Pbskumar2006
Sr.manager-hr
Raghunath_bv
General Manager-hr & Admin
Tiwari Sudhir
Executive Hr
Shiva786
Hr Manager
Neelesh77
Service
Anshuanshu
Professional
Mak007hr
Hr Professional
Rahul Kumar
Senior Hr Professional
Yadavneeraj79
Hr(p&a)executive
AshokHR
Service
REEBI JOSE
Personnel Officer
Krnavneet
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RSB
Hr Professional
Devenderku
Executive
+1 Other

Thread Started by #devenderku

Dear HR Friends,

Our company is planning to squeeze working days from 6 to 5. We are planning to keep Saturday and Sunday as a weekly off. As the employees would be giving lesser time to office, so can we reduce their basic salaries? If yes, what will be ration then? Pls help

Regards,

Dev
25th November 2008 From India, Delhi
Dear Dev, Doest it mean that your employees are ready to reduce their current earnings ??? Prashant 09011070437
25th November 2008 From India, Pune
No you can not reduce the base salary, under some judgement given by the court. sorry i couldnt recall the case. but soon come back to you with the case.
25th November 2008 From India, Mumbai
No you can not reduce the base salary of an employee. This is based on one of the judgement given by the court. Sorry couldn't recall the case but i will come back to you soon with details of that case.
But you should consult to legal advisors of your company, there could be some circumventing solutions to it.
25th November 2008 From India, Mumbai
You cannot reduce the basic salary of any employee. Please understand that all the statutory deductions like PF, gratuity, superannuation are based on it.The quantum of deduction cannot come down from a given level.
25th November 2008 From Germany
hi,
see friend according to the minimum wages act which is decided by the state you must pay more amount.
so it is not necessary that u did your working day 6 to 5 or 6 to 3.
necessaty is that u must follow the minimum wages act rule.
BR/
Sudhir
25th November 2008 From India, Bhopal
Thanks to all of you for responding. Can Anyone out here give me some reference like any court decision or definition given by any legal authority in this reference? Pls reply Regards, Dev
25th November 2008 From India, Delhi
No, I don't think it is a good idea to reduce the workload and reduce the package of the employees, instead reduce the manpower and think of other ways of generating revenues for the company.
Khan/ KCS Recruitments.
25th November 2008 From India, Pune
Dear Dev
First question to be answered is that how company is going to sabstantiate squeezing of working days from 6 to 5. Whether it would come under 'Lay OFF' or 'Block Closer'. If company declares it only a normal reduction of working hours / days then it has got no right to deduct from employee's basic salary. As you have mentioned in your post that it would be a weekly off then there is no chance of reducing salary.
While in case of Lay off & Block closer it may go for deducting of salary. But in both the cases you must take care of relevant Laws & Rules defined under ID Act.
Regards
Anshu
25th November 2008 From India, Jamshedpur
Hi if your company is paying PF for all employees, then it cannot be possible, if it is not, then it can be possible subject to employee’s agreement. hope this clarifiies Rgds Venkat
26th November 2008 From India, Madras
Dear Dev,
I think your company is planning to reduce the salary of employees to face the recession problems. For saving administrative and other overheads you are aslo reducing one more working day. It is possible to reduce the salary of employees by 10% or some other if your employees are aware of the problems of the company and they are wiiling to accept the same. You may conduct discussions with the employees and implement the same.
regards
reebi
26th November 2008 From India, Pune
Hi Reebi Most of the members suggested that it is not possible. Nonetheless, you say that it can be done. May I know the basics of your answer please? Thanks with regards, Dev
26th November 2008 From India, Delhi
Dear Dev,
You can not reduce the Basic salary resulting in to the reduction in P.F. Contribution. It will be contradiction and non compliance of Section 12 (not to reduce wages) of EPF. & MP Act - 1952., wherein an employer shall not reduce the wages which shall result the reduction in EPF contribution.
Further on reduction of Basic, Leave encashment, Gratuity, notice period also reduced.
Thanks
Mohd. Arif Khan
26th November 2008
Dear Dev,
Rebbi is correct, you can reduce allowances with mutual consent of majority of employees affected from this decision, but can not reduce Basic. which is the basis for PF, Gratuity, Leave Encashment, Noice period. etc.
26th November 2008
I think before making any deduction in the basic salary, employees should be taken into confidence. Discuss with them. I think you can make deduction if they agree for this formula. Make an agreement and get their signature in that.
26th November 2008 From India, Kozhikode
Dear Ning Khan you dont think that by reducing manpower you are increasing recession and todays market as far as my study goes there is very less job instead if you give job security by reducing some amount of salary you are just cutting on cost as well as you are cutting on recession i have found outside people who get fired are ready to come today at 50 % of what they are getting previously if we think from that angale and reduce salary by 10-20% that will be always better but also discuss this issue and market condition with your employees
26th November 2008
Dear HR Friend, You can increase working hrs. from Monday to Friday & keep min. Lunch break & dont take tea/coffee break to compen. the saturday holiday. Regards Sudhir
26th November 2008
Reducing salaries would mean digging own (i mean company) grave...means cultivating the discomfort and sense of insecurity in EE's also a potential risk to the reputation of the company...rather should aim at cost cutting in various ways like stop/reduce travel...expenses streamline...n many other overheads which is nt looked upon
26th November 2008 From India, Pune
dear concerned, You can not reduce the basic salary of the employees. but you can increase the working hours of weekdays to adjust the loss of one extra holiday (saturday)
27th November 2008 From India, New Delhi
If they are workmen category people, provisions of Indl Disputes Act, of Notice of Change (Sec. 9A) & that of lay off (Sec. 25 F / N etc.) would have to be complied with regards Jayant singh
27th November 2008
Dear Dev ji,Firstly in your question you have not given full details i.e under what circumastances your company has to reduces the basics.Second while changing the timings and weekly offs of the employee have to obtain permission from the competant person as per Shops & Estb Act or Factories Act , have you done that ?Thirdly is there any understanding between employee and employer in what conditions the basic wages reduces ?Forth, According the PF / ESI act you should not reduces the Basic / DA etc. ( PF/ESI ceeling limites keep it in mind) Regards,PBS KUMAR
27th November 2008 From India, Kakinada
Reduction in Basic will mean reduction in PF contribution. It is not acceptable. In one of my earlier companies some employees' basic pay got reduced to to some restructuring of salary components. We got a notice from PF department for the reduced contribution. Whatever you do, reduce the other components and avoid reducing basic pay.
27th November 2008 From India, Bangalore
Hi friend,
1.Once you have fixed the salary, you can not reduce the basic salary as you have to carry out the statutory compliance on the same.
2. If you want to reduce the working days from 6 to 5 that is up to your Management's decision but you can not reduce the basic salary.
3. As per any act, the working hours in the week is 48 hours.
So depending up on your industry, you can adjust that working hours in 5 days if required.
ThanQ
K.Srinivasa Rao
27th November 2008 From India, Hyderabad
you dont think that by reducing manpower you are increasing recession and todays market as far as my study goes there is very less job instead if you give job security by reducing some amount of salary you are just cutting on cost as well as you are cutting on recession i have found outside people who get fired are ready to come today at 50 % of what they are getting previously if we think from that angale and reduce salary by 10-20% that will be always better but also discuss this issue and market condition with your employees
27th November 2008
Dear
it's not possible to reduce once basic salary when once increase
there is only one hook to reduce that is not practical is that
we have to rejoin them and after that it can be possible
or another thing is we can make a agenda to make a re structure of all of the employee and in that case it can be
Neeraj
27th November 2008 From India, New Delhi
The basic salary can be reduced if there is a change in the terms of employment e.g. a full time employee has changed to part time worker. In other circumstances the basic can not be changed as it is impacting the social security contributions like PF etc.
27th November 2008
Related Info:

