Can Companies Legally Adjust Basic Salary and Increments Without Clear Terms?

Inquiry About Basic Salary Adjustments

I want to know about basic salary. If nothing is specified in the appointment letter, can any company decrease the basic salary based on the performance of HR personnel? The company has not set any targets for performance; it is at the discretion of the management to decide the benchmark of performance.

Salary Review and Increments

Secondly, can any company stop increments if the appointment letter states "your salary will be reviewed every year" without mentioning an increase or decrease in the amount?

Legal Framework for Salary Changes

Do we have any laws regarding the decrease or increase in basic salary?

Please advise.

Thanks and regards,
jd

There is no rule to provide a basic salary; companies always design their CTC keeping in mind that employees get tax relief. Increments are based on performance; if your performance is good, the company may give an increment; otherwise, not.

Can a Company Decrease the Basic Salary?

Thanks for your reply, but I still want to know, can a company decrease the basic salary? I would appreciate your response.

Thanks and regards,
jd

Decreasing and increasing the Basic salary is not governed by any law.

1. Basic salary is a fully taxable amount. Therefore, reducing the basic salary will result in tax relief, but the basic salary must comply with the Minimum Wages Act.

2. If the basic salary is higher, you will be required to pay full tax on the total amount.

Please ensure that your basic salary is structured appropriately to comply with regulations and optimize tax implications.

If the basic salary is decreased, tax authorities have the right to ask for the reason, and the company needs to provide a valid explanation. Is that what I understand from the above reply? Does the employee have the right to question the employer for a decrease in basic salary? Can that be considered a logical and valid reason to leave the company?

Regards,
jd

1. No one will ask about your basic pay, but the basic pay should be designed as per the Minimum Wages Act, not less than this.
2. If an employer provides basic pay less than the Minimum Wages Act, then the employee has the right to ask the employer.