Due to recession in market, we don’t want to dismiss them from work, but we want to decrease the salary. So they can survive as well and we sustain in market. Weather we can do it? If yes then, what will be the legal procedure? We want to introduce 1 year contract for employee. Therefore, can I get format and how can I introduce legally? Please do let me know.
Thank you
From India, Jalalpur
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From India, Jalalpur
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Dear friend,
You have raised two queries. One is about decreasing the salary of the employees, and the second is converting their status from permanent employment to Fixed Term Employment (FTE). Let me give a reply to the former, whereas for the latter, other members will provide the response.
What is the breakup of the salary components? Generally, the basic salary is 30% to 50% of the gross salary. Please do not reduce the basic salary as far as possible. Since the basic is not reduced, there will not be any impact on PF remittance, and the reduction will not attract any attention from the PF Enforcement Officer. Other allowances that are on and above basic wages can be reduced.
Thanks,
Dinesh Divekar
From India, Bangalore
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You have raised two queries. One is about decreasing the salary of the employees, and the second is converting their status from permanent employment to Fixed Term Employment (FTE). Let me give a reply to the former, whereas for the latter, other members will provide the response.
What is the breakup of the salary components? Generally, the basic salary is 30% to 50% of the gross salary. Please do not reduce the basic salary as far as possible. Since the basic is not reduced, there will not be any impact on PF remittance, and the reduction will not attract any attention from the PF Enforcement Officer. Other allowances that are on and above basic wages can be reduced.
Thanks,
Dinesh Divekar
From India, Bangalore
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As Per Law you have to pay the Mim. wage of that state. wage or salary consist of (Basic +DA). So your Basic + DA must be equal to Mim. wage. you can change in other components of salary structure.
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You all r diverting the subject. He is looking for Legal Procedure to reduce salary/wages!
From India, Bangalore
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From India, Bangalore
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The appointment letter is a contract, and you cannot reduce/decrease the salary without explicit acceptance by the employee.
In my perception, take the employees into confidence regarding your financial situation and give them the option of either fresh terms and conditions of engagement or termination due to the existing circumstances. I have heard that TATA's asked senior staff to take a 50% pay cut once, and the salary was raised when the situation improved. I cannot vouch for it, but this information was shared with me by one of their employees. The junior staff on minimum wages were not affected.
The two issues of reduction and fixed-term employment should not be clubbed.
Col. Suresh Rathi
From India, Delhi
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In my perception, take the employees into confidence regarding your financial situation and give them the option of either fresh terms and conditions of engagement or termination due to the existing circumstances. I have heard that TATA's asked senior staff to take a 50% pay cut once, and the salary was raised when the situation improved. I cannot vouch for it, but this information was shared with me by one of their employees. The junior staff on minimum wages were not affected.
The two issues of reduction and fixed-term employment should not be clubbed.
Col. Suresh Rathi
From India, Delhi
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Other than minimum wages also those whose salary come under purview of ESI also can not be reduced on any account please note.
From India, Pune
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From India, Pune
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It can be done by consent of the Employees and cannot be done unilaterally . In any case it cannot be less than minimum wages. Sujeet Salkar 9702963645
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Sir, there is no such provision. However, one condition exists: the employer has to pay all engaged workers their wage dues regardless of financial capacity, changing market demands, or any other reasons. If you want to retain workers for one year, you must pay and bear all their wage amounts. You have no legal right to stop, delay, or cut their salaries. You can maintain a separate budget exclusively for paying your workers' wages by taking a loan, sir.
From India, Nellore
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From India, Nellore
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If organisation has given appointment latter to employee and mentioned salary in appointment letter then what we can reduce the salary ?
From India, Bhopal
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From India, Bhopal
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Dear Sirs,
I have settled one issue nearly related to the above situation. A company is running on the basis of the receipt of raw material near mines. Suddenly, due to honorable court orders for a total review of the supply of raw materials to nearby companies, the Mining Department stopped mining and supply. Consequently, all dependent companies temporarily closed their units.
One of those companies wants to retain their truck drivers, who are the primary staff to transport raw materials to the company. All the trucks were parked in the factory, but the drivers hit the road and called for a strike.
We have settled the matter amicably with an agreement on wage payment comfortable to both parties, ensuring it doesn't affect the dues of EPF and ESI, among themselves in a conducive atmosphere. Later, when the supply of raw material was restored, a normal wage structure was implemented.
This approach can be applied to the above-mentioned situation, which is an internal flexible behavior of both parties accepted by the ID Act as well. An agreed Wage pact between the employer and employees for a certain period cannot be denied.
From India, Nellore
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I have settled one issue nearly related to the above situation. A company is running on the basis of the receipt of raw material near mines. Suddenly, due to honorable court orders for a total review of the supply of raw materials to nearby companies, the Mining Department stopped mining and supply. Consequently, all dependent companies temporarily closed their units.
One of those companies wants to retain their truck drivers, who are the primary staff to transport raw materials to the company. All the trucks were parked in the factory, but the drivers hit the road and called for a strike.
We have settled the matter amicably with an agreement on wage payment comfortable to both parties, ensuring it doesn't affect the dues of EPF and ESI, among themselves in a conducive atmosphere. Later, when the supply of raw material was restored, a normal wage structure was implemented.
This approach can be applied to the above-mentioned situation, which is an internal flexible behavior of both parties accepted by the ID Act as well. An agreed Wage pact between the employer and employees for a certain period cannot be denied.
From India, Nellore
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Salary-Note.doc
SALARY SHEET CALCULATION.xls