Dear Experts, please advise here ..
XYX company plans to restructure its current salary components due to the expected implementation of the labor code. These changes will have few impacts on their take-home pay. The company has already issued appointment letters to all employees and now wants to make these changes. The new changes will be communicated to all employees via meetings, and the company has an HRIS tool where it has access to all employees' salary information.
In this scenario, is it a requirement to issue a revised appointment letter to all employees? If not issued, any legal risks in future?
Thank you in advance for your POVs..
From India, Bangalore
1XYX company plans to restructure its current salary components due to the expected implementation of the labor code. These changes will have few impacts on their take-home pay. The company has already issued appointment letters to all employees and now wants to make these changes. The new changes will be communicated to all employees via meetings, and the company has an HRIS tool where it has access to all employees' salary information.
In this scenario, is it a requirement to issue a revised appointment letter to all employees? If not issued, any legal risks in future?
Thank you in advance for your POVs..
From India, Bangalore
Greetings,
In regards to reworking the salary structure to meet the new wage code bill (expected to be implemented in the future) of employees in your company, it is necessary to communicate the same to employees in the first place- which you have done, or are planning to.
When this task was carried out in our company, we made sure that the net pay did not have any change. A consequence of the same was increased cost to the company as the benefits (gratuity and employer PF) had gone up (since basic has to be 50% of the CTC). However, we took it up and had no qualms from employees as net pay remained unchanged. Reworked appointment letters with new salary structure were shared.
In your scenario, with significant impact on net pay, highly necessary to issue revised appointment letters. To provide a legal perspective:
1.) According to the Karnataka Shops and Establishments Act, necessary to issue appointment letters with accurate information such as designation, terms of employment etc. Please check if similar clauses are present in your state of employment.
2.) Meetings are oratory form of communicating change. The changes have to be proofed on company letterheads should any issue arise in the future.
Thanks
Lucy
From India, Bengaluru
In regards to reworking the salary structure to meet the new wage code bill (expected to be implemented in the future) of employees in your company, it is necessary to communicate the same to employees in the first place- which you have done, or are planning to.
When this task was carried out in our company, we made sure that the net pay did not have any change. A consequence of the same was increased cost to the company as the benefits (gratuity and employer PF) had gone up (since basic has to be 50% of the CTC). However, we took it up and had no qualms from employees as net pay remained unchanged. Reworked appointment letters with new salary structure were shared.
In your scenario, with significant impact on net pay, highly necessary to issue revised appointment letters. To provide a legal perspective:
1.) According to the Karnataka Shops and Establishments Act, necessary to issue appointment letters with accurate information such as designation, terms of employment etc. Please check if similar clauses are present in your state of employment.
2.) Meetings are oratory form of communicating change. The changes have to be proofed on company letterheads should any issue arise in the future.
Thanks
Lucy
From India, Bengaluru
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