Madhu.T.K
Industrial Relations And Labour Laws
Saswatabanerjee
Partner - Risk Management
Jeevarathnam
Sr. Manager Hr/admin
Adoni Suguresh
Sr.executive (per & Adm)
ExxonAnjali
Hr Professional
Mail8013
Hr Consultant
+1 Other

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Dear All,
I would like to share my query with you, request you to provide some solution. In my org. Mgt. had increase the salary of some employees but after disbursement of Nov. month (increased) salary and PF challan generation, mgt has changed their decision and told me that we will not increase the salary of 2 employees.
Now, as I mentioned, I had already generated PF challan as per the revised/increased basic amount and paid in Dec. month. As per my knowledge once increased basic amount is mentioned in PF we cann't decrease the basic of employee. But anyhow i want to change their basic as earlier.
Is there any option to come out from this problem, can I change the basic in next month for PF and pension, if yes then what would be the procedure & rules.
Info: EE_1 Nov. basic salary was : 12600 & Revised basic : 13400
EE_2 Nov. basic salary was : 11600 & Revised basic : 12400
Kindly suggest.
Thanks & Regards
Anjali Singh
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Hi
Once there is any upward revision in the increment then we should not revise the same into downward. As seeing the basic I hope both of the employees are not taxable employees.
I feel it is better to revise any other allowance's. If at all you have mentioned any Special Allowance then you can adjust in Special Allowance else you can adjust the portion of the amounts such as HRA, Medical Allowance & Conveyance allowance
Thank you sir for your prompt reply, but could you pls suggest if in case we don’t want to increase single penny and want to consider same structure (last one).
You can bring the basic down
It was only for a month
If the matter comes for review, you need to have documentation that it was done by mistake.
The law prevents you from decreasing basic to absorb FP cost. It does not say you can not reduce a persons salary
I draw attention to Section 12 of EPF & MP Act reproduced below:
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.
Thanks
Hello Anjali,
It's not at all an issue if the PF dues for a particular month exceeds the normal dues that is remitted every month to the employee's account. Such incidents happen whenever there are any payments done by way of "arrears". This may be a result of :
# Late declaration of increments by the establishment or
# Because of an associate's resignation whereby the establishment keeps his last (or even previous) month's salary on hold and settles it along with his Full & Final Settlement on the date of his exit from the company.
So, there is nothing to worry.
Good Luck,
A.B.
Mr. Gupta,
Please read the second line of your post - by reason only of his liability for the payment of any contribution to the Fund
This therefore will not apply in the given case. The reduction is only for 2 of the employees, the rest continue to get increased increment. Further, the reduction is not to cover PF liability but because the increment was wrongly applied.

Mrs..Anjali,
Once you have increased the basic salary the law does not permit to reduce the same. You don't increase law doesn't question if reduced the law definitely question you. As our friend Mr.S.Banejee said since it is the matter of one month you can have documents for review to explain. Be cautious in future and to avoid such practice which is not healthy environment.
Adoni Suguresh
Labour Laws Consultant
Mr. Saswata
It is not a case of " the increment was wrongly applied" but it is a case of as per queriest 'but after disbursement of Nov. month (increased) salary and PF challan generation, mgt has changed their decision and told me that we will not increase the salary of 2 employees." Thus this gave the understanding that management wanted to change their decision for "reason only of his liability".
However, my understanding can be different.
Thanks
V K Gupta
No sir
The reduction is not on account of liability of PF.
It is a decision of the management that they do not want to give the increment or that increment was wrongly applied to these 2 employees.
The concept of reduction only on account of liability refers to a completely different scenario. In case of employee to whom PF applies for the first time (eg when the firm has got 20 employees for the first time), and therefore PF is now a liability of the employer, increasing his cost, the employer can not reduce the salary of the employee to fully or partly absorb the PF costs. In other cases, there is nothing stopping an employer from reducing salary. It may be an industrial dispute, but the law does not prevent reduction of wages as such.

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