Can Employers Legally Withdraw Employee Benefits? Seeking Insights on Labour Laws and Court Rulings

Dear Sir, With reference to the captioned subject, I require to know whether an employer can withdraw benefits of the employees. Kindly provide relevant provisions in the statute (Labour laws and new Labour Codes) and also provide any judgments of the Supreme Court on the issue.

Regards,
Mayur P. Kulkarni

Dear Mayur P Kulkarni, While raising the query, I wish you had mentioned what benefits your company provides to the employees and which ones you wish to withdraw or retain.

Occasionally, business organizations pass through rough weather. For the sustenance of the organization and to reduce expenses, the organizations withdraw the benefits provided earlier. There is nothing wrong with doing so; however, please take employees into confidence and explain to them clearly why the withdrawal became necessary. If the conditions under which the decision is taken are not communicated clearly, there could be backlash, and the decision could do more harm than good.

Please note that in many companies, statutory obligations like PF, ESI, Gratuity, etc., are called "benefits." However, please note the difference between "obligation" and "benefits." The latter is over and above the former, and providing these is a prerogative of the company's administration. Statutory obligations have to be fulfilled, however financially bad the condition of the company may be.

Thanks,

Dinesh Divekar

Existing benefits will be part of the service conditions of employees. The employer can withdraw such benefits ONLY by giving notice as per Section 9A of the Industrial Disputes Act.