Hi You can bring down the basic pay as a percentage CTC from 50% to 40%. However, make sure that the actual amount of basic does not get reduced, since it affects the PF etc. Surendra
From India, New Delhi
2From India, New Delhi
Mr. Vijaygk
Say per your post, you said that DA will be part of BAsic for PF calculation, but just now i gone through the PF Act, which say that DA doesnt inclueds in PF calculation, and extract of the same is below,
{ “basic wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include-
(i) the cash value of any food concession;
(ii) any dearness allowance that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;
(iii) any presents made by the employer;}
can any body gives any inputs regarding this, becase i am calculating PF on the basis of Basic (not included the DA)??
regards
From India, Bangalore
Say per your post, you said that DA will be part of BAsic for PF calculation, but just now i gone through the PF Act, which say that DA doesnt inclueds in PF calculation, and extract of the same is below,
{ “basic wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include-
(i) the cash value of any food concession;
(ii) any dearness allowance that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;
(iii) any presents made by the employer;}
can any body gives any inputs regarding this, becase i am calculating PF on the basis of Basic (not included the DA)??
regards
From India, Bangalore
dear sir As per proviosn of PF Act you can not reduces Basic Salary Refere Section 12 Dave D m
From India, Surat
From India, Surat
Hello Vijay,
Ideally this is not practical (Salary can never decrease in a organization) but the if the change is taking place for the entire organisation than there no legal restriction to it. Even if you do it for an individual there is no legal obligation or law for it but the the employee will face problems in his future jobs
From India, Pune
Ideally this is not practical (Salary can never decrease in a organization) but the if the change is taking place for the entire organisation than there no legal restriction to it. Even if you do it for an individual there is no legal obligation or law for it but the the employee will face problems in his future jobs
From India, Pune
Hi Ashi, I am MMRAO,
I would like to clarify your PF will always be calculated on basic pay only. In your case, the basic pay is Rs.5000/-. The statutory rate of PF is 12%. Hence, 600/- will be the contribution from employee side. another 600/- should be contributed from employer side. There is one more thing to know. Here,the employer contribution i.e. 600/- will be divided into two parts. One is towards PF @ 3.67% another one is towards 8.33% towards Pension Scheme. So total Rs.1200/- will be credited to the employee PF A/c. at EPF Office by way of R1 monthly challan.
Hope you got clarification.
Pl.Revert back if any.
Regards,
MMRAO
From India, Hyderabad
I would like to clarify your PF will always be calculated on basic pay only. In your case, the basic pay is Rs.5000/-. The statutory rate of PF is 12%. Hence, 600/- will be the contribution from employee side. another 600/- should be contributed from employer side. There is one more thing to know. Here,the employer contribution i.e. 600/- will be divided into two parts. One is towards PF @ 3.67% another one is towards 8.33% towards Pension Scheme. So total Rs.1200/- will be credited to the employee PF A/c. at EPF Office by way of R1 monthly challan.
Hope you got clarification.
Pl.Revert back if any.
Regards,
MMRAO
From India, Hyderabad
Hi All,
I am also looking at working on restructuring on salary break-ups for my employees to ensure more inhand for them. Can you please guide me as to what kind of formalities I may have to get into to get this approved by PF Commissioner. All employees in my company are white collar employees and beyond Rs. 7501/- mark.
Any inputs from your end would be of great help.
Thanks in advance.
Regards,
Karuna Ahuja
From India, Delhi
I am also looking at working on restructuring on salary break-ups for my employees to ensure more inhand for them. Can you please guide me as to what kind of formalities I may have to get into to get this approved by PF Commissioner. All employees in my company are white collar employees and beyond Rs. 7501/- mark.
Any inputs from your end would be of great help.
Thanks in advance.
Regards,
Karuna Ahuja
From India, Delhi
Hi
Yes company can change basic any time but takin in view that the member should not lose much,
the reduced amount in basic can be raised into other allowences like Con, hra, lta spl.bonuse etc., and alo in this way you employee can expect a growth in thp. statutory requirements need not to be changed.
Thank you
Regards
Debajit Roy
From India, Mumbai
Yes company can change basic any time but takin in view that the member should not lose much,
the reduced amount in basic can be raised into other allowences like Con, hra, lta spl.bonuse etc., and alo in this way you employee can expect a growth in thp. statutory requirements need not to be changed.
Thank you
Regards
Debajit Roy
From India, Mumbai
HI XXXXX A company cannot reduce the bAsic once it has fixed bcoz it effects PF , ESI, Also Gratuity and all otheer elements vr the Employee may loose certain benefits bcoz incremnet r based on Basic
From India, Hyderabad
From India, Hyderabad
Hello
Basically Terms and Conditions are governed by Appointment letter and for unionised category, Industrial Disputes Act will also guide.. I do not know why PF Act is being discussed here.
1. One can reduce basic salary of management/ supervisory staff ( Dont reduce too much) as a restructuring exercise and get the revised terms and conditions duly accepted by him by geeting the duplicate copy signed "read and accepted"
2. In case of unionised staff Notice under section 9 of the industrial Disputes Act need s to be given. Then discussion will take place before the Commissioner. Agreement need to be arrived at. Whetrher you have union or no union, if the employees are workmen under the Industrial Disputes Act, then , my advice would be not to reduce the basic
3. PF Authorities have no role here. The concerned section which was referred to in one post was about not reducing the basic salary to adjust the Managements Contribution. They can not take up this issue and and even if they take up, if you could prove that no adjustment has been made to recover employers contribution, they will not proceed.
4. There was another post enquiring about Basic and DA and PF. The Member has reproduced the definition of Basic salary and says Basic salary does not include DA. That is obvious Basic does not include DA. But I would request the member to read Section 6 of the Act which talks about contribution. If you are not contributing PF on DA, you are in real trouble and change it immediately
Siva
From India, Chennai
Basically Terms and Conditions are governed by Appointment letter and for unionised category, Industrial Disputes Act will also guide.. I do not know why PF Act is being discussed here.
1. One can reduce basic salary of management/ supervisory staff ( Dont reduce too much) as a restructuring exercise and get the revised terms and conditions duly accepted by him by geeting the duplicate copy signed "read and accepted"
2. In case of unionised staff Notice under section 9 of the industrial Disputes Act need s to be given. Then discussion will take place before the Commissioner. Agreement need to be arrived at. Whetrher you have union or no union, if the employees are workmen under the Industrial Disputes Act, then , my advice would be not to reduce the basic
3. PF Authorities have no role here. The concerned section which was referred to in one post was about not reducing the basic salary to adjust the Managements Contribution. They can not take up this issue and and even if they take up, if you could prove that no adjustment has been made to recover employers contribution, they will not proceed.
4. There was another post enquiring about Basic and DA and PF. The Member has reproduced the definition of Basic salary and says Basic salary does not include DA. That is obvious Basic does not include DA. But I would request the member to read Section 6 of the Act which talks about contribution. If you are not contributing PF on DA, you are in real trouble and change it immediately
Siva
From India, Chennai
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