Umakanthan53
Labour Law & Hr Consultant
Madhu.T.K
Industrial Relations And Labour Laws
Kritarth Consulting
Posh Programs; Hr Management Consultants
Nelsonthomas9102
Hr Executive
+1 Other

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We have paid full salary for the month of March to all employee. Considering present situation and also further another 3 - 4 months company not expecting even 50% of our production capacity, the orders may not be executable. It will be very difficult to manage running cost and also to pay full salary. We would like to retain all staff, but paying full salary will be a great concern. If we reduce salary for employees or some employees in writing for 4-5 months, is it legal or illegal ?
Please advice.

From India, Bangalore
Hi Mohan,

The current tussle between the judiciary and the government/legislators on withholding salaries and reducing salaries, is itself an example that this is illegal, but given the circumstances non-verbally considered as an accepted practice.

With an alarmingly reducing rate of investment and unemployment being on the rise, the govt is in a tough spot to take action against such companies and they know it. The right way for a company to proceed on such practices would be to openly present losses being incurred and thus lack of funds. These could be approved by the labour authorities and then the proceedings could be taken forward as per the law. But obviously, we can see that this is not the case.

So, with a catch 22 situation what seems good enough is to explain to the employees the losses that the company is incurring and then discuss with them on salary reduction factors or any other alternatives to avoid or reduce unemployment or loss of revenue. This creates a degree of fairness or perception of a degree of fairness.

From India, Bengaluru
Well said, Nelson. A "Catch22" in industry and employment matters indicates a "lose-lose" situation which demands mutual sacrifices from all the ones involved. Interestingly, every one placed involuntarily in such a situation has to be content with a lesser-evil or necessary-evil for the sake of survival. Therefore, the current universal lockdown and its inevitable impacts in the long run compel every stakeholder of the societies to think in terms of survival only. The employers stand only to choose in between immediate closure or sustained break even:the employees in between unemployment or reduced earnings, the consumers in between scarcity or rationed supplies on affordable prices and the Governments in between economic bankruptcy or depression.
Hence, the need of the hour is realization of the gravity of the situation and taking concerted efforts to recognize the difficulties of one another and act accordingly.

From India, Salem
Defering the some part/portion of Due Wages/Salary till your Finances Stabilize can be discussed with Wage-Earners as Equal Partners as a Tide-Over Solutions Harsh K Sharan, Kritarth Team 5.5.20
From India, Delhi
This is an unexpected situation. The employers are not in a position to pay the expenses without having a revenue. The employees are also in a very pathetic condition. But when we weigh the sorrows of both, the situation of employees weigh more than that of employers. Moreover, if the objective of the lockdown is making the people stay at home which can only be achieved by offering salary or the days not worked, the period of lockdown should be treated as paid days. Once the lockdown period is over, then you can have discussions with the employees and reach a solution for the months to come.

Deferring a potion of salary would be an ideal solution. Reducing salary of some employees is not proper but you can think of reduction of salary of all employees.

Also read.

Madhu T K: Liability of employers to pay salary during COVID 19 lockdown period

From India, Kannur
Thanks to all for the information and sharing knowledge.
Current situation definitely leading to a financial crunch to companies who are producers as per customer's requirement and not standard products. Most of the orders can't execute as customer are in dilemma and it can invite more lose to company. We also prefer to withhold / retain a portion of salary, but how long it will go and when we will stabilise. That time, when employees claim the retained salary, company may not be in a position to pay all retained amount. Whereas, when company start doing well, company can pay good incentives to all employees.
In agreement with the employees, if paying reduced salary, can any legal implication arise.
Regards,
Mohan

From India, Bangalore
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