Salary Adjustments in Textile Industry: Do We Need Employee Approval for Changes?

Dear Seniors, we are in the Textile industry background, so we offer a fixed salary that depends on the trainees' progression to skilled employees. In this scenario, we have recently adjusted the salary scale. The new salary scale reflects a reduction in the salary range compared to the old one (for example, Rs350-Rs345). However, this adjustment does not impact the monthly take-home pay of employees. When comparing the old Take-Home Pay (THP) to the new THP, the salary range is actually increased. This increase is because we have deducted other benefits by a lesser amount compared to before (e.g., food, transport).

Is there any requirement for employee approval when fixing the salary in this manner?

Your valuable comments and suggestions are appreciated.

Thank you.

Hi Dinesh, it's necessary that either the concurrence of employees concerned or a tripartite agreement is obtained if they are covered under a 'unionized' system when considering any changes in emoluments. While there is no need for any such precondition when increasing emoluments, on the contrary, proper agreement is essential when emoluments are reduced. I would suggest that you should at least issue individual letters to all concerned, inviting their comments on your proposals, consider the responses, and act accordingly to avert complications in due course.

Hi Dinesh, what you have to examine is from the point of view of:

1) Total emoluments: Whether they are more or less. If they are less, it is not likely to be accepted. Please ensure adherence to minimum wages as stipulated by the state government.

2) Take-home pay: If the THP is more, it is not likely to invite murmurs from the concerned.

3) Reduction in basic wages/downward revision: This is likely to affect the contribution to EPF. Under the EPF Act, any revision in basic wages with a view to reduce the contribution to EPF is not permissible. Due to the upward revision in basic wages, deduction towards EPF is likely to be more, resulting in lower THP, which the concerned employees might agitate against.

4) Keeping 'basic wages' at par but altering other allowances: Alterations in HRA, conveyance, medical allowance, etc., may be affected. If the policy on this has the concurrence of employees/union, it may not pose problems to implement.