Reduction In Basic Salary By Employer Without Consent In The Name Of Appraisal?

Can an employer reduce basic salary without the consent of the employee in the name of appraisal? If not, what action can we take?

In many jurisdictions, an employer cannot unilaterally reduce an employee's basic salary without their consent, unless specified otherwise in the employment contract or permitted by law. Salary reductions typically require mutual agreement between the employer and the employee. If an employer attempts to reduce an employee's salary without consent, it may be considered a breach of contract or employment law.

If you believe that your employer is unjustly reducing your salary without your agreement, you may consider taking action by discussing the matter directly with your employer, seeking guidance from a labor union or legal counsel, or filing a complaint with the relevant labor authorities. It is important to review your employment contract, company policies, and applicable labor laws to understand your rights and options in such a situation.

Dear Monika,

As per law, employers should never reduce your basic salary in any way or form. If you are considered a workman as classified by the ID Act, you have the option to file a complaint with the Labor Commissioner. If you are not classified as a workman, your sole recourse is to initiate a civil case to restore your previous basic salary. However, engaging in litigation with your employer may have an adverse impact on your relationship.

Thank you.

Hello Monica,

Your employer can't reduce the basic pay. If they do, they will need to face the following problems:
- EPF Office will not allow such a reduction in the amount.
- The Labour Department will not allow for the Bonus and Gratuity amounts.
- It needs to be determined whether the Minimum Wage Act will be considered or not.

Seniors, please shed some light on this.

Thank you,
Regards,
Ashish

Does your company policy have any mentions about such activities?

But whatever the case may be, under the law, it is considered as fraud, and you can take both civil and criminal actions against the same.

Hi,
My company has reduced my basic salary from 40% to 30% along with appraisal letter & kept the gross salary same by increasing the allowances & pf contribution but reduced gratuity & written that based on the performance, you are not eligible for salary increment & bonus.
As per the company " deduction or increment in salary can be made by the company basis performance at any point in time and it at the sole discretion of the management of the company ".
I hadn't accepted it & resigned.
please help me.

If you haven't accepted, then there is no agreement in existence at all as per law. You have no base in this case. The only option left is whether to accept the job or search for another.

You have answered your own question: "Deduction or increment in salary can be made by the company based on performance at any point in time, and it is at the sole discretion of the company's management."

Attribution: https://www.citehr.com/468397-reduct...#ixzz2bs17Wgh8

Hello Monica,

Please share the employer's name so I will take care in the future and advise candidates not to join such an organization.

Thank you,
Regards,
Ashish

Dear Sir,

As the gross salary is the same, you need not worry about a reduction in the basic salary. Please try to improve your performance; automatically, it will be increased.

D. Gurumurthy
HR & IR Consultant
Hyderabad.

Very preventive!! But, it is difficult to decide any of these kinds of cases where we hardly know the facts of each side and conclude what's indeed being practiced... There are some employees who even fail to understand the clauses of the agreement in the way it is meant to be understood.

Have a nice day.

Dear Forum members,

I will not agree with the views of our respected member D. Gurumurthy. First and foremost, as per P.F. law, you cannot reduce the Basic. Furthermore, P.F. is a long-term benefit plan for the employee. I hope the respected member will correct his views without prejudice.

Regards,
Ravi

Please read the acts carefully.

Nowhere in any law does it say that the employer cannot bring down basic or even gross salary. The PF Act states that salary cannot be reduced to adjust it for the recovery of PF from the salary by any means. In plain language, if you are getting PF for the first time, your salary cannot be reduced to the extent of PF (or part of that) so that the employer can recover his contribution from your salary. That is all it says. The only other restriction is that the salary should not go below minimum wages.

In terms of the Industrial Dispute Act, you can raise a dispute on this matter, and it can be taken up for conciliation or industrial action. But the act does not by itself prevent the lowering of salary. Incidentally, the salary is not (to the best of my knowledge) a condition of employment. Conditions of employment can't be changed without giving notice of change and following the rules under the act.

Dear,

If there is a clause in your appointment letter about the reduction of your salary based on performance appraisal, then your salary can be reduced. Otherwise, it should not be. In the private sector where no statutory compliance is followed, anything is possible. If your gross salary and PF deduction remain the same, then there is no issue. It is clear that your performance is not acceptable to the company, and it should serve as an alarm for you to start looking for another job before being let go. It is a fact that if you want the best job, the company also needs the best employee. So, don't worry and don't waste your time on legal action. It is a part of life; move forward and explore more opportunities.

Good luck,
Uday

Dear Sir,

Mohan has worked for 8 years in a company, and his basic salary was Rs. 25,000/- Initially. However, after 6 years, they reduced his basic salary to Rs. 18,000/-, although his gross salary remained the same.

Now, after 8 years, Mohan has resigned and smoothly handed over his responsibilities. The question arises, on which basis salary will he receive his gratuity?

Thank you.