Dear All,
I have joined a real estate organisation and the taxation team pointed out that the current salary structure varied from individual to individual in the organisation. In light of the same, we had a revised salry structure generated which made Basic salary to be ranging from 60% maximum to 50% minimum going from bottom grade to the top grade.
In light of the above, there are changes in the basic salary of quite a number of employees as the current rate of Basic Salary for most of them was 70 - 75% of the gross.
My Question is :
Can we currently re-structure the salaries according to the revised proforma for all employees?
In case of reduction of basic will there be any legal complexities?
Please note that we have taken care of the PF aspect while considering this restructuring.
Seek your expert advise on this asap.
Regards:confused:
From India, Mumbai
I have joined a real estate organisation and the taxation team pointed out that the current salary structure varied from individual to individual in the organisation. In light of the same, we had a revised salry structure generated which made Basic salary to be ranging from 60% maximum to 50% minimum going from bottom grade to the top grade.
In light of the above, there are changes in the basic salary of quite a number of employees as the current rate of Basic Salary for most of them was 70 - 75% of the gross.
My Question is :
Can we currently re-structure the salaries according to the revised proforma for all employees?
In case of reduction of basic will there be any legal complexities?
Please note that we have taken care of the PF aspect while considering this restructuring.
Seek your expert advise on this asap.
Regards:confused:
From India, Mumbai
In any salary restructuring process the main concerns shall be to fix salary which will protect the present package. Therefore, care should be taken to ensure that no employee gets less than what he has been getting just before re structuring.
You need not go for the detailed aspects of PF liabilities because, there may have amendments in the law by which whatever you had concealed for reducing PF will come out. If you reduce basic salary so as to reduce your PF contribution, the question of Minimum Wages will come into act. If you raise basic wages so as to avoid PF, for the time being you may get relaxed but if the PF salary is revised by an amendment, you will have to bear the burden.
If you implement a revised salary package, the same should be applicable to all the employees.
Regards,
Madhu.T.K
From India, Kannur
4248You need not go for the detailed aspects of PF liabilities because, there may have amendments in the law by which whatever you had concealed for reducing PF will come out. If you reduce basic salary so as to reduce your PF contribution, the question of Minimum Wages will come into act. If you raise basic wages so as to avoid PF, for the time being you may get relaxed but if the PF salary is revised by an amendment, you will have to bear the burden.
If you implement a revised salary package, the same should be applicable to all the employees.
Regards,
Madhu.T.K
From India, Kannur
Dear Shweta,
As for my experience goes, the basic should not be brought down from the existing amount. Even if there is any legal provision to alter and bring down the basic, I suggest not to do so, because, there are high chances of having confusions at the time of with drawal / transfer by any employee who might move out of the organisation.
Hence you try your level best to not to alter the basic amount and alter other components of the existing salary structure.
With best wishes,
A V Ramanan:)
From India, Thana
As for my experience goes, the basic should not be brought down from the existing amount. Even if there is any legal provision to alter and bring down the basic, I suggest not to do so, because, there are high chances of having confusions at the time of with drawal / transfer by any employee who might move out of the organisation.
Hence you try your level best to not to alter the basic amount and alter other components of the existing salary structure.
With best wishes,
A V Ramanan:)
From India, Thana
Let Me Explain........
Basic Salary Is Protected Salary Which Canot Be Reduced By Any Means Because That Is Guaranteed Cash.
Most Of Allowances Are Calculated On The Basis Of Corrosponding Basic Percentages.
Restructuring Doesnot Allow You Flexibility To Reduce Any Privileages Or Customary Concessions To Be Withdrawn.
Under This Circumstances You Have To Re-negotiated Salary With Individual And Agreement Shall Be Signed With Individual Employee For Aceptable Terms For Re-negotiated Salary.
Regards
Badlu
From Saudi Arabia
Basic Salary Is Protected Salary Which Canot Be Reduced By Any Means Because That Is Guaranteed Cash.
Most Of Allowances Are Calculated On The Basis Of Corrosponding Basic Percentages.
Restructuring Doesnot Allow You Flexibility To Reduce Any Privileages Or Customary Concessions To Be Withdrawn.
Under This Circumstances You Have To Re-negotiated Salary With Individual And Agreement Shall Be Signed With Individual Employee For Aceptable Terms For Re-negotiated Salary.
Regards
Badlu
From Saudi Arabia
Dear Sweta,
I am fully agreed with the comments given by Madhu.
But if you want to increase the salary, you can add new components of the salary break up which will be part of the gross and will include in the salary slip. Such as Personal pay and Special Allowance, this components will be acted as fitment of the salary.
Yes, you cannot reduce the salary of the individual any point of time because the contribution towards PF will increase/decrease simultaneously.
In the end, you can do this exercise while under taking the Annual Increment Exercise not before that.
Thanks,
Chitragya
From India, New Delhi
I am fully agreed with the comments given by Madhu.
But if you want to increase the salary, you can add new components of the salary break up which will be part of the gross and will include in the salary slip. Such as Personal pay and Special Allowance, this components will be acted as fitment of the salary.
Yes, you cannot reduce the salary of the individual any point of time because the contribution towards PF will increase/decrease simultaneously.
In the end, you can do this exercise while under taking the Annual Increment Exercise not before that.
Thanks,
Chitragya
From India, New Delhi
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Salary-Note.doc
SALARY SHEET CALCULATION.xls