Dear All,
I would like to share my query with you and request you to provide a solution. In my organization, management had increased the salary of some employees. However, after the disbursement of the November month (increased) salary and PF challan generation, management has changed their decision and informed me that we will not increase the salary of 2 employees.
As I mentioned, I had already generated the PF challan based on the revised/increased basic amount and paid in December. To my knowledge, once the increased basic amount is mentioned in PF, we can't decrease the employee's basic. Nevertheless, I want to revert their basic to the previous amount.
Is there any option to resolve this issue? Can I adjust the basic salary next month for PF and pension? If yes, what would be the procedure and rules to follow?
Information:
- Employee 1: November basic salary was 12600, Revised basic: 13400
- Employee 2: November basic salary was 11600, Revised basic: 12400
Kindly provide your suggestions.
Thanks & Regards,
Anjali Singh
From India, Delhi
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I would like to share my query with you and request you to provide a solution. In my organization, management had increased the salary of some employees. However, after the disbursement of the November month (increased) salary and PF challan generation, management has changed their decision and informed me that we will not increase the salary of 2 employees.
As I mentioned, I had already generated the PF challan based on the revised/increased basic amount and paid in December. To my knowledge, once the increased basic amount is mentioned in PF, we can't decrease the employee's basic. Nevertheless, I want to revert their basic to the previous amount.
Is there any option to resolve this issue? Can I adjust the basic salary next month for PF and pension? If yes, what would be the procedure and rules to follow?
Information:
- Employee 1: November basic salary was 12600, Revised basic: 13400
- Employee 2: November basic salary was 11600, Revised basic: 12400
Kindly provide your suggestions.
Thanks & Regards,
Anjali Singh
From India, Delhi
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Hi,
Once there is any upward revision in the increment, we should not revise the same downward. Considering the basic, I assume that both employees are not taxable employees.
I believe it would be more appropriate to revise other allowances. If you have specified a Special Allowance, you can adjust it accordingly; otherwise, you may adjust portions of other amounts such as HRA, Medical Allowance, and Conveyance allowance.
From India, Bangalore
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726Once there is any upward revision in the increment, we should not revise the same downward. Considering the basic, I assume that both employees are not taxable employees.
I believe it would be more appropriate to revise other allowances. If you have specified a Special Allowance, you can adjust it accordingly; otherwise, you may adjust portions of other amounts such as HRA, Medical Allowance, and Conveyance allowance.
From India, Bangalore
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Thank you sir for your prompt reply, but could you pls suggest if in case we don’t want to increase single penny and want to consider same structure (last one).
From India, Delhi
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From India, Delhi
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You can bring the basic down. It was only for a month. If the matter comes for review, you need to have documentation that it was done by mistake. The law prevents you from decreasing basic to absorb FP cost. It does not say you cannot reduce a person's salary.
From India, Mumbai
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From India, Mumbai
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I draw attention to Section 12 of EPF & MP Act reproduced below:
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.
Thanks
From India, Panipat
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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.
Thanks
From India, Panipat
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Hello Anjali,
It's not at all an issue if the PF dues for a particular month exceed the normal dues that are remitted every month to the employee's account. Such incidents happen whenever there are any payments done by way of "arrears". This may be a result of:
- Late declaration of increments by the establishment, or
- Because of an associate's resignation whereby the establishment keeps his last (or even previous) month's salary on hold and settles it along with his Full & Final Settlement on the date of his exit from the company.
So, there is nothing to worry.
Good Luck, A.B.
From India, Mumbai
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It's not at all an issue if the PF dues for a particular month exceed the normal dues that are remitted every month to the employee's account. Such incidents happen whenever there are any payments done by way of "arrears". This may be a result of:
- Late declaration of increments by the establishment, or
- Because of an associate's resignation whereby the establishment keeps his last (or even previous) month's salary on hold and settles it along with his Full & Final Settlement on the date of his exit from the company.
So, there is nothing to worry.
Good Luck, A.B.
From India, Mumbai
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Mr. Gupta,
Please read the second line of your post - by reason only of his liability for the payment of any contribution to the Fund. This, therefore, will not apply in the given case. The reduction is only for 2 of the employees; the rest continue to get increased increments. Further, the reduction is not to cover PF liability but because the increment was wrongly applied.
From India, Mumbai
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Please read the second line of your post - by reason only of his liability for the payment of any contribution to the Fund. This, therefore, will not apply in the given case. The reduction is only for 2 of the employees; the rest continue to get increased increments. Further, the reduction is not to cover PF liability but because the increment was wrongly applied.
From India, Mumbai
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Mrs. Anjali,
Once you have increased the basic salary, the law does not permit a reduction in the same. If you don't increase the salary, the law will question you if it is reduced. As our friend Mr. S. Banerjee mentioned, since it is a matter of one month, you can provide documents for review to explain. Be cautious in the future and avoid such practices that do not promote a healthy work environment.
Adoni Suguresh
Labour Laws Consultant
From India, Bidar
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Once you have increased the basic salary, the law does not permit a reduction in the same. If you don't increase the salary, the law will question you if it is reduced. As our friend Mr. S. Banerjee mentioned, since it is a matter of one month, you can provide documents for review to explain. Be cautious in the future and avoid such practices that do not promote a healthy work environment.
Adoni Suguresh
Labour Laws Consultant
From India, Bidar
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Mr. Saswata,
It is not a case of "the increment was wrongly applied", but it is a case of, as per the queriest, "after disbursement of Nov. month (increased) salary and PF challan generation, management has changed their decision and told me that we will not increase the salary of 2 employees." This gives the understanding that management wanted to change their decision for the "reason only of his liability."
However, my understanding may differ.
Thanks,
V K Gupta
From India, Panipat
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It is not a case of "the increment was wrongly applied", but it is a case of, as per the queriest, "after disbursement of Nov. month (increased) salary and PF challan generation, management has changed their decision and told me that we will not increase the salary of 2 employees." This gives the understanding that management wanted to change their decision for the "reason only of his liability."
However, my understanding may differ.
Thanks,
V K Gupta
From India, Panipat
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No, sir. The reduction is not on account of the liability of PF. It is a decision of the management that they do not want to give the increment or that the increment was wrongly applied to these two employees. The concept of reduction only on account of liability refers to a completely different scenario. In the case of an employee to whom PF applies for the first time (e.g., when the firm has 20 employees for the first time), and therefore PF is now a liability of the employer, increasing his cost, the employer cannot reduce the salary of the employee to fully or partly absorb the PF costs. In other cases, there is nothing stopping an employer from reducing salary. It may be an industrial dispute, but the law does not prevent the reduction of wages as such.
From India, Mumbai
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From India, Mumbai
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Basic 4 pf.pdf