Company wants to reduce the % of HRA. Is it legal under the Tamilnadu Shops and Establishment Act?

Our company pays HRA to staff. Now, they want to reduce the % of HRA. Is it legal under the Tamilnadu Shops and Establishment Act?

There are States where as a State Act HRA is in system. Please check the status in your state and the minimum % is required to pay. It is usually 5% of Basic + DA.

If there is no State Act the you can reduce HRA.

S K Bandyopadhyay ( WB, Howrah )
CEO-USD HR Solutions
+91 98310 81531

technically, nothing stops you from changing composition of salary, specially if the gross salary stays the same.
However, it may have an impact on PF and some there components.
A change in salary resulting in impact on take home pay needs consent of the employees.
This also impacts income tax of the employees

Is there a specific reason why this is planned to be changed?

You can't reduce the rate of HRA is being paid to employees.
The HRA you are paying is a part & parcel of conditions of service for the employees. You can not change the conditions of services by whims.

https://www.keka.com/library/minimum-wages/tamilnadu
Pl.go thru' the contents of the above link.
As far as I know there is strict rule prescribing any %age of HRA as part of salary under TN Shops & Estts.Act. And even under Minimum Wages notified by the TN Govt. there is no such a stipulation but there is Basic & DA part of minimum wages, no HRA stipulated. However any attempt affecting the present emoluments will be contentious issue and HRA one such a matter and an attempt to reduce the %age thereof will not be acceptable by the employees. May be there should be an agreement or Letter of appointment where these rates could have been mentioned. If so it's not possible to effect an unilateral action my employer without the formal approval of all employees concerned.