Can Basic Salary Be Reduced?

Dear Dev ji,Firstly in your question you have not given full details i.e under what circumastances your company has to reduces the basics.Second while changing the timings and weekly offs of the employee have to obtain permission from the competant person as per Shops & Estb Act or Factories Act , have you done that ?Thirdly is there any understanding between employee and employer in what conditions the basic wages reduces ?Forth, According the PF / ESI act you should not reduces the Basic / DA etc. ( PF/ESI ceeling limites keep it in mind) Regards,PBS KUMAR

Reduction in Basic will mean reduction in PF contribution. It is not acceptable. In one of my earlier companies some employees' basic pay got reduced to to some restructuring of salary components. We got a notice from PF department for the reduced contribution. Whatever you do, reduce the other components and avoid reducing basic pay.

Hi friend,
1.Once you have fixed the salary, you can not reduce the basic salary as you have to carry out the statutory compliance on the same.
2. If you want to reduce the working days from 6 to 5 that is up to your Management's decision but you can not reduce the basic salary.
3. As per any act, the working hours in the week is 48 hours.
So depending up on your industry, you can adjust that working hours in 5 days if required.
ThanQ
K.Srinivasa Rao

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
it's not possible to reduce once basic salary when once increase
there is only one hook to reduce that is not practical is that
we have to rejoin them and after that it can be possible
or another thing is we can make a agenda to make a re structure of all of the employee and in that case it can be
Neeraj

The basic salary can be reduced if there is a change in the terms of employment e.g. a full time employee has changed to part time worker. In other circumstances the basic can not be changed as it is impacting the social security contributions like PF etc.

Related Info:

http://epfindia.nic.in <link updated to site home> ( Search On Cite | Search On Google )

THE EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952

(Act No. 19 of 1952)

Dated 4th March, 1952

12. Employer not to reduce wages, etc.

No employer in relation to an establishment to which any Scheme or the Insurance Scheme applies shall, by reason only of his liability for the payment of any contribution to the Fund or the Insurance Fund or any charges under this Act or the Scheme or the Insurance Scheme reduce whether directly or indirectly, the wages of any employee to whom the Scheme or the Insurance Scheme applies or the total quantum of benefits in the nature of old age pension, gratuity, provident fund or life insurance to which the employee is entitled under the terms of his employment, express or implied.

Employer is not supposed to reduce wages(which refers to Basic Pay) to minimize any benefit.

Regards,
Mridula Venugopal

U can reduce leaves from ur leave structure. Go through Factory Act and Standing Order Act as well and further, if posible, go through " Practical journal of HRM & Labour Laws"

i feel basic salary can not reduce. by giving extra leaves if we deduct more pay than usaul will not acceptable. its not good strategy.

Hi,
First of all your question is incomplete. Whether you want to reduce the expenses or to bring down the expenses by reducing the wages of the employees ?. This is because by implementing 5 days of week, you are automatically controlling your direct & indirect costs.
Reduction in wages of the employees in not a wise decision. You need to focus to control the wasteful expenses.
Thanks
Sunil