Need clarity on below:
If employee's salary gets revised due to the current pandemic and the employee is then asked to leave to organisation. Will the gratuity be payable on actual basic or last drawn basic (which is low salary)
Please help form a legal point of view

From India, Thane
Labour Law & Hr Consultant
Hr Manager


You might have decreased the salary in view of Covid-19 pandemic and subsequent lockdown
which played a major role in company's financial ability.
But if the employee leaves, for computing gratuity payment, you need to take the actual basic salary
Let me put it in another way. If the employee availed leave for say 10 days due to
an urgent reason at his home. If the employee does not have any credit to his PL/EL account,
naturally, you will effect lop (LOSS OF PAY) in his salary. If he separates from the company in the very same month, does it mean that you need to compute gratuity with the last drawn basic?

From India, Aizawl
Are you suggesting this solution based on good faith of the company or are we legally bound to pay as per actual basic?
From India, Thane
Dear Prajakta,

If the impact of the pandemic is genuinely so severe that you have to reduce the no of your employees, why don't you straight away tell them to leave on their own before reducing their salaries? Such an action would make the separation decent and peaceful. Moreover, the downward revision of the salary would probably be the employer's unilateral decision in breach of the contract of employment. No prudent employee would tolerate such a calculated unethical move and meekly accept the same. I think that only such an inherent realization of the erosion of the employment ethics has prompted you to raise the question of legality behind the employer's move to determine the gratuity amount based on the last-drawn revised salary. Though it is a hyper-technical argument based on the letter of law, I don't think that it will stand judicial scrutiny, if contested by the employees.

From India, Salem

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