Basic salary represents relative job value in job hierarchy and cannot be reduced even by way of punishment unless it is provided for in the certified standing orders or service rules. Some S.O.s provide for stoppage of increment or reverting to earlier basic in case of demotion. But reducing basic through legal process is Herculean task and is next to impossible.
The information provided by Mr Nagarkar is justified. The employer can not reduce the Basic salary of one at whims.
The subjected employee can file a case before the labour authority of the area where the establishment is existing.
Is there any issue if a person joins a new company on reduced salary that what he is drawing in his previous organisation.
The background to this question is that there one person who has shown interest in joining my organisation at a lesser salary that what he is drawing presently due to some compelling personal reasons.
We have made it clear to him that we cannot afford to pay him anywhere close to his present salary, but he is still keen, and so are we to have him onboard. But his PF contribution will be lesser than what he is contributing presently, will that be an issue?
We are discussing here the of reducing basic of existing employee.
In your case, the person is on his own volition wants join on lesser salary than his previous, and knowingly take lesser PF contribution. So no issues.
When minimum wages and employee net take home is not disturbed,you can make such necessary changes in other components like HRA,Conveyance beyond Basic and DA, as both the components are considered for calculating EPF,Leave encashment,Bonus etc.
But do it duly informing the employees and also be prepared to explain the circumstances for such change to them.