Respected Seniors & Colleagues,
This company in which I am working since last 2.5 years is 34 years old MSME organization. The day from which it began operations, they are paying 'per day salary' till date to all senior employees, operators and even new joinees on contract labor.
For e.g. One senior operator's salary is Rs.751/- per day without any breakup or bifurcation of Basic+DA, HRA, etc. Therefore his monthly basic salary is lump sum of Rs.751*26 = Rs. 19526/-.
The management which was running the company since last 35 years, has changed now and young generations are heading all the operations and various departments as well. If Rs.19526/- is basic monthly salary, then paying Bonus on basis of this will be quite costly to the company even if we pay @ 8.33%.
The same will be case while paying our Gratuity to Left or Retired employees. Even in Leave Encashment this will be a costly overhead.
Thirdly, Provident Fund contribution cost to company is also comparatively high if it is calculated on whole monthly salary instead of calculating on basic part of that salary.
Therefore, as a solution, they are thinking of shifting everyone to 'fixed' OR 'CTC' salary structure wherein Basic salary will be around 40%-50% of the Monthly gross salary.
For e.g. in Rs.19526/- case, Basic will be 40% of 19526 = Rs.7810/- will be basic monthly salary. This will straight away control and reduce as well the company’s cost on payables like PF, Bonus, Gratuity, Leave Encashment, etc.
Now management is of the opinion that all those on ‘per day’ salary should be shifted to ‘monthly’ salary structure ASAP so that company cost can be reduced on other perquisites as well along with the salary.
But my concerns are as below:
- All senior employees are getting salary according to ‘per day structure’ and so are their salary slips. It would be difficult to make them ready for ‘fixed salary’ structure as this might not be acceptable to them
- Once they get the news of fixed salary structure, they might straight away show oppose to it because their yearly bonus will get effected ultimately.
- In term of Provident Fund also they might oppose as their contribution (savings in actual) will decrease comparatively. Even I doubt whether PF department will allow this decrease in contribution of Provident Fund.
- What will be legal implications/after-effects of making this change in salary structure?
All these questions are running through my mind whenever I think of start making a ‘fixed salary’ structure for all.
Therefore, I request members in this fraternity to kindly share their thoughts on above queries and please provide a solution/guidelines in this matter.
This company in which I am working since last 2.5 years is 34 years old MSME organization. The day from which it began operations, they are paying 'per day salary' till date to all senior employees, operators and even new joinees on contract labor.
For e.g. One senior operator's salary is Rs.751/- per day without any breakup or bifurcation of Basic+DA, HRA, etc. Therefore his monthly basic salary is lump sum of Rs.751*26 = Rs. 19526/-.
The management which was running the company since last 35 years, has changed now and young generations are heading all the operations and various departments as well. If Rs.19526/- is basic monthly salary, then paying Bonus on basis of this will be quite costly to the company even if we pay @ 8.33%.
The same will be case while paying our Gratuity to Left or Retired employees. Even in Leave Encashment this will be a costly overhead.
Thirdly, Provident Fund contribution cost to company is also comparatively high if it is calculated on whole monthly salary instead of calculating on basic part of that salary.
Therefore, as a solution, they are thinking of shifting everyone to 'fixed' OR 'CTC' salary structure wherein Basic salary will be around 40%-50% of the Monthly gross salary.
For e.g. in Rs.19526/- case, Basic will be 40% of 19526 = Rs.7810/- will be basic monthly salary. This will straight away control and reduce as well the company’s cost on payables like PF, Bonus, Gratuity, Leave Encashment, etc.
Now management is of the opinion that all those on ‘per day’ salary should be shifted to ‘monthly’ salary structure ASAP so that company cost can be reduced on other perquisites as well along with the salary.
But my concerns are as below:
- All senior employees are getting salary according to ‘per day structure’ and so are their salary slips. It would be difficult to make them ready for ‘fixed salary’ structure as this might not be acceptable to them
- Once they get the news of fixed salary structure, they might straight away show oppose to it because their yearly bonus will get effected ultimately.
- In term of Provident Fund also they might oppose as their contribution (savings in actual) will decrease comparatively. Even I doubt whether PF department will allow this decrease in contribution of Provident Fund.
- What will be legal implications/after-effects of making this change in salary structure?
All these questions are running through my mind whenever I think of start making a ‘fixed salary’ structure for all.
Therefore, I request members in this fraternity to kindly share their thoughts on above queries and please provide a solution/guidelines in this matter.