Hi If they are covered under Minimum wages no other option we have to follow Act else Management can take a call on it. Cheers Karthik Nayudu
From India, Vijayawada
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80From India, Vijayawada
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There are states which had fixed MW as basic + VDA + service weightage. If the employee is getting only the MW, then basic cannot be reduced even if the employee agrees because it is contracting out. It is also not advisable where DA, HRA, etc., are paid as a % of basic. If the reduction in basic results in a reduction of benefits/contribution under EPF, ESI, Gratuity, ID, Bonus Acts, or subsistence allowance, then also it is not right.
Varghese Mathew
9961266966
From India, Thiruvananthapuram
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Varghese Mathew
9961266966
From India, Thiruvananthapuram
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Dear Saswata Banerjee,
Restructuring the pay/wage scales is different from reducing the salary/wage. If the restructuring is through a valid and legal settlement (I am discussing only regarding workmen covered by the provisions of the Industrial Disputes Act), then there is no dispute between the employer and the workmen, and therefore section 9A will not be attracted.
With regards,
From India, Madras
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Restructuring the pay/wage scales is different from reducing the salary/wage. If the restructuring is through a valid and legal settlement (I am discussing only regarding workmen covered by the provisions of the Industrial Disputes Act), then there is no dispute between the employer and the workmen, and therefore section 9A will not be attracted.
With regards,
From India, Madras
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Dear Soma,
If I'm not wrong, your company wants to restructure the compensation part, mostly known as "Restructuring of Compensation." I want to clarify one thing: your company can reduce the basic salary without affecting the gross by dividing it into various allowances. However, always keep in mind that your basic salary should not be less than the minimum wages and should not violate the minimum wages act.
The PF officer will never check why you are paying more allowances; they will only verify the PF payments to ensure you are not violating minimum wages (this is the reality).
Another benefit is that your company will pay a lesser amount of tax because the company only pays income tax on BASIC+DA. Therefore, it's advantageous for your company to reduce the basic salary.
Regards,
Anjana
From India, Bhubaneswar
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If I'm not wrong, your company wants to restructure the compensation part, mostly known as "Restructuring of Compensation." I want to clarify one thing: your company can reduce the basic salary without affecting the gross by dividing it into various allowances. However, always keep in mind that your basic salary should not be less than the minimum wages and should not violate the minimum wages act.
The PF officer will never check why you are paying more allowances; they will only verify the PF payments to ensure you are not violating minimum wages (this is the reality).
Another benefit is that your company will pay a lesser amount of tax because the company only pays income tax on BASIC+DA. Therefore, it's advantageous for your company to reduce the basic salary.
Regards,
Anjana
From India, Bhubaneswar
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Dear Soma,
I agree with Anjana's point. I also have a court judgment that I am sharing, which will support your position. Let the experts in the forum share their views, and then you can decide whether to roll back to your old pay structure or let us face the PF inspectors.
Regards
From India, Coimbatore
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I agree with Anjana's point. I also have a court judgment that I am sharing, which will support your position. Let the experts in the forum share their views, and then you can decide whether to roll back to your old pay structure or let us face the PF inspectors.
Regards
From India, Coimbatore
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Dear PT Ramesh ji, The question of querist is - Can basic be decresed ? Is it legal ? Your reply says that the PF contribution can be reduced. This is not the answer to the queriest question.
From India, Mumbai
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From India, Mumbai
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Mr. Remesan,
The case you mentioned is not about reducing the basic; it was regarding whether management can reduce the PF contribution from the higher rate to the prescribed statutory limit of Rs 6,500. The bank was contributing for the wages in excess of Rs 6,500. They decided to limit the contribution to Rs 6,500 only. The Supreme Court upheld it.
VARGHESE MATHEW
9961266966
From India, Thiruvananthapuram
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The case you mentioned is not about reducing the basic; it was regarding whether management can reduce the PF contribution from the higher rate to the prescribed statutory limit of Rs 6,500. The bank was contributing for the wages in excess of Rs 6,500. They decided to limit the contribution to Rs 6,500 only. The Supreme Court upheld it.
