Navigating Salary Structure Changes: How to Handle Basic Pay Adjustments and PF Limits?

Considering 30% of Gross as Basic, we will have 3 scenarios which are as follows:

Scenario 1

Employees who already have a basic salary of Rs 6500, but the percentage of Basic to Gross pay is more than 30%. For example, employees whose Gross Salary is up to Rs 21600 (30% is Rs 6500) will fall under this category. Therefore, we will keep their Basic unchanged and will utilize the existing Salary Sheet to offer to such employees.

Scenario 2

Employees whose salaries are more than Rs 21600 but less than Rs 50000 (30% is Rs 15000). We will change the existing salary structure for on-roll employees and make the Gross as 30% of Basic, restricting PF contribution at Rs 15000 as per the new Gazette notification. For new employees, we request you to prepare a sheet capturing 30% of Gross as Basic. This will be for employees whose Gross Salary falls between Rs 21600 to Rs 15000.

Scenario 3

Employees whose Gross Salary is more than Rs 50000. We can prepare a separate Excel sheet where Basic will be 30% of Gross, but PF Deduction can be restricted to Rs 15000 as Basic.

Can we prepare two such sheets?

There is no issue in keeping any percentage as basic until your company's basic is more than the minimum wages prescribed by your state government. This issue should not be raised as an unfair labor practice by your employees. You have to take consent from your employees while changing their salary structure. Legally, there is no act that says the basic should be a certain percentage of the gross salary. So, it's your choice to prescribe the salary structure. You are required to deduct PF on the basic for employees who are earning less than 15k. There is no change in that.

Thanks,