Can Employer Change The Basic % Of Salary

skdevre
Can employer change the basic component of the salary?
For e.g. If my salary structure is defined like, basic is 50% of total gross salary for last 4 years. Can my company change it to 35% of the gross without my approval?
pon1965
employer has the right to change the basic as long as your gross does not get reduced or affected.
skdevre
Thanks borntosin and pon.
I discuss this with experts (C.A. and Lawyer) and conclude that it depends on company. If it is a Public ltd. then one can do something; but when it is a private ltd, there are no hope to fight except the offer letter (or last signed bond) has any details of salary structure.
Thanks & regards,
Sachin.
TELIKEPALLI
I do agree with Sachin it is absolutely depends on company policy. There is no statutory obligation in this regard.
actually higher basic is always very useful to employees for statutory obligations.
for example if Basic salary is higher side employees can get more HRA Exemption as per IT act while calculating of his tax liability.
P.F contributions depends on Basic Pay and Gratuity payment also depends on Basic salary.
Any way to conclude, this is absolutely depends on company policy.
balwant_t53
Company not change in Basic Salary structure because Pf contribution increase time to time but not decrease
smitavaity
Hi,
I agree with Balwant. You cannot reduce the basic component as it would affect the PF contribution. As per Employees PF and Miscellaneous Act, employer cannot reduce the PF contribution, and hence basic cannot be reduced.
Regards,
Smita
shrinivasdesai
Hi
I feel the Company can always change the basic and change the DA to make the PF contribution unaffected. But there are many allowances /benifits linked with basic which may change
Regards
Shrinivas
sanjeevtalegaon
Dear Sir
Mohan has worked for 8 year in a company .and his basis salary was rs 25000/- and after 6 years they reduced his basic salary up to 18000/- though his gross salary remained same.
now after 8 year mohan has resigned and smoothly given the hand over .
on which basis salary he will get his gratuity .
hekarthik
Employer have rights to reduce the basic wages but should not violate any provision under minimum wage act ......
Hekarthi ....
v shakya
No legally employer cannot change the terms of service conditions offer letter/appointment letter contains the clause thereof is the terms of employment agreed by both the employer and employee if once offer letter has been signed by agreed both employer and employee Then later No changes can be made unless the mutual consent of employee & employer subjected to section 9A of ID act. However as per this section changes in form of effectness to workers either changs such as working shift or working timing or change in service conditions the Notice thereof atleast 21 days shall be given to every workers before any change.

Pls refer :- T RAJAMANICKAM V/S BINNY LIMITED wherein Hon'ble Madras High court held that reduction in the emolument of a workers which was Not envisaged in the settlement between Management and the workers and was done without the Notice was Ex facia against sec 9A of ID act.

Therefore No changes can be made unless The Notice Given to workers or Without mutual concent of employee?

Thanks & Regards

V Shakya

HR & Labour Law Advisor
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