dear All,
I am Newer to HR i want to know that whether basic salary can be reduced at the time of demotion of an employee or not. Means before demotion he was a skilled employee demoting him as a semi skilled employee, at that scenario we can follow as per minimum wages Act provisions to make his basic is equal to other semi-skilled employees or we need to keep same basic salary for him at the time of before demotion.
Please help to clarify the same....
From India, Salai
1I am Newer to HR i want to know that whether basic salary can be reduced at the time of demotion of an employee or not. Means before demotion he was a skilled employee demoting him as a semi skilled employee, at that scenario we can follow as per minimum wages Act provisions to make his basic is equal to other semi-skilled employees or we need to keep same basic salary for him at the time of before demotion.
Please help to clarify the same....
From India, Salai
As demotion is opposite of promotion and as with a promotion employee's basic salary is increased, on a demotion it should naturally decrease. However, in the case of workers, while demoting you should consider some basic things. First you should have a performance appraisal system in your company meant for that category of workers. If available, it should have applicability to that category of employees. It should have been communicated to that category of employees either through a provision in the certified Standing Orders or by means of a separate communication. Secondly, there should be proper record of his performance as accepted by the employee or you should have communicated him of his poor performance. Thirdly, you should have issued memo stating that he has been demoted following the results of performance appraisal. In the absence of these, the act of demotion and reduction shall be deemed as change in the service conditions or simply a punishment for poor performance and it is illegal to demote an employee and put him under a lower salary without giving him an opportunity to be heard.
Regards,
Madhu.T.K
From India, Kannur
Regards,
Madhu.T.K
From India, Kannur
Dear Madhu,
Thanks for giving clarifications . Can you please help me to provide such word was said in any Labour law in India or Not. Please help me to clarify the same also if provided please send us a link to me to verify.
Thanks,
From India, Salai
Thanks for giving clarifications . Can you please help me to provide such word was said in any Labour law in India or Not. Please help me to clarify the same also if provided please send us a link to me to verify.
Thanks,
From India, Salai
There is no specific link for this issue but there are a lot of court verdicts which say that without giving an opportunity to be heard the salary of an employee should not be reduced.As already stated by me, there is nothing illegal in demoting a poor performer and thereby reducing his salary. Often, as a punishment also we use to reduce salary, say reduction of one increment, but that should be done after following certain procedures. But without any reason if you reduce the salary, the same will lead to an industrial dispute and you will have to prove that sufficient opportunity was given to the employee before his salary was subjected to reduction and principles of natural justice were followed. Similarly, you will have to give clarification to the appropriate authorities under the Employees Provident Fund and Employees State Insurance Act under which employer is not expected to reduce salary of an employee unless there is any specific requirement as a part of change in service conditions of the employee. Please refer section 12 of EPF Act and 72 of ESI Act.
Regards,
Madhu.T.K
From India, Kannur
Regards,
Madhu.T.K
From India, Kannur
If the demotion is a part of disciplinary action, certainly his basic pay has to be reduced to the new grade. In such cases , normally, his service may also be considered. It will seem that the employee is awarded with two punishments namely:(1) Demotion to a lower post and (2) Reduction of salary (basic pay) but in fact only one punishment is given i.e: demotion. Salary reduction is a consequence of demotion and not actually a punishment.
From India, Bangalore
From India, Bangalore
Dear Yuva,
There is a Certified Standing Order in all good industrial establishments. Where it isn't, the Model Standing Orders are followed. There is a mention of punishments to be imposed in case of disciplinary proceedings, which are classified under two major categories : Major Penalty, Minor Penalty. Demotion or lower of basic pay comes under the "Major Penalty" category.
As per promotion/demotion policy in most of the industries HR Policies, I have been acquainted with, it has come to my knowledge that Basic Pay of an employee can only be reduced only if there is a mention to this effect in the Penalty Imposing Order passed by the Disciplinary authority. If there is no such mention, then if the employee will continue to draw the Basic pay what he was drawing prior to demotion. Only his designation, grade, status will be reduced to match with the next lower grade.
There are instances, where the employee imposed with penalty of " One annual Increment is withhold, with or without cumulative effect". In such case, the employee continues to hold the present designation & status, but the next annual increment which is due after passing of penalty order is held up till the date as mentioned in the Penalty Order. (Explanation : If it is with cumulative effect, it is held up for life long, if it is without cumulative effect, it is held up for the period of one or two or more years as mentioned in the order and thereafter it is released, thus the employee suffers one increment loss for the number of years mentioned in the order and not thereafter).
AK Jain
From India, Jabalpur
There is a Certified Standing Order in all good industrial establishments. Where it isn't, the Model Standing Orders are followed. There is a mention of punishments to be imposed in case of disciplinary proceedings, which are classified under two major categories : Major Penalty, Minor Penalty. Demotion or lower of basic pay comes under the "Major Penalty" category.
As per promotion/demotion policy in most of the industries HR Policies, I have been acquainted with, it has come to my knowledge that Basic Pay of an employee can only be reduced only if there is a mention to this effect in the Penalty Imposing Order passed by the Disciplinary authority. If there is no such mention, then if the employee will continue to draw the Basic pay what he was drawing prior to demotion. Only his designation, grade, status will be reduced to match with the next lower grade.
There are instances, where the employee imposed with penalty of " One annual Increment is withhold, with or without cumulative effect". In such case, the employee continues to hold the present designation & status, but the next annual increment which is due after passing of penalty order is held up till the date as mentioned in the Penalty Order. (Explanation : If it is with cumulative effect, it is held up for life long, if it is without cumulative effect, it is held up for the period of one or two or more years as mentioned in the order and thereafter it is released, thus the employee suffers one increment loss for the number of years mentioned in the order and not thereafter).
AK Jain
From India, Jabalpur
Dear Yuva,
One more thing to add, purview of imposing punishment is restricted to what has been spelt in the Order passed by Disciplinary Authority and not beyond that either in favour or against the interest of employee concerned or the Company/Estb.
AK Jain
From India, Jabalpur
One more thing to add, purview of imposing punishment is restricted to what has been spelt in the Order passed by Disciplinary Authority and not beyond that either in favour or against the interest of employee concerned or the Company/Estb.
AK Jain
From India, Jabalpur
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