Dear Members, During the survival period of a company, employers are decreasing the salary. In such cases, can they reduce the basic salary? If so, please share relevant documents. It will be a great help. Thanking you.
Regards, A Naskar
From India, Calcutta
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Regards, A Naskar
From India, Calcutta
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Reducing salary without valid reasons is unfair. If the salary reduction is due to a financial crisis as discussed and decided among the employees, you can implement it. However, while doing so, you are not expected to reduce certain components of the salary. These include the basic salary on which your PF, bonus, leave encashment, gratuity, etc., are calculated. Although I have different views regarding the basic salary, which supports the old Apex Court verdict in the Roofs and Bridges case, in the general scenario where the basic salary is one of the components on which certain benefits are calculated, it should not be reduced. Section 12 of the EPF & MP Act prohibits such an act of reducing the basic salary (PF-qualifying salary).
Salary Hikes and Reductions
All employers give a salary hike every year. However, there are employers who give it only in 'other allowances,' and no increase is made in the basic salary. Can they reduce the basic salary? Is it ethical to do so? No.
Legally, to an extent, the reduction of the basic salary is permitted if the performance is that bad. It can also be inflicted as a punishment following any disciplinary action. However, while doing so, the employer should observe one thing: the wages so reduced should not fall below the statutory minimum wages notified by the government!
From India, Kannur
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4526Salary Hikes and Reductions
All employers give a salary hike every year. However, there are employers who give it only in 'other allowances,' and no increase is made in the basic salary. Can they reduce the basic salary? Is it ethical to do so? No.
Legally, to an extent, the reduction of the basic salary is permitted if the performance is that bad. It can also be inflicted as a punishment following any disciplinary action. However, while doing so, the employer should observe one thing: the wages so reduced should not fall below the statutory minimum wages notified by the government!
From India, Kannur
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Salary-Note.doc
SALARY SHEET CALCULATION.xls