1. #1
    Unregistered

    Can a company reduces the salary of employees in recession?

    I am the general manager of a well known private company. In the current economy crisis, my company has decided to reduce the Basic Salary by 15 %. Also please let me know that can we legally reduce the Basic Salary?

  2. #2
    yuvi36 Array
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    Re: Can a company reduces the salary of employees in recession?

    Hi friend,
    Hope you are in good health and good state of mind!

    Yes,my friend,the company has every right to reduce your salary but for a valid reason only!
    See,you need to treat your workplace as a family.
    The employees working in the organisation are like your family members.
    And the top level management acts like the elders of a family.

    During recession,the profit of a company dips.
    As a result,the company decreases the salary of its employees in order to uniformly distribute the loss of profit over all the employees.
    Do not worry,once the situation gets back to normal,your salary will be increased again!


    Keep working hard!


  3. #3
    premlata Array
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    Re: Can a company reduces the salary of employees in recession?

    Hi..

    The current economic crisis is a bane for the economy and will definitely show its effect on the salaries received by the employees. In this kind of situtaion if your company plans to reduce the basic salary by 15% then you can do so but before that a notice has to be given to the employees informing the above mentioned decrease in the basic salary. You can also state that the reason for the same. Employees who have been working with you since a long time will definitely understand the situation of the company and the crisis situation.


    At the same time it is also good idea to motivate the employees to work better so that the crisis situation can be overcome and the salaries can brought back to normal.


    Best wishes to you.

  4. #4
    Madhu M Array
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    Re: Can a company reduces the salary of employees in recession?

    Hi..Ya of course you can reduce the basic salary of your employees anytime citing a proper explanation for the same and this is certainly legal...You should inform your employees of the same beforehand so that they dont get surprised when the new salary is implemented..

    During recession most of the companies either start laying-off their employees or reduce their salaries ..So this is certainly legal and you dont have to worry about it..Even if anyone complains against you , you have proper explanation to offer and thus are in the right..

    As you dont have adequate funds and resources due to recession you cant do much about it..But as soon as your financial conditin improves you should give them back their due..

    Good luck..THanks

  5. #5
    Angel Shweta Array
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    Re: Can a company reduces the salary of employees in recession?

    Hello friend,

    A Company,usually a Private Company possess all rights to amend or frame any policy working to its side. And it can do it at any time and your company is tagging that with the term" Economy Crisis".
    The salary too can be influenced by the change called in by the company.
    It is certain that the Establishment is providing you and the other employees lame excuses for reducing the salary by offering this pretention.
    However,leaving aside this,to your answer, yes Companies have right to make such declaration.

  6. #6
    Ashok Array
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    Re: Can a company reduces the salary of employees in recession?

    Quote Originally Posted by Unregistered View Post
    I am the general manager of a well known private company. In the current economy crisis, my company has decided to reduce the Basic Salary by 15 %. Also please let me know that can we legally reduce the Basic Salary?
    [FONT=Times New Roman][/FONT]Dear Aspirant,
    [FONT=Times New Roman][/FONT]Reducing the salary of employees due to any reason such as recession is possible only in private companies.
    [FONT=Times New Roman][/FONT]It is so because the private companies are under the control of a person (the head of the company) and the salary of the employees depend on the instantaneous situation of the company.
    [FONT=Times New Roman][/FONT]If the company is in profit, the salary may increase, but if the company is making losses or at worst if it is heading towards bankruptcy, then definitely it will reduce the salary any it may even recess a few employees as the private companies operate independently.
    [FONT=Times New Roman][/FONT]However, the government services are held by rules and regulations and the salary is decided through rules and cannot be reduced in recession and neither it will increase in profit situation.
    [FONT=Times New Roman][/FONT]Thanks.
    [FONT=Times New Roman][/FONT]Ashok
    [FONT=Times New Roman][/FONT]

  7. #7
    abbebo Array
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    Re: Can a company reduces the salary of employees in recession?

    Hi..I think during recession the company loses its financial resources and thus suffers a financial setback ..So of course if the company itself doesnt have adequate amount of finances then how can it pay its employees handsomely..So its clear that the company which is in such a situation will either reduce the no. of employees or reduce their salaries.

    And there is certainly no law which forbids you from decreasing the salary of its employees..So if you are suffering from recession you can certainly do so and reduce the basic salary of vyour employees and when your company returns to its normal condition then you can raise their salaries again..

    Hope you understood..Good luck

  8. #8
    Expert Array
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    Re: Can a company reduces the salary of employees in recession?

    Hello Friend !!

    Effects of Recession :

    Most of the Projects will be kept on Hold for months and years.

    Many of the current employees are kept on Bench i.e idle.

    No hiring of freshers anymore.

    The company's economy will come down.

    As a result of all these, the Salaries of the employees will get reduced.

    And one more thing, if you are doing the same work though it is in the recession period, then your salary cannot decrease.

    And you can demand for this, if company reduces your salary even though you are working as usual on same project.

    But if your work is reduced and if you are kept on bench, then you can expect a little salary instead of complete payment.

    Good Luck !!

  9. #9
    heemanshubhalla Array
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    Re: Can a company reduces the salary of employees in recession?

    Yes, my friend any company has full right to reduce the income of an employee but it should have a valid reason . As an employee is signed with a company for a particular period of time and when every year income form is signed you can see if there is a clause that state this condition or not otherwise you can also take legal action.

  10. #10
    san8 Array
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    Re: Can a company reduces the salary of employees in recession?

