Is Reducing Basic Salary for PF Enrollment a Wise Move? Seeking Your Advice on Potential Impacts

Dear experts, Our company is enrolling a few employees in PF starting this month (May 2013). As part of this process, we have adjusted their salary structure and reduced their basic salary to accommodate the PF percentage deduction. We would like to seek your advice on whether reducing the basic salary is the right approach. Will this decision have any negative impact on the employees' career progression?

Thank you for your guidance.

If the employees also include those falling under the definition of "workman," you cannot reduce the Basic salary unilaterally as it has several legal implications. You can do so by entering into a settlement with them/union where you can propose to protect Total Benefits, including projected ones (retiral/allowances linked with basics).

For supervisory roles (executives), you should apply the same principle with clear and precise communication to set the right perspective and avoid any misunderstandings or misperceptions among employees.

The objective of the company should be genuine; otherwise, it could be challenged.

Regards,
Shailesh Parikh
Vadodara, Gujarat
[Phone Number Removed For Privacy Reasons]

You mentioned that your company is enrolling a few employees in PF from May 2013. When your company enrolls new employees, where is the question of a reduction in salary/basic? Your query is a bit confusing to me.