Industrial Relations And Labour Laws
Legal Counsel
Hr Specialist - Policy,compehsation &
Sr.manager Hr & Payroll
Hr, Six Sigma
+3 Others

Dear all,
I just came to know of an aquaintance whose salary was decreased by his employer :!: and he therefore quit his job.:sad:
As long as I know, no employer can decrease salary of an existing employee under any circumstance, not even as a disciplinary action.
Can my friend sue his ex-employer? What is the procedure? Can he claim any money from the ex-employer?:?::?:
Seeking your valuable advise.:idea:

From India, Delhi
This particluar case is not about withholding increments, this is actually decrease of take home salary i.e. if the employee was getting 8000 take home, it was reduced to 5000 take home(say).
This partilcular person we are talking about was an outsourced employee working onsite the client. now the client was very happy with the performance, but his salary was reduced by the vendor, on whose rolls the person was.

From India, Delhi
Dear Harsh,
The salary of an employee can not be decreased untill a non performance issue or a variable component roll back is there. However decreasing the inhand doesn't imply the decrease in salary. There might be different reasons.
And if the client is happy with the performance of the employee then performance might be good (depends upon the actual feedbacks). Then there should not be a question of decreasing his/her salary. You can also increase the inhand without even increasing the CTC. So I think you need to look into those issues also.

If you are workman under the Industrial Disputes Act, you can raise a claim under section 33(c)(2) of the ID Act; subject to the above condition . Otherwise if you are drawing upto Rs.6500 wages, you can file a claim under the Payment of Wages Act and also you can also inform PF Authorities, if cover under the PF Act

From India, Guwahati
As per Section 12 of Profidend Fund Act 1952 Basic salary of any employee covered under the said Act cannot be decreased.
How ever by way of punishment in order to reduce the salary Basic can be maintained even if CTC in reduced

From India, Aurangabad
let us say a company does a revision of the entire salary structure wherein adding allowances & reimbursement heads. this maintains the CTC, increases the Cash in Hand but the amount kept under Basic pay decreases. This affects the PF contribution, to some extent is decreased for some employees. Can that company do this?
Pl help. I'm confused due to the said section 12 of PF act 1952. Pl remember that the take home salary has been increased but the basic pay decreased to divide the CTC into different heads.

From India, Chandigarh
Dear Harsh Greetings! As per Prabhakar, if your friend basic salary amount is maintained(not decreased) then you can’t file a case or else as per PF act you can file.
From India, Madras
Dear All,
My company is planning to reduce basic salary of all existing staff and planning to add new tax free component in salary structure, which affect statutory compliance .
please advice whether they right to do so........?
Thanks & Regards,

From India, Mumbai
Dear All,
first of all thank you for the valuable solutions. I wanted to know that If employer wants to restructure the entire salary break up and want to add new tax free component in new CTC break up of all existing 350 employee, so can it be a right decision for an employee??
secondly i would like to know the benefit of adding new tax free component in ctc, is it beneficial for employee or employer????
Thanks & Regards,

From India, Mumbai
Restructuring salary will involve change in service conditions of employee which can be made effective only after giving 21 days notice of such changes as per section 9A of the Industrial Disputes Act.
Reduction of wages as punishment is permissible if the certified Standing Orders of the company so permits.
Reduction of PF wages (PF wages means basic salary and dearness allowances on which PF is deducted and contributed) though not permitted under section 12 of the EPF & MP Act, is permissible if it is not below Rs 15000.

From India, Kannur

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