http://epfindia.nic.in <link updated to site home> ( Search On Cite | Search On Google )

THE EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952

(Act No. 19 of 1952)

Dated 4th March, 1952

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.

Employer is not supposed to reduce wages(which refers to Basic Pay) to minimize any benefit.

Regards,
Mridula Venugopal
27th November 2008 From India, Bangalore
U can reduce leaves from ur leave structure. Go through Factory Act and Standing Order Act as well and further, if posible, go through " Practical journal of HRM & Labour Laws"
27th November 2008 From India, Ahmadabad
i feel basic salary can not reduce. by giving extra leaves if we deduct more pay than usaul will not acceptable. its not good strategy.
27th November 2008 From India, Hyderabad
Hi,
First of all your question is incomplete. Whether you want to reduce the expenses or to bring down the expenses by reducing the wages of the employees ?. This is because by implementing 5 days of week, you are automatically controlling your direct & indirect costs.
Reduction in wages of the employees in not a wise decision. You need to focus to control the wasteful expenses.
Thanks
Sunil
27th November 2008 From India, Pune
:) 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.
27th November 2008
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.
28th November 2008 From India, Bangalore
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
9th December 2008 From India, New Delhi
Hi, Dev,
Here is exact extract of the Section 12 of Employees Provident Fund and Miscellaneous Provisions Act, 1952
U will get the entire act @ Vakilno1.com - India Law, Online Legal Advice, Legal Documents, Legal News
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...
24th April 2009 From India, Mumbai
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.
25th April 2009 From India, Mumbai
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
31st July 2010 From India, Madras
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?
1st August 2010 From India, Bangalore
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