Dinesh Divekar
Business Mentor, Consultant And Trainer
Suhaskhambe
Executive Human Resource At Emcure Pharmaceuticals
Nathrao
Insolvency N Gst Professional
Tajsateesh
Recruitment/talent Acquisition, Career Counselling
+2 Others

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Dear Friends,
we are working in a limited company wherein employer has reduced our monthly gross pay by 20% and 25% for top management , we just want to know whether an employer has a right to reduce the salary of employee,is it legal.
in total 19 people were also fired in the month of April 2015 reducing our total employee strength to 85.
it has been more than 5 years i had been working n this company and i am skeptic if i leave the company they would pay the gratuity on the reduced monthly amount, which again would be a loss for me.
when i will appear for the interview i will have to put up the reduced monthly salary slip which would turn out to be a loss for me again.
the reduced amount of 20% is no where reflective in the salary slip,what could be the repercussion.
friends , please suggest a way out as the employer has gone completely adamant .
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The company may be in financial crisis or planning to change business or even wind up.
There is no real way to stop pay reduction,law can give any amount of legal protection for labour welfare.
Look around for greener pastures.
Dear Dazler,

Reduction in remuneration is common when company faces rough weather. Nevertheless, I find two contradictory statements in your post. These are as below:

when i will appear for the interview i will have to put up the reduced monthly salary slip which would turn out to be a loss for me again.

the reduced amount of 20% is no where reflective in the salary slip,what could be the repercussion.


I wanted to ask simple question. If the reduction in wages is not reflected in the salary slip then how do they manage the reduced pay? Are you paid by cash or what? Secondly, if the reduced salary does not reflect in the salary slip then is it not boon to you? You may not have to disclose that your salary was reduced.

As far as gratuity is concerned, no company can turn down the claim. You can sue the company for non-payment of the rightful dues.

Thanks,

Dinesh Divekar


hi,
well the statement does look contradictory , let me give a clarification..
supposing initially i was getting X amount as my take home salary now it has changes to (X - 20%X) so the effective take home salary no is (X-20%X) i.e. 80%X , and this 80% of X is reflective in the salary slip now.
now coming down to the question of gratuity , the employer will not deny the gratuity claim but may pay @ 80% of X (as basic+DA component)
which was earlier x this reduction of 20% from the take home salary will have a direct impact on the total gratuity amount.
hope the concerns are clear now.
There is not legal way to fight. if the reduced salary is higher than prescribed minimum wages then you can not sue the employer. Gratuity will also get reduced because as per gratuity act salary is taken as last month salary (as if paid for complete month). If company is facing loss then they are certain to do this. wait till company again comes in profit or you can search for new job. you should tell the truth to the new prospective employer that your salary was reduced due to financial loss to your organization and not because of job performance & justify your answer.
Hello Dazler,
You haven't clarified--either way--the common query of the members.
WHY did the Company reduce the Salaries? Was it, like Suhas Khambe mentioned, due to losses?
Also there's a fallacy in the clarification you mention to Dinesh's query about contradictory salary statements.
In your First Posting, you mention "reduced our monthly GROSS pay by 20% and 25% for top management" while your posting of today says "my TAKE HOME salary now it has changes to (X - 20%X)".
Rgds,
TS
hi TS,
the first query whether the company is at loss, the answer is "NO" ; its just that they want to improve on their operational income.
and,for the second part the monthly take home salary has reduces to 0.8X from X, they have played wisely keeping the basic same and reducing the special allowances.
hope the above is clear now.
""its just that they want to improve on their operational income.""
Cutting pay to improve bottom line is a foolish move.
Employees will not apply their full mind and spirit in work and that could impact the company more than anything else.
Company should review their finances as a whole on holistic basis and not take short cut decisions.
you are correct , but employees are left to languish as they cannot do anything about it.
My prima-facie motive of raising the question was , do we have anything(rule,act,law) to fight the injustice....
Hello Sandeep,

Like Nathrao mentioned such steps--cutting wage bills to increase the bottomlines--is not just foolish, but also counter-productive in the long run.

However, I guess that's not YOUR problem...let the Company face the consequences.

Coming to your concern/query, Suhas Khambe has already given the legal position: "if the reduced salary is higher than prescribed minimum wages then you can not sue the employer".

However, this situation raises another point--how come you or the other employees didn't notice this trait/nature of the management in all these years [you worked here for >5 yrs]? Usually such mentalities don't develop OVERNIGHT. There sure would have been some situations that would be giveaways of this trait. OR did the management control change?

As far the options open to you or other employees: move as soon as possible from here. This is a classic situation where you need to 'cut down the losses' than to see ways of getting what you ought to get.

And DON'T bluff your way in the Interviews.....give the factual picture of the Salary differences vis-a-vis what's mentioned in your Appointment Letter & the Salary Slip.

All the Best.

Rgds,

TS
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