We are having a workforce of approx 400 employees at different locations all accross India ,we are following the minimum wages ,PF & ESI compliances etc.Now our management wants to revise or reduce the salary structures in 50% fixed and 50% variable ratio ,for example if an employee is getting 10000 CTC 50% of his salary will be fixed 50% will be payable as incentive looking at his performance .
Please advise as soon as possible what should be my plan of action to explain my management .Above all is it legal to follow the above mentioned process?
Pankaj Sindri :(
From India, Delhi
Please advise as soon as possible what should be my plan of action to explain my management .Above all is it legal to follow the above mentioned process?
Pankaj Sindri :(
From India, Delhi
25
Restructuring of salary is your internal matter but it should not be done with a view to reducing the net take home salary of employees. It is clearly stated in EPF Act and ESI Act that no reduction in salary so as to reduce the employer's liability towards EPF/ ESI, as the case may be, shall be permitted. Similarly Minimum Wages Act gives protection to the wages/ salary drawn by employees currently not withstanding any changes in the salary structure. Therefore, I do not find any logic in restructuring the salary with 50% variable pay.
Regards,
Madhu.T.K
From India, Kannur
Regards,
Madhu.T.K
From India, Kannur
Dear Madhu,
If compnay does not fall in PF & ESI, can the salary be reduced? Secondly in current situation where company do not want to remove the employee has no option but to reduced the salary to sustain, whether they are covered under PF , ESI or no, so they sould handle the situation where they need to reduced the salary?
Regards,
harshad
From India, Mumbai
If compnay does not fall in PF & ESI, can the salary be reduced? Secondly in current situation where company do not want to remove the employee has no option but to reduced the salary to sustain, whether they are covered under PF , ESI or no, so they sould handle the situation where they need to reduced the salary?
Regards,
harshad
From India, Mumbai
A company which is not covered by ESI/ EPF must be having only a workforce of less than 20. Even for such a tiny establishment, the provisions of Minimum Wages Act will apply. If the company wants to sustain, they should come out with other means of cost reduction such as reducing the allowances of officers, cutting short benefits other than statutory, with holding of leave encashment (for the time being), cutting short the electricity bill by means of switching off the ACs of higher Officials etc. It should not be done at the cost of employees alone.
Regards,
Madhu.T.K
From India, Kannur
Regards,
Madhu.T.K
From India, Kannur
Madhu, Is it true that Basic of the salary sturture should not be less than the minimum wages?? DM
From India, Raipur
From India, Raipur
No, it is not like that. The total fixed emolument should not be less than the minimum wages. You can have HRA, DA or other allowance but these should be fixed and the total of basic + DA + HRA etc should not be less than the minimum wages fixed by the govt. In many cases ( I wonder why in new generation companies only) instead of salary slip they have CTC slips with a lot of variable elements in it. The sum of all these variable part of salary will not be taken as salary or wages but these are only benefits offered to employees.
Regards,
Madhu.T.K
From India, Kannur
Regards,
Madhu.T.K
From India, Kannur
Just a little hint about something to think about:
Management... will the managers and directors will also have a reduction of their salary ?
If not you will have a big problem with the employees.
The directors and not only managers... they have to serve like model and that imply that if they want to have respect and credibility they will have to act the same way as they want the employees to go...
Regards,
Yan
From Sweden, Hägersten
Management... will the managers and directors will also have a reduction of their salary ?
If not you will have a big problem with the employees.
The directors and not only managers... they have to serve like model and that imply that if they want to have respect and credibility they will have to act the same way as they want the employees to go...
Regards,
Yan
From Sweden, Hägersten
Dear Pankaj, I am fully satisfied with Madhu instead of salary cut you can have general meetings with the employees and ask them to reduce unnecessary cost like admin etc. Regard’s Sunil
Dear Pankaj,
fixed component comprises of Basic, HRA, Medical expenses, Conveyance Allowance, Executive Allowance coming under salary credits and PF, professional tax,income tax, any other deductions comes under salary debits.
Variable componet called as performance pay will be paid annually basing on the performance rating of the individual.
Seshu
From India, Mumbai
- Now a days many companies are having salary design
fixed component comprises of Basic, HRA, Medical expenses, Conveyance Allowance, Executive Allowance coming under salary credits and PF, professional tax,income tax, any other deductions comes under salary debits.
Variable componet called as performance pay will be paid annually basing on the performance rating of the individual.
- If decision to be taken on salary cutting, it should happen through out the organization. No one should be exempt from this.
- We need to look at the options of cutting down the expenses as suggested by our friend Sunil. Currently in my organisation we are keeping an eye o electricity consumption( ensure PC'S are properly shut down, monitoring of AC machines, refrigerators etc)
Seshu
From India, Mumbai
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Salary-Note.doc
SALARY SHEET CALCULATION.xls