    Quote Originally Posted by Unregistered View Post
    I am the general manager of a well known private company. In the current economy crisis, my company has decided to reduce the Basic Salary by 15 %. Also please let me know that can we legally reduce the Basic Salary?
    Profit maximization should be the motive of every company and i'am sure no company will ever want to run in losses so it is a natural practise for a company to reduce the amount of salary paid to the employees. When the company is in recession period with factual records the move to reduce salary can be done and without such records reducing the salary will led to serious issues. Therefore, provided a genuine reason reducing the basic salary is legal, the company just have to make it clear to the employees inorder to avoid confusions.

  11. #11
    Boss Array
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    Re: Can a company reduces the salary of employees in recession?

    The current economic condition may be a scourge for the economy and can positively show its impact on the salaries received by the staff. during this reasonably scenario if your company plans to cut back the fundamental remuneration by 15 August 1945 then you'll do thus however before that a notice needs to tend to the staff informing the higher than mentioned decrease within the basic remuneration. you'll additionally state that the explanation for constant. workers World Health Organization are operating with you since an extended time will certainly perceive {the scenario|things|matters|true|the case} of the corporate and also the crisis situation.
    Profit maximization ought to be the motive of each company and i'am positive no company can ever wish to run in losses thus it's a natural apply for an organization to cut back the quantity of remuneration paid to the staff. once the corporate is in recession amount with factual records the move to cut back remuneration is done and while not such records reducing the remuneration can diode to serious problems. Therefore, provided a real reason reducing the fundamental remuneration is legal, the corporate simply need to build it clear to the staff so as to avoid confusions.
    Yes,my friend,the company has each right to cut back your remuneration except for a legitimate reason only!
    See,you need to treat your geographical point as a family.
    the staff operating within the organization ar like your relations.
    and also the prime level management acts just like the elders of a family.

    throughout recession,the profit of an organization dips.
    As a result,the company decreases the remuneration of its workers so as to uniformly distribute the loss of profit over all the staff.
    don't worry,once things gets back to traditional,your remuneration are going to be enlarged again!

  12. #12
    ozvert Array
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    Re: Can a company reduces the salary of employees in recession?

    Hello friend...............
    During the time of joining in job you will have offered a bond to sign for certain no.of years.................
    So in this time period you will be paid as mentioned in your bond.
    But after this time expires based on your work efficieny you will be offered another bond but it is in rare cases.................
    During the time of precision, as the company didn't you a bond with them. they can reduce your salary by showing you certain causes............
    But at some cases people might lost the job,better to be happy that you are not in that position and
    try to help the company get out of this situation with your work efficiency...................

    All The Best/........................

  13. #13
    saikrishna polavarapu Array
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    Re: Can a company reduces the salary of employees in recession?

    Hello friend,
    Yes based on the company you may have decrease in your salary and some companies fire their employees out of the company.I want to say that if you are a skilled and good employee the company don't want to loose you .so,I suggest you to concentrate on you current job efficiently and prove yourself so that at the time of recession you would be in a good position.Hope for your good future ALL THE BEST

  14. #14
    karanchowdary Array
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    Re: Can a company reduces the salary of employees in recession?

    Hai friend...............

    Yes, every company can reduce the salary of employees during recession,
    If there is no bond between the employee and company regarding tenure of job and salary..........
    If you having good will and efficient worker in the company then those are not suffer from these deductions..........


    All the best

  15. #15
    Kangaroo Array
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    Re: Can a company reduces the salary of employees in recession?

    The current economic crisis is a bane for the economy and will definitely show its effect on the salaries received by the employees. In this kind of situtaion if your company plans to reduce the basic salary by 15% then you can do so but before that a notice has to be given to the employees informing the above mentioned decrease in the basic salary. You can also state that the reason for the same. Employees who have been working with you since a long time will definitely understand the situation of the company and the crisis situation.




    At the same time it is also good idea to motivate the employees to work better so that the crisis situation can be overcome and the salaries can brought back to normal.

  16. #16
    priyadharshini Array
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    Re: Can a company reduces the salary of employees in recession?

    Hi, In order to overcome the recession period, certain critical situations may occur..This is better decision than firing an employee out..so, keep working hard so that even this condition will not prevail..All the best:-).

  17. #17
    sampath Array
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    Re: Can a company reduces the salary of employees in recession?

    hello sir,
    as the company has the mere reason to cut or increase salary with a proper reason.if the company is running in profits then you get increments in form of bonus,if it is running in recession obviously reduction of salary is compulsory as a part of support to the company.you may also need to work extra hours to show you loyalty towards company.

    Thank u

  18. #18
    Devi.career Array
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    Re: Can a company reduces the salary of employees in recession?

    Hello Friend,
    yes a company has the right to do that in the time of need.and recession is a special case and in this case inorder to save the business they need to thnk the ways to save cost.and use it efficiently.
    so these are the few steps they usually take during recession
    1-Retrenchment of employees
    2-deducting the salary of the employee that the original one.
    3-reducing the bonus amount
    4- stop taking new resources
    5-delaying the joining of already hired employees
    and this salary cut and bonus cut impacts the higher authorities more than the lower grade employee as they get more comparative to the lower grade ones.
    but once the company revives from this recession period and get stable the reward heavily that time you may get promoted if you have continued to serve the company in recession period.
    Thank You.

  19. #19
    Param Array
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    Re: Can a company reduces the salary of employees in recession?

    Dear Friend!

    The company have right to reduce employees salary but for a valid reason only. You need to treat your workplace as a family member. The employees working in the organisation are like your family members. and top lever management act like the elders of a family.

    During recession, the profit of a company dips.
    As a result, the company decreases the salary of its employees in order to uniformly distribute the loss of profit over all the employees. Don't worry, once the situation gets back to normal, your salary will be increased again!!

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