How Can I Adjust Employee Salaries Without Causing Disputes or Lowering Morale?

Greetings! I am a contractor providing manpower to various firms. This is in reference to a contract wherein I have retained old employees. I have been trying for the last few months to find my margins, but after analyzing data from the past few months, I have learned that I am unable to make a profit from the business due to various reasons.

Reviewing manpower costing

One option that I have considered is to review the manpower costing and thus change the salary structure of existing employees by adjusting their CTC, wherein I plan to deduct the Employer's contributions of ESI & PF from the Employee. This would result in a decrease in their monthly salary by approximately Rs. 1500 per person.

Although I am not happy about this decision, I see it as necessary to continue the business. I want to offer some benefits to the employees in exchange for this change. I anticipate saving around 45K by implementing this adjustment and am willing to allocate a portion of these savings to provide additional benefits.

Seeking guidance for smooth implementation

I kindly request your expertise to guide me on how to smoothly implement this change without encountering disputes (expected due to the reduction in take-home pay) and how to offer something that can make the transition easier for the employees. Thank you.

Though you have answered your query stating that you are not happy doing so, under certain circumstances, it needs to be done. The existing employees currently working cannot be switched to the CTC module and have their contributions deducted, as they may raise objections. This practice would not be fair and could lead to industrial disputes.

You can achieve this by hiring new staff and implementing the CTC factor. After informing the individuals beforehand and having them sign the necessary documentation, you can then deduct the designated portion.

Regards, Harpreet Walia [Phone Number Removed For Privacy-Reasons]