Hi Soma
As far as I can see, there is no specific provision in law that you can not reduce basic or even the total salary that you pay to an employee. Make sure that the basic + DA + Special Allowance is more than minimum wages. Only other rule that applies is that amount of PF can not be reduced. However, even that rule applies only for statutory limit of PF amounting to Rs. 780 per month. If your basic is above 6500 per month, then reduction will not affect PF
That given, there are other factors that apply.
If you reduce wages, it can result in an industrial dispute.
In your case, the agreement is being approved by the employees and the union, so that would not be a problem. In general employees are more concerned about take home pay, rather than basic.
Some times people try to make trouble simply by taking advantage of a gap they perceive. So you may have investigation by the authorities who will harass you on this matter. One way out is to get approval of the concerned labour officer for your settlement.
As far as I can see, there is no specific provision in law that you can not reduce basic or even the total salary that you pay to an employee. Make sure that the basic + DA + Special Allowance is more than minimum wages. Only other rule that applies is that amount of PF can not be reduced. However, even that rule applies only for statutory limit of PF amounting to Rs. 780 per month. If your basic is above 6500 per month, then reduction will not affect PF
That given, there are other factors that apply.
If you reduce wages, it can result in an industrial dispute.
In your case, the agreement is being approved by the employees and the union, so that would not be a problem. In general employees are more concerned about take home pay, rather than basic.
Some times people try to make trouble simply by taking advantage of a gap they perceive. So you may have investigation by the authorities who will harass you on this matter. One way out is to get approval of the concerned labour officer for your settlement.