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Dear All, I need a valuable suggestions from you people regarding this case. My friend's daughter is working under Company A, which is working for its clients.Now the client for my friend's daughter is going to close business (reason not able to survive in lockdown) .The company is now saying that since client company is not going to operate the employees will have to work for another client with lesser salary or Company A will also say Bye to employees.
My question can a employer can reduce salary on above matter,as client change.
Can PF be deducted on reduced salary. At present she is working from home.Her appointment letter from Company A.
I hope expert will guide me what and how handle this situation.

From India, New Delhi
I understand the situation like this.

Ms X is an employee of Company A which is the manpower supplier for company B(the client)

The company B has closed own its operations

Company A has other clients, like Company C, but that client cannot afford the same salary as did Company B pay.

Ms X can be deployed for or Company C but with reduced salary.

Now the question is that is it legal to reduce salary for contribution of PF?

Under section 12 of the EPF & MP Act reduction of salary is not permitted.

However, this applies only to PF qualifying salary or the salary on which the employer contributes PF. Suppose the salary of Ms X with while working for Company B was Rs 25000 and out of which Rs 15000 was the salary on which PF was being deducted. Now with Company C, the salary would become Rs 20000, but the PF contributing salary would be the same, ie, Rs 15000. Then there is no issue.

The issue comes only when you reduce the PF contributing salary, ie, Rs 15000 in the above example.

If, for instance, Ms X is joining company C as a direct employee (not under Company A rolls) then also reduction is permissible even on the PF qualifying salary. This is because it is upto the employee to decide on which salary he/she should accept the offer of employment. EPF Organisation cannot say that you should not join a company with less salary or you should continue to contribute the same amount towards PF when you join another company.

At the same time, reduction of salary below the amount of PF contributing salary under the same employer is not permitted.

In another example, the gross salary of Ms X as Rs 50000 and the PF qualifying salary while working with company B was Rs 25000. Now when she is deployed in Company C, the PF qualifying salary is brought down to Rs 15000. This is also okay as per law. The Employer who has been contributing PF on salary above Rs 15000 can bring it down to Rs 15000. Supreme Court citation is available. EPFO cannot question it saying that section 12 of the EPF&MP Act says that PF wages should not be reduced. The Hon. Supreme Court has said that EPFO cannot demand a contribution on salary above Rs 15000. The employer or employee can contribute PF on any salary above Rs 15000 but the EPFO cannot take it as an enforcement right and demand contribution of amount higher than Rs 15000.

From India, Kannur
Thank you Mr.Madhu,
She is not getting new appointment letter but Company A is going to reduce salary and also extend working day 6day a week and earlier it was 5 day a week.
My question is can a employee object this development or she has to go as company say.She is an meritorious employee for the company. Even seniors takes his suggestions and appreciate her contributions One thing I also I want to add that Company is not doing this for single employee It is applicable to all the employees.
Thank
Sunil

From India, New Delhi
It is for the employee to decide whether to continue with the company at a reduced salary or not. If she is okay with the pay offered, she can continue or leave the company. When the company is making profits, they give increments to all employees, and when the company is in trouble, obviously, the company can reduce the salary. But what is to be observed is that the revised salary is not below the notified minimum wages. So long as the minimum wages rates are covered, there is no legal issue for the company.
From India, Kannur
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