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Respected Seniors , Can we reduce the basic pay of an employee when we are restructuring his salary break up for salary increment. Regards Shanu
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Dear Shanu,
Whenever there is a increment, BASIC PAY must be hiked because most of the calculations are based on BASIC PAY. Some organisations doesn't consider hike in BASIC PAY but, they give hike in other allowances.
I suggest you to give a hike in BASIC PAY.
With profound regards
Dear Sir,
According to co. policy we are only giving basic + esi(Emplr.Share)= CTC ,
now we are increasing his ctc by giving basic+hra+other allow+esi(Emplr.Share), PF
(Emplr.Share)+Bonus(Emplr.Share) = ctc i.e. we have to decrease his basic rate can we
according to the law ?
With Regards
Dear Shanu,
Kindly update me about the PAY FIXATION LAW & STANDARDS you had come across. If you have a copy kindly do upload or email me. Will guide you based on your inputs.
For PF, It is the amount to be contributed from both sides EMPLOYEE and EMPLOYER. You cannot include EMPLOYER SHARE in the CTC and show a BIG PICTURE.
With profound regards
There is no law governing salary breakup. Your method of computing ctc is correct. It is intended to show the bigger Picture. You need to ensure basic is above min wages.
In reality, government officials will give you a tough time on the lowering of basic of anyone comPlains. Even though legally they can't stop you.
We have similar Problem as we have a policy of min 6500 as basic to avoid pf. We show entire salary of entry level employees as basic. As the person moved into higher designation or grade, we start adding allowances. First conveyance allowance, then hra, then others. Since we do this grade wise, we can have multiple structures for different grades. You will need to come up with something that will allow you do have separate structures that endure scrutiny. May be even with number of years with company.
Basic salary can not be reduced (other allowances like Conveyance allowance, Special allowance etc can be adjusted)
Dear Shanu,
CTC Includes employee share/ Employer share of EPF & ESIC.
When you are giving hike in basic automatically EPF will increase. If gross salary increase esic will increase.
Normally You should not decrease the basic pay.
As per epf act: EPF Benfits should not disturb / Decrease in future when an employee employed in the same concern.
Thanks & Regards
I think the pf act says that salary should not be decreased when introducing pf. That is salary should not be reduced to pay the pf. It applies to first time only. Nothing there says salary can not decreased in future
Dear All
The best think to do is to make a control over the Basic Pay to keep the company's salary scale on control and you can increase the other allowances . By adding other allowances and cost of living allowances .
Dear shanu,
i have seen all above conversation, but the topic had been from context, shanu asked you that we can reduce basic salary if we done revise of an employee salary.
Now my question was the Employeer share Esic and PF came to picture. they are paying to government not to the employee. whatever things required of esic and pf u just check with Communities.
As per my company we are giving salary on below structure.
Basic 40%
HRA 30%
Conveuy 800/- rs fixed
remaining would be paid as spacial allowance.
you just do let me know why you want reduce the basic salary, if anybody given reply on the same so i feel happy.

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