Is This Possible For Employer To Remove Medical Reimbursement From Salary - CiteHR
Dinesh Divekar
Business Mentor, Consultant And Trainer
Madhu.T.K
Industrial Relations And Labour Laws
+3 Others

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is this possible for employer to remove medical reimbursement from salary if previously get in salary. but now after increment they remove medical reimbursement from salary.
Dear Deepak,
You have written your post as if you had "Medical Reimbursement" as one of the components of your monthly salary. If this is true, then it is a wrong practice.
Reimbursement is defined as compensation paid (to someone) for damages, losses or money already spent etc. Were you getting medical reimbursement even without spending money? In few companies, depending on the designation, certain slabs are fixed up to which claimant can submit claim for the medical expenses. In support of his/her claim, claimant has to attach cash memos on account medical expenses. The claim is submitted to the HR department, which in turn forwards to the Accounts department. On scrutiny of the claim, the reimbursed amount is credited to the claimant's account. However, this is not a part of the salary hence it is not included in the salary slip.
Please clarify further on your query.
Thanks,
Dinesh Divekar

There can be re structuring of salary. With this some components of salary may be removed and some other included. Since each revision is a new condition of service, there is nothing wrong in removing medical reimbursement as a component of salary provided there is no loss of income to the employee. For instance, if the salary was Rs 25000 and Rs 1000 was the medical reimbursement and if this is revised as Rs 26000 as fixed salary per month, there is no direct loss to the employee. Therefore, this is not illegal.
However, for an employee whose income is subjected to tax deduction, this will reduce his take home salary, because reimbursement are exempted from Income Tax subject to a certain amount, say, Rs 15000 per annum for medical reimbursements. Therefore, if you have more portion of your salary as reimbursements, like medical reimbursements, fue reimbursement, telephone reimbursement etc, your TDS will be less.
Madhu.T.K

Dear All,
Mr.Madhu.T.K has clarified the position in clear terms.
With restructuring of components of the salary, correct procedure is to take acceptance from employees as it changes terms of engagement.This , however is seldom done .
Regards,
Col.Suresh Rathi

Do you propose to change it for employees who are members of a union? In that case you will have to discuss & convince the change and implement the same later. Important thing is there should be loss of gross salary / wages.
In case you intent to affect any change it is better to refer Fourth Schedule of the Industrial Disputes Act, 1947. If any item therein is proposed to be changed, then you will have to issue notice of change as required under section 9A of the Act. In case of salary / wages the section is definitely applicable, as such you must display at least 21 days prior notice on the board about proposed change.

Dear Shrikant,
The query is about the redesigning or restructuring the salary components. It appears that you have given your post from Industrial Relations (IR) point of view.
For Deepak Singh Nayal: - Though seniors have given their valuable views, you have not given reply to their queries or acknowledged their valuable advice. Professionalism merits doing that.
Thanks,
Dinesh Divekar

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