Madhu.T.K
Industrial Relations And Labour Laws
Jeevarathnam
Sr. Manager Hr/admin
HR_Mind
Hr Professional
Sunil Purohit
Manager-administration

Dear Friends
Just for my curiosity and to share the details for HR fraternity I am posting the message. After the changes into PF contribution the maximum ER contribution is changed to Rs. 2042/- Including Admin charges. I request you to share the practice followed at your organisation. This query is applicable only for the organisations who are following CTC Structure
a) Are you retaining the existing CTC and reducing the net take home salary of the employees?
b) Revising the CTC to adjust the difference and retaining the Net take home wages of the employees?
c) Any other practice? Please explain
Regards
Jeevarathnam P
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You cannot reduce the salary just to make up the CTC. You should pay the additional employer's contribution and prepare a new CTC statement if you want to show that you have done a great thing. In no way, you can adjust the CTC by reducing the contribution paid by the employer from the salary of the employee. The same thing will happen when there is a change in other Acts, like Payment of Bonus Act or Gratuity Act. After all, CTC is not a legally enforceable pay structure.
Madhu.T.K
Dear Jeevarathnam P, Pls go through the earlier circular/letter issued by PF authorities regarding CTC. Sunil Purohit

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File Type: pdf PF not applicable on CTC 18.3.2014.pdf (530.4 KB, 467 views)

Generally an organisation can not reduce Gross Salary of an employee in any case even to compensate new/ additional benefits, but if you have mention in appointment letter that \" your emoluments are on CTC (Cost to Company basis), in case due to change in any rules, you become entitled for specific new/additional amounts/ benefits under any head (e.g. Bonus, Gratuity, PF etc.), the components of your CTC will be suitably adjusted by the amount that will be required to be paid under that head\" then only employer can reduce gross salary.
S.L.Chopra
taking the employees concerned you can follow a mixed approach, i.e. part of the incremental element is increased in CTC and part of it adjusted in the salary. but you need to be transparent in your approach.
Dear Madhu.T.K,
i have one queries, regarding this, one of my friend's company (i will not disclose the name of company) very renowned name in e-commerce, their top management has given clear instruction to their finance team and HR team that do whatever changes in policy or anything else, the whole PF contribution amount should be deduct from employee side only (i.e. Employee contribution as well employer contribution).
Now what they have opted, they have revised CTC of employees and started deducting extra PF contribution (employer's one) from employee salary.
i want to know how much this practice is fair??
and how one employee can escape from this propaganda if he faced same.
The practice of deducting employer's share of contribution is absolutely UNFAIR. It is against the law also. Therefore, if the employees question it, the employer will be forced to drop the idea of deducting the employer's share from the salary of employees. Now when I quote it, I would also say that any adjustment accepted by the employees (not disputed by the employees) will become a policy and the authorities can not question it unless there is some material adjustment of salary like reducing the PF qualifying salary which is not permitted as per section 12 of the Act. I am sure that whatever the company takes will be accepted by the employees because in such a sector the supply of labour is very high. On the contrary where the supply of labour is less and the demand for labour is high the employer may not be able to play with any such adjustments because any adjustment will lead to shortage of manpower.

Indication: Very recently there was a heated discussion in Kerala on "forming Trade Union among employees in IT sector" in which the pro trade unionists (mainly CITU) argued that there has been exploitation happening in IT companies and workers are forced to work for longer hours and without any statutory protection, ete etc. As against it, the IT Management representatives defended that they pay high salary and if their workers join together under a trade union, they would be constrained to move to other places because their function demands that they should work in the manner in which some others (persons sitting in the USA or UK) decide. The above situation is an example where the employer himself is inviting a trade union to come to his business house!!!

Madhu.T.K
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