Due to recession in market, we donít want to dismiss them from work, but we want to decrease the salary. So they can survive as well and we sustain in market. Weather we can do it? If yes then, what will be the legal procedure? We want to introduce 1 year contract for employee. Therefore, can I get format and how can I introduce legally? Please do let me know.
Thank you

From India, Jalalpur
Dinesh Divekar

Business Mentor, Consultant and Trainer
Dear friend,
You have raised two queries. One is about decreasing the salary of the employees and second is converting their status from permanent employment to Fixed Term Employment (FTE). Let me give reply to the former whereas for latter other members will give the reply.
What is the break up of the salary components? Generally Basic salary is 30% to 50% of the gross salary. Please do not reduce the basic salary as far as possible. Since the basic is not reduced, there will not be any impact on PF remittance and reduction will not attract any attention of the PF Enforcement Officer. Other allowances that are on and above basic wages can be reduced.
Dinesh Divekar

From India, Bangalore
Human Resourse
As Per Law you have to pay the Mim. wage of that state. wage or salary consist of (Basic +DA). So your Basic + DA must be equal to Mim. wage. you can change in other components of salary structure.

You all r diverting the subject. He is looking for Legal Procedure to reduce salary/wages!
From India, Bangalore
The appointment letter is a contract and you can not reduce/decrease the salary without explicit acceptance by the employee.
In my perception, take the employees in confidence of your financial situation and give them option of either fresh T&C of engagement or termination due to the existing circumstances.
TATA's I am told asked Sr Staff to take 50% cut once and salary was raised when the situation improved. I can not vouch for it but I was told this by one of their employees.
Junior staff on min wages was not touched.
The two issued of reduction and fixed term employment should not be clubbed
Col.Suresh Rathi

From India, Delhi
Other than minimum wages also those whose salary come under purview of ESI also can not be reduced on any account please note.
From India, Pune
It can be done by consent of the Employees and cannot be done unilaterally . In any case it cannot be less than minimum wages. Sujeet Salkar 9702963645


Sir there is no such provision .But one condition is there
..The employer has to pay to all his engaged workers all the wage dues irrespective of his financial capacity or changed market demands or as such reasons any.
If you want to retend worker s for one year you have to pay and bare all their wage amounts
You have no legal right to stop delay or cutting in their salaries.you can exclusively maintain a separate budget for payment s of wages of your workers by taking a loan.sir

From India, Nellore
Asst Manager (P&A)
If organisation has given appointment latter to employee and mentioned salary in appointment letter then what we can reduce the salary ?
From India, Bhopal

Dear Sirs
I have settled one issue nearly related to above situation
A company is running on the basis of receipt of Raw material near by mines.suddenly due to honour ble court orders for a total review of supply of rawmaterials to the nearby companies
...The mIning Dept.stopped mining and supply.then
All the depended companies closed temporarily their units.
One of those companies want to retain their truck drivers who are the primary staff to reach Raw materials to company.
All the trucks put in the factory...Drivers on the road andcalled for a strike.
We have settled the matter amicably an agreement on wage payment comfortably to both parties made without affecting dues of EPFand ESI.
.. among themselves in a conducive atmosphere.
Later when supply of raw material restored normal wage structured implemented.
It can be applied to above mentioned situation .Which is internal flexible behaviour of both parties accepted by IDact also.Agreed Wagepact between employer and employees for a certain period cannot be deniable

From India, Nellore

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