VARGHESE MATHEW
9961266966
From India, Thiruvananthapuram
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Dear all,
I feel that any component of the wages could be revised upwards or downwards based on the understanding between management and workers/unions, but the same should not be less than the minimum wages under the Act. If we consider the quantum of minimum wages and the wages prescribed under various labour welfare legislations for contributions, it will be seen that mere compliance will not suffice.
Secondly, going by the present trend of cost-to-company (CTC), such adjustments are commonplace. Ultimately, it is a question of whether the workers raise any dispute over it. If not, proceed without any worry.
Thirdly, as regards fixed-term or contractual employment, every term is independent of each other, and management is at liberty to fix compensation based on demand and supply without triggering provision 9A of the Industrial Disputes (ID) Act. There are no restrictions thereon.
Seniors, please guide.
Regards.
From India, Mumbai
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I feel that any component of the wages could be revised upwards or downwards based on the understanding between management and workers/unions, but the same should not be less than the minimum wages under the Act. If we consider the quantum of minimum wages and the wages prescribed under various labour welfare legislations for contributions, it will be seen that mere compliance will not suffice.
Secondly, going by the present trend of cost-to-company (CTC), such adjustments are commonplace. Ultimately, it is a question of whether the workers raise any dispute over it. If not, proceed without any worry.
Thirdly, as regards fixed-term or contractual employment, every term is independent of each other, and management is at liberty to fix compensation based on demand and supply without triggering provision 9A of the Industrial Disputes (ID) Act. There are no restrictions thereon.
Seniors, please guide.
Regards.
From India, Mumbai
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I agree.
Moreover, in the document attached, it clearly states - "Section 12 prohibits the employer from reducing the wages of the employee to avoid liability to pay contributions to the EPF Scheme. It specifies that the employer should not reduce, whether directly or indirectly, the benefits such as old age pension, gratuity, provident fund, life insurance, etc., to which the employee is entitled under the terms of employment, express or implied. The counsel for the petitioners pointed out the prohibition under Section 12 of the EPF Act, stating that the employer must not reduce the benefits enjoyed by the employee directly or indirectly. By reducing the employer's share of contribution, the employees' benefits would be diminished. Section 12 imposes a prohibition on reducing wages with the intent to avoid payment of contributions to the Scheme. It further clarifies that the employer cannot reduce these benefits directly or indirectly if the terms of employment entitle the employee to such benefits.
Warm regards.
From India, Delhi
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Moreover, in the document attached, it clearly states - "Section 12 prohibits the employer from reducing the wages of the employee to avoid liability to pay contributions to the EPF Scheme. It specifies that the employer should not reduce, whether directly or indirectly, the benefits such as old age pension, gratuity, provident fund, life insurance, etc., to which the employee is entitled under the terms of employment, express or implied. The counsel for the petitioners pointed out the prohibition under Section 12 of the EPF Act, stating that the employer must not reduce the benefits enjoyed by the employee directly or indirectly. By reducing the employer's share of contribution, the employees' benefits would be diminished. Section 12 imposes a prohibition on reducing wages with the intent to avoid payment of contributions to the Scheme. It further clarifies that the employer cannot reduce these benefits directly or indirectly if the terms of employment entitle the employee to such benefits.
Warm regards.
From India, Delhi
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Hi All,
One of my friends had a previous experience similar to this. They were paying Rs.200 per day to sewing operators, and PF was contributing Rs.200 as well. Later, they restructured their wages, and PF contributions started to be remitted excluding HRA. That is, PF was deducted and remitted on Rs.174 instead of Rs.200. In this case, they were able to convince the PF officers. I am sharing this practical case for information and am interested to know its legal validity further.
From India, Coimbatore
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One of my friends had a previous experience similar to this. They were paying Rs.200 per day to sewing operators, and PF was contributing Rs.200 as well. Later, they restructured their wages, and PF contributions started to be remitted excluding HRA. That is, PF was deducted and remitted on Rs.174 instead of Rs.200. In this case, they were able to convince the PF officers. I am sharing this practical case for information and am interested to know its legal validity further.
From India, Coimbatore
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Revision in Basic wage wef Mar 2014 Gazette.pdf