Dear friend,
It is quite possible to reduce basic wages; it all depends on the category of employees. If you have a union and have had prior discussions, you can do it. You cannot reduce total wages, but if you are adjusting the wages, it is possible. However, it should be discussed with the concerned employees; it is just a give and take.
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2It is quite possible to reduce basic wages; it all depends on the category of employees. If you have a union and have had prior discussions, you can do it. You cannot reduce total wages, but if you are adjusting the wages, it is possible. However, it should be discussed with the concerned employees; it is just a give and take.
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Mr. Dev,
I have gone through your email and noted its contents. I do not understand why you initiated a pay cut and invited problems upon yourself. One should understand that receiving appraisals in this period of recession is difficult, and I would rather suggest undertaking to work on weekends and taking home your complete salary. Always maintain a positive mindset; perhaps this kind of arrangement of working on weekends could be a temporary phenomenon, and the company may revert back to its policy once things are in order.
From India, Bangalore
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I have gone through your email and noted its contents. I do not understand why you initiated a pay cut and invited problems upon yourself. One should understand that receiving appraisals in this period of recession is difficult, and I would rather suggest undertaking to work on weekends and taking home your complete salary. Always maintain a positive mindset; perhaps this kind of arrangement of working on weekends could be a temporary phenomenon, and the company may revert back to its policy once things are in order.
From India, Bangalore
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Hi Dev,
Reduction in basic salary is not recommended. As indicated by one of our forum members, all applicable statutory deductions like income tax, PF, ESI, Gratuity, Bonus, etc., are deducted from it, and various statutory authorities will object.
Reduction in working days may be a good idea for your management, considering that there may be low workload at this moment. This approach could lead to administrative savings on electricity, water, office upkeep, air conditioning, pantry/canteen, etc.
As a survival strategy, certain or all official reimbursements and allowable perquisites may be reduced or dispensed with. Do not touch the basic salary or even the allowances as a first resort.
Cheers,
Rahul Kumar
From India, New Delhi
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Reduction in basic salary is not recommended. As indicated by one of our forum members, all applicable statutory deductions like income tax, PF, ESI, Gratuity, Bonus, etc., are deducted from it, and various statutory authorities will object.
Reduction in working days may be a good idea for your management, considering that there may be low workload at this moment. This approach could lead to administrative savings on electricity, water, office upkeep, air conditioning, pantry/canteen, etc.
As a survival strategy, certain or all official reimbursements and allowable perquisites may be reduced or dispensed with. Do not touch the basic salary or even the allowances as a first resort.
Cheers,
Rahul Kumar
From India, New Delhi
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Hi Dev,
Here is the exact extract of Section 12 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. You can access the entire act at Vakilno1.com - India Law, Online Legal Advice, Legal Documents, Legal News.
12. Employer not to reduce wages etc:
No employer in relation to an establishment to which any Scheme or the Insurance Scheme applies shall, by reason only of his liability for the payment of any contribution to the Fund or the Insurance Fund or any charges under this Act or the Scheme or the Insurance Scheme, reduce whether directly or indirectly the wages of any employee to whom the Scheme or the Insurance Scheme applies or the total quantum of benefits in the nature of old age pension, gratuity, provident fund, or life insurance to which the employee is entitled under the terms of his employment, express or implied.
Best Regards,
Jitendra
From India, Mumbai
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Here is the exact extract of Section 12 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. You can access the entire act at Vakilno1.com - India Law, Online Legal Advice, Legal Documents, Legal News.
12. Employer not to reduce wages etc:
No employer in relation to an establishment to which any Scheme or the Insurance Scheme applies shall, by reason only of his liability for the payment of any contribution to the Fund or the Insurance Fund or any charges under this Act or the Scheme or the Insurance Scheme, reduce whether directly or indirectly the wages of any employee to whom the Scheme or the Insurance Scheme applies or the total quantum of benefits in the nature of old age pension, gratuity, provident fund, or life insurance to which the employee is entitled under the terms of his employment, express or implied.
Best Regards,
Jitendra
From India, Mumbai
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I don't feel there is any statutory law binding which does not allow an employer from reducing the basic salary. In any case, reducing the basic salary will not be appreciated by any employee since there are certain benefits attached to the basic salary (PF/Gratuity, etc.) which also get affected.
Secondly, the basic salary should not be less than as prescribed by the Minimum Wages Act.
From India, Mumbai
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Secondly, the basic salary should not be less than as prescribed by the Minimum Wages Act.
From India, Mumbai
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As a punishment, if the grade of an employee is downgraded, their basic salary in that grade becomes applicable. This affects PF deduction and contributions. Is this permissible by EPFO? How then can this be done?
Sara
From India, Madras
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Sara
From India, Madras
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The statutory aspect has been explained by many of them. But what was the purpose of making it a 5-day week in the first place? Is it to give work-life balance or reduction of costs? Or was it because there was less workload? Won't a reduction in salary (basic or whatever) kill the joy of giving a 5-day week? You need to decide based on what value you want to provide your employees?
From India, Bangalore
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From India, Bangalore
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Statutory Compliance of a Industrial or Commercial Unit.xls
Statutory-compl iance.pdf
Statutory Compliance.zip