Our company pays HRA to staffs . Now they want to reduce the % of HRA. Is it legal under Tamilnadu Shops and Establishment act?
From India, Coimbatore
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1From India, Coimbatore
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State Act for HRA
There are states where a State Act for HRA is in the system. Please check the status in your state and the minimum percentage required to pay. It is usually 5% of Basic + DA.
If there is no State Act, then you can reduce the HRA.
Regards, S K Bandyopadhyay
From India, New Delhi
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There are states where a State Act for HRA is in the system. Please check the status in your state and the minimum percentage required to pay. It is usually 5% of Basic + DA.
If there is no State Act, then you can reduce the HRA.
Regards, S K Bandyopadhyay
From India, New Delhi
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Technically, nothing stops you from changing the composition of salary, especially if the gross salary stays the same. However, it may have an impact on PF and some other components. A change in salary resulting in an impact on take-home pay needs the consent of the employees. This also impacts the income tax of the employees.
Is there a specific reason why this is planned to be changed?
From India, Mumbai
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Is there a specific reason why this is planned to be changed?
From India, Mumbai
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You can't reduce the rate of HRA being paid to employees. The HRA you are paying is a part and parcel of the conditions of service for employees. You cannot change the conditions of service on a whim.
From India, Mumbai
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From India, Mumbai
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Hi, Please go through the contents of the above link: https://www.keka.com/library/minimum-wages/tamilnadu.
HRA and the Tamil Nadu Shops & Establishments Act
As far as I know, there is no strict rule prescribing any percentage of HRA as part of the salary under the TN Shops & Establishments Act. Even under the Minimum Wages notified by the TN Government, there is no such stipulation for HRA. However, there is the Basic and DA part of the minimum wages, with no HRA stipulated.
Impact of Reducing HRA
However, any attempt affecting the present emoluments will be a contentious issue, and HRA is one such matter. An attempt to reduce the percentage thereof will not be acceptable to the employees. Perhaps there should be an agreement or Letter of Appointment where these rates could have been mentioned. If so, it's not possible to effect a unilateral action by the employer without the formal approval of all employees concerned.
From India, Bangalore
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HRA and the Tamil Nadu Shops & Establishments Act
As far as I know, there is no strict rule prescribing any percentage of HRA as part of the salary under the TN Shops & Establishments Act. Even under the Minimum Wages notified by the TN Government, there is no such stipulation for HRA. However, there is the Basic and DA part of the minimum wages, with no HRA stipulated.
Impact of Reducing HRA
However, any attempt affecting the present emoluments will be a contentious issue, and HRA is one such matter. An attempt to reduce the percentage thereof will not be acceptable to the employees. Perhaps there should be an agreement or Letter of Appointment where these rates could have been mentioned. If so, it's not possible to effect a unilateral action by the employer without the formal approval of all employees concerned.
From India, Bangalore
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(Fact Checked)-Your interpretation aligns with the TN Shops & Estts.Act. Reducing HRA unilaterally might not be acceptable to staff without a formal agreement. (1 Acknowledge point)
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Tamilnadu shops and establishment act 1947.pdf
SELF-CERTIFICAT E PROFORMA UNDER THE PUNJAB SHOPS AND COMMERCIAL ESTABLISHMENT ACT, 1958.doc
CiteHR.AI
(Fact Checked)-Your reply is accurate. Changes in salary composition can impact PF and tax. Employee consent is also necessary for changes affecting take-home pay. Keep up the good work! (1 Acknowledge point)