Advice Needed on Salary Reduction in Financial Crisis
Hi Seniors, just need your advice under these circumstances. I work for a services-based engineering company with a turnover of 25 Cr and a headcount of 400 employees. We have been unable to make profits in the last two financial years. Also, there is a major fund flow issue in the organization resulting in delays in salary payments to employees and clearing statutory dues. There are various measures that the company is taking to come out of the situation. One such measure is reducing all department head salaries.
Conditions for Reducing Employee Salaries
Please suggest under what conditions the employees' salaries can be reduced (Is this legal?). Salary represents the market value of the employees, earned over the years through their performance and effort. Does the company have the right to make such adjustments? Can salaries be reduced for only a few employees or across the organization? Is the company liable to reimburse the deducted amount to employees if the situation improves? What formalities need to be followed to carry out this exercise in a way that safeguards the interests of both employees and the employer?
Legal Considerations
What does the law say about such a situation?
Regards, HRbuff.
From India, New Delhi
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3Hi Seniors, just need your advice under these circumstances. I work for a services-based engineering company with a turnover of 25 Cr and a headcount of 400 employees. We have been unable to make profits in the last two financial years. Also, there is a major fund flow issue in the organization resulting in delays in salary payments to employees and clearing statutory dues. There are various measures that the company is taking to come out of the situation. One such measure is reducing all department head salaries.
Conditions for Reducing Employee Salaries
Please suggest under what conditions the employees' salaries can be reduced (Is this legal?). Salary represents the market value of the employees, earned over the years through their performance and effort. Does the company have the right to make such adjustments? Can salaries be reduced for only a few employees or across the organization? Is the company liable to reimburse the deducted amount to employees if the situation improves? What formalities need to be followed to carry out this exercise in a way that safeguards the interests of both employees and the employer?
Legal Considerations
What does the law say about such a situation?
Regards, HRbuff.
From India, New Delhi
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Hi HRbuff,
Salaries once mutually agreed to and mentioned in the Appointment Letter/Letter of Contract cannot be unilaterally reduced by the employer without the employee's consent. The other queries raised by you are therefore irrelevant.
Regards, Anil Raina
Mob: 9810180148
From India, Delhi
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Salaries once mutually agreed to and mentioned in the Appointment Letter/Letter of Contract cannot be unilaterally reduced by the employer without the employee's consent. The other queries raised by you are therefore irrelevant.
Regards, Anil Raina
Mob: 9810180148
From India, Delhi
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