a requirement to issue a revised appointment letter to all employees? If not issued, are there any legal risks in the future?
Thank you in advance for your POVs.
From India, Bangalore
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2XYZ Company plans to restructure its current salary components due to the expected implementation of the labor code. These changes will have a few impacts on their take-home pay. The company has already issued appointment letters to all employees and now wants to make these changes. The new changes will be communicated to all employees via meetings, and the company has an HRIS tool where it has access to all employees' salary information.
In this scenario, is it a requirement to issue a revised appointment letter to all employees? If not issued, are there any legal risks in the future?
Thank you in advance for your POVs.
From India, Bangalore
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Greetings,
In regards to reworking the salary structure to meet the new wage code bill (expected to be implemented in the future) of employees in your company, it is necessary to communicate the same to employees in the first place - which you have done, or are planning to.
When this task was carried out in our company, we made sure that the net pay did not have any change. A consequence of the same was increased cost to the company as the benefits (gratuity and employer PF) had gone up (since basic has to be 50% of the CTC). However, we took it up and had no qualms from employees as net pay remained unchanged. Reworked appointment letters with new salary structure were shared.
In your scenario, with a significant impact on net pay, highly necessary to issue revised appointment letters. To provide a legal perspective:
1.) According to the Karnataka Shops and Establishments Act, necessary to issue appointment letters with accurate information such as designation, terms of employment, etc. Please check if similar clauses are present in your state of employment.
2.) Meetings are an oratory form of communicating change. The changes have to be proofed on company letterheads should any issue arise in the future.
Thanks, Lucy
From India, Bengaluru
Acknowledge(0)Amend(0)
In regards to reworking the salary structure to meet the new wage code bill (expected to be implemented in the future) of employees in your company, it is necessary to communicate the same to employees in the first place - which you have done, or are planning to.
When this task was carried out in our company, we made sure that the net pay did not have any change. A consequence of the same was increased cost to the company as the benefits (gratuity and employer PF) had gone up (since basic has to be 50% of the CTC). However, we took it up and had no qualms from employees as net pay remained unchanged. Reworked appointment letters with new salary structure were shared.
In your scenario, with a significant impact on net pay, highly necessary to issue revised appointment letters. To provide a legal perspective:
1.) According to the Karnataka Shops and Establishments Act, necessary to issue appointment letters with accurate information such as designation, terms of employment, etc. Please check if similar clauses are present in your state of employment.
2.) Meetings are an oratory form of communicating change. The changes have to be proofed on company letterheads should any issue arise in the future.
Thanks, Lucy
From India, Bengaluru
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(Fact Check Failed/Partial)-The user reply is mostly accurate. However, it is important to clarify that under the Indian labor laws, specifically the Payment of Wages Act, 1936, any changes impacting the take-home pay of employees do require a formal notice or revised appointment letter to be issued to all employees. This is to ensure transparency and compliance with legal obligations. Therefore, it is advisable to issue revised appointment letters in this scenario to mitigate any legal risks in the future. Regarding the reference to the Karnataka Shops and Establishments Act, while it emphasizes the importance of accurate information in appointment letters, the primary legislation governing payment of wages is the Payment of Wages Act, 1936, which should be adhered to in this case. Additionally, it would be beneficial to ensure that all changes are clearly documented in writing, whether through revised appointment letters or other formal communication channels, to avoid any misunderstandings or disputes in the future. Overall, the user's response provides valuable insights and considerations for handling the situation effectively.