I am working in a hospital. The salary was split into BASIC +DA+ HR. till March 2022 the basic salary was 17000+DA+HRA the epf contribution was for Basic +DA. but from April 2022 onwards the basic salary was reduced to 15000+DA+hra. the reduced salary was added to HRA.

Is it right? the company can reduce the basic salary as per the EPF act. Kindly clarify.

From India, Coimbatore
Industrial Relations And Labour Laws

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It is unfair to reduce basic salary of an employee. But in your case, it is the PF qualifying salary reduced from Rs 17000 to Rs 15000. Though section 12 of the EPF & MP Act says that the basic salary (on which PF is contributed) should not be reduced, the PF authorities cannot say that you should continue to contribute it on Rs 17000. This is because they have no right to demand contribution on salary above Rs 15000. In Maratwada Gramin Bank's case the Supreme Court has said that if the employer has been contributing to EPF on an salary over the ceiling limit and subsequently decides that the same be restricted to the required percentage on statutory ceiling, then there is no violation of section 12.

Though in respect of contributions to PF they are okay, there exists an unfairness because such decisions should be taken after consulting with the employees. This happens only when the affected employees do not have collective bargaining powers. This will also make changes in your amount of gratuity when you leave the organisation. Anyway, you are compensated the same by addition to your HRA.

From India, Kannur

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