Reduction of Basic

Hi All,

I am also looking at working on restructuring on salary break-ups for my employees to ensure more inhand for them. Can you please guide me as to what kind of formalities I may have to get into to get this approved by PF Commissioner. All employees in my company are white collar employees and beyond Rs. 7501/- mark.

Any inputs from your end would be of great help.

Thanks in advance.

Regards,

Karuna Ahuja

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Regards,

Karuna Ahuja

Hi

Yes company can change basic any time but takin in view that the member should not lose much,

the reduced amount in basic can be raised into other allowences like Con, hra, lta spl.bonuse etc., and alo in this way you employee can expect a growth in thp. statutory requirements need not to be changed.

Thank you

Regards

Debajit Roy

HI XXXXX


A company cannot reduce the bAsic once it has fixed bcoz it effects PF , ESI, Also Gratuity and all otheer elements vr the Employee may loose certain benefits bcoz incremnet r based on Basic

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Keep Smiling and work hard to get success ...........

B M Nanda Kishore
09849086729

Dear ashi gurjar
The pf & esic contribution will be deduct for both (basic + da)
Thanks
rajbir yadav

Hello

Basically Terms and Conditions are governed by Appointment letter and for unionised category, Industrial Disputes Act will also guide.. I do not know why PF Act is being discussed here.

1. One can reduce basic salary of management/ supervisory staff ( Dont reduce too much) as a restructuring exercise and get the revised terms and conditions duly accepted by him by geeting the duplicate copy signed "read and accepted"

2. In case of unionised staff Notice under section 9 of the industrial Disputes Act need s to be given. Then discussion will take place before the Commissioner. Agreement need to be arrived at. Whetrher you have union or no union, if the employees are workmen under the Industrial Disputes Act, then , my advice would be not to reduce the basic

3. PF Authorities have no role here. The concerned section which was referred to in one post was about not reducing the basic salary to adjust the Managements Contribution. They can not take up this issue and and even if they take up, if you could prove that no adjustment has been made to recover employers contribution, they will not proceed.

4. There was another post enquiring about Basic and DA and PF. The Member has reproduced the definition of Basic salary and says Basic salary does not include DA. That is obvious Basic does not include DA. But I would request the member to read Section 6 of the Act which talks about contribution. If you are not contributing PF on DA, you are in real trouble and change it immediately


Siva

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T.Sivasankaran

Hi,
c
It is legally not tenable to reduce the basic of a person. It is violative of labour laws as per the Sec 12 of PF Act and Sec 72 of ESI Act. You can adjust other components which doesn't have direct bearing in the PF, ESI and Gratuity.

Regds,
Srira

Dear Srira

Employment terms and conditions are governed by appointment letter and Industrial disputes act.

PF Act and ESI are social security legislations and have no scope on terms.

The Sections you are referring to is to protect the employees from employer recovering their contribution from the employees.

Consider variable Dearness Allowance. There had been months in which Cost of Living Index will come down and the salary....Basic plus DA of an employee will come down from the previous month. This is not theoretical and we have seen these variations.
Then can the PF authorities demand that the employer to deduct based on the higher DA and contribute on hbigher DA? They can not.

Purpose and intention of the sections specified by you are different

The question raised was...

Can we reduce the Basic salaries of employees?

Legally it is possible

They are guided by
1. Terms of appointment
2. Industrial Disputes Act

In case of employees not governed by ID Act, change the terms and get it signed in token of acceptance Here the new terms of service will become applicable which is a valid contract in law

Those who are goverend by ID Act a notice under Section 9A is mandatory


Siva

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T.Sivasankaran

In your case PF deduction will be made on 5000 and ESI will be deducted on gross i.e on basic and d.a.

thanx & regards
Dinesh
09816545630

Hi Sdix,
This issue would lead statutory implecations. One way we can do the same as those who are lower salaried employees (below 6500 basic+DA), not required to reduce their basic and the higher salaried we can reduce their basic, but make sure as told above their basic should not fall in to the PF class. accordingly we can make changes.

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Regards,
Dhananjay

One can reduce Basic at the time of increment. Increase amount can be adjusted to rest of allowances and basic can braught to 40%.

Thanks

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Anuj