Thanks Rajat In fact your posting timing is after my posting timings If it is seen either before my posting or after my posting, there will be logical end to this discussion. Somehow it is recorded in between.
Anyway thanks once again
Siva
From India, Chennai
368Anyway thanks once again
Siva
From India, Chennai
Thanks for all the inputs, this was my first post on citehr and i must say this is a very good forum with a lot of knowledgeable inputs. Yes, there are variance in views on this subject which was one of the main reasons for posting this query.
My initial understanding of this issue after consulting with many experts and my colleagues in the industry told me that it would not be easy to implement reduction in basic for the employees (Especially if an employee goes to court). Yes, we can have the employee to sign the revised comp and implement the new structure, but in case of PF scrutiny and PF being a sensitive issue for the governement, there might be a chance of attracting heavy penalties.
We would all agree that the definition of workmen, the PF and other associated employee benefit acts have very old definitions which have not been updated with time, in a way they do not reflect the new economy in many cases, and i presume that Reduction/ Restructuring salary is one such issue.
As one senior member has suggested, the best way to go about restructing and bringing down Basic as % of CTC is to add the increments in other allowances and keep the basic constant, over a period of time automatically Basic of % of CTC will come down to more acceptable levels.
It would really help if any of the members can provide with a case study/ court case in this matter, this would help in brining this discussion to logical conclusion.
Thanks once again to all the members for their valuable inputs, really appreciate the time and knowledge shared.
Regards
Santosh
From Philippines
My initial understanding of this issue after consulting with many experts and my colleagues in the industry told me that it would not be easy to implement reduction in basic for the employees (Especially if an employee goes to court). Yes, we can have the employee to sign the revised comp and implement the new structure, but in case of PF scrutiny and PF being a sensitive issue for the governement, there might be a chance of attracting heavy penalties.
We would all agree that the definition of workmen, the PF and other associated employee benefit acts have very old definitions which have not been updated with time, in a way they do not reflect the new economy in many cases, and i presume that Reduction/ Restructuring salary is one such issue.
As one senior member has suggested, the best way to go about restructing and bringing down Basic as % of CTC is to add the increments in other allowances and keep the basic constant, over a period of time automatically Basic of % of CTC will come down to more acceptable levels.
It would really help if any of the members can provide with a case study/ court case in this matter, this would help in brining this discussion to logical conclusion.
Thanks once again to all the members for their valuable inputs, really appreciate the time and knowledge shared.
Regards
Santosh
From Philippines
Hi Sdix,
You can always restructure the compensation pacakage in the company.
If you are looking for change in basic, then every components' ratio needs to be changed accordingly, because every component would be based on basic only in order to to keep the CTC unchanged .
Regrads,
Archana Dewang
From India, Pune
You can always restructure the compensation pacakage in the company.
If you are looking for change in basic, then every components' ratio needs to be changed accordingly, because every component would be based on basic only in order to to keep the CTC unchanged .
Regrads,
Archana Dewang
From India, Pune
Dear Friends
I am requesting you to understand one basic issue
Reduction in basic is nothing to do with PF
If a settlement is signed with Union reducing wages, what can PF Authorities do??
I have in my career span of nearly 35 years have reduced the basic salaries atleast 4 to 5 times Many organisations have done
I repeat I am not talking about its desirability
I am talking about legality.
I really do not understand as to why one should refer to a wrong legislation.
Terms and conditions of employment are not governed by PF ACT and in any experts say so, I really would like to discuss this issue seriously.
I saw Rajat Joshis posting and thought it has reached a logical conclusion. Now members are again talking about PF Act for reduction of basic.
We do not go to a Dentist for Cardiac problem Do we??
We do not refer to IPC for implementing Standing Orders>. Do we?
We do not refer to Factories Act or Shops Act or Plantation Act to discuss Permanent Status.
Then why quote PF on a subject on which it has no jurisdiction
Please understand
Siva
From India, Chennai
I am requesting you to understand one basic issue
Reduction in basic is nothing to do with PF
If a settlement is signed with Union reducing wages, what can PF Authorities do??
I have in my career span of nearly 35 years have reduced the basic salaries atleast 4 to 5 times Many organisations have done
I repeat I am not talking about its desirability
I am talking about legality.
I really do not understand as to why one should refer to a wrong legislation.
Terms and conditions of employment are not governed by PF ACT and in any experts say so, I really would like to discuss this issue seriously.
I saw Rajat Joshis posting and thought it has reached a logical conclusion. Now members are again talking about PF Act for reduction of basic.
We do not go to a Dentist for Cardiac problem Do we??
We do not refer to IPC for implementing Standing Orders>. Do we?
We do not refer to Factories Act or Shops Act or Plantation Act to discuss Permanent Status.
Then why quote PF on a subject on which it has no jurisdiction
Please understand
Siva
From India, Chennai
Hi Nilendra, I second your views..PF authorities will really give organizations tough time, if they happen to reduce the statutory benefits of employees. Regards
From India, Mumbai
From India, Mumbai
Dear Sdix,
First of all we should understand that there is a contractual obligation between the employees and employers framed in the offer of an appointment. Neither employer nor employees have right to breach the said contract, which has been agreed in offer of appointment without mutual consent of both the parties.
So, if your management has decided to reduce the basic wages, please take consent from the employees in writing to avoid future litigation.
Regards,
Karuna Kumar
From India, Pen
First of all we should understand that there is a contractual obligation between the employees and employers framed in the offer of an appointment. Neither employer nor employees have right to breach the said contract, which has been agreed in offer of appointment without mutual consent of both the parties.
So, if your management has decided to reduce the basic wages, please take consent from the employees in writing to avoid future litigation.
Regards,
Karuna Kumar
From India, Pen
Dear Siva, Pls refer to my reply below : The whole discussion is to bring clarity in our understanding and learn from others..I am sorry if I have hurt anyone.. Regards
From India, Mumbai
From India, Mumbai
Nilendra, if the basic and DA is decreased without affecting the PF contribution as the company may have limited to the slab of Rs. 6500.But it has an adverse affect on the annual bonus considered as it will consider 8.33% of Basic and DA
example:
If the Basic and DA is 6000/- & 4000/- respectively annual bonus with the minimum requirement of 8.33 % for the whole year will be Rs.8330/-
When the Basic and DA reduced to is 5000/- & 2000/- and added the same amount of Rs 3000/- as HRA then the annual bonus with the minimum requirement of 8.33 % for the whole year will be Rs.6997/- thus there will be i decrease in CTC, but your take home will be more.
Nilendra, are there any rules regarding that the basic or DA should not be reduced when annual appraisal is done or any other cases
From India, Bangalore
example:
If the Basic and DA is 6000/- & 4000/- respectively annual bonus with the minimum requirement of 8.33 % for the whole year will be Rs.8330/-
When the Basic and DA reduced to is 5000/- & 2000/- and added the same amount of Rs 3000/- as HRA then the annual bonus with the minimum requirement of 8.33 % for the whole year will be Rs.6997/- thus there will be i decrease in CTC, but your take home will be more.
Nilendra, are there any rules regarding that the basic or DA should not be reduced when annual appraisal is done or any other cases
From India, Bangalore
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