Can Basic Salary Be Reduced? - CiteHR
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:) Dear friend,
It is quite possibe to reduce basic wages it all depend on the catagory of employees, if you have union and with prior discussion you can do it. you can not reduce total wages but if you are adjusting the wages it is possible but it should be discusse with the concern employees it is just give and take.
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Mr Dev,
I have gone your mail and noted its contents, I do not understand why you initiate a pay cut and invite problem to your self. One shouuld understand that getting appraisals in this period of recession is difficult and I would rather suggest to under take to work at weekends and take home your complete salary. Always one should have positive a mind set may be this kind of arrangment of working on weekends could a temporary phenomena and tghe company may revert back its policy once the things are set in order.
Hi Dev,
Reduction in basic salary is not recommended. As indicated by one of our forum members, all applicable statutory deductions like income tax, PF, ESI, Gratuity, Bonus, etc are deducted on it and various statutory authorities will object.
Reduction in working days may be a good idea for your management considering that there may be low workload at this moment and there may be administrative savings on electricity, water, office upkeep, airconditioning, pantry/canteen, etc.
As a survival strategy, certain/all official reimbursements & allowable perquisites may be reduced/dispensed with. Do not touch the basic salary or even the allowances as a first cut resort..
Cheers
Rahul Kumar
Hi, Dev,
Here is exact extract of the Section 12 of Employees Provident Fund and Miscellaneous Provisions Act, 1952
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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.

Best Regars,
Jitendra...
I dont feel there is any statutory Law binding which does not allow a employer from reducing the basic salary.
In any case reducing Basic salary will not be appreciated by any employee since there are certain benefits attached to basic salary(PF/ Gratuity, etc) which also gets affected.
Secondly, the Basic Salary should not be lesse than as prsecribed by the Minimum Wages Act.
As a punishment, if the grade of an employee is downgraded,his basic salary in that grade becomes applicable. This affects PF deduction & contributions. Is this permissible by EPFO? How then can this be done?
sara
The statutory aspect has been explained by many of them.
But what was the purpose of making it a 5-day week in the first place? Is it to give work-life balance or reduction of costs? Or was it because, there was less workload?
Won't a reduction in salary (basic or whatever) kill the joy of giving a 5-day week? You need to decide based what value you want to provide your empoyees?
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