Can Basic Salary Be Reduced?

Dear Dev,
I think your company is planning to reduce the salary of employees to face the recession problems. For saving administrative and other overheads you are aslo reducing one more working day. It is possible to reduce the salary of employees by 10% or some other if your employees are aware of the problems of the company and they are wiiling to accept the same. You may conduct discussions with the employees and implement the same.
regards
reebi

Hi Reebi

Most of the members suggested that it is not possible. Nonetheless, you say that it can be done. May I know the basics of your answer please?


Thanks with regards,

Dev

Dear Dev,
You can not reduce the Basic salary resulting in to the reduction in P.F. Contribution. It will be contradiction and non compliance of Section 12 (not to reduce wages) of EPF. & MP Act - 1952., wherein an employer shall not reduce the wages which shall result the reduction in EPF contribution.
Further on reduction of Basic, Leave encashment, Gratuity, notice period also reduced.
Thanks
Mohd. Arif Khan

Dear Dev,
Rebbi is correct, you can reduce allowances with mutual consent of majority of employees affected from this decision, but can not reduce Basic. which is the basis for PF, Gratuity, Leave Encashment, Noice period. etc.

I think before making any deduction in the basic salary, employees should be taken into confidence. Discuss with them. I think you can make deduction if they agree for this formula. Make an agreement and get their signature in that.

Dear Ning Khan you dont think that by reducing manpower you are increasing recession and todays market as far as my study goes there is very less job instead if you give job security by reducing some amount of salary you are just cutting on cost as well as you are cutting on recession i have found outside people who get fired are ready to come today at 50 % of what they are getting previously if we think from that angale and reduce salary by 10-20% that will be always better but also discuss this issue and market condition with your employees

Dear HR Friend,
You can increase working hrs. from Monday to Friday & keep min. Lunch break & dont take tea/coffee break to compen. the saturday holiday.
Regards
Sudhir

Reducing salaries would mean digging own (i mean company) grave...means cultivating the discomfort and sense of insecurity in EE's also a potential risk to the reputation of the company...rather should aim at cost cutting in various ways like stop/reduce travel...expenses streamline...n many other overheads which is nt looked upon

dear concerned,
You can not reduce the basic salary of the employees.
but you can increase the working hours of weekdays to adjust the loss of one extra holiday (saturday)

If they are workmen category people, provisions of Indl Disputes Act, of Notice of Change (Sec. 9A) & that of lay off (Sec. 25 F / N etc.) would have to be complied with
regards
Jayant singh