Reduction in salary during insolvency

Querist : Anonymous (Querist) 23 July 2020 This query is : Resolved
Dear Sir(s),

The resolution professional has issued letter indicating reduction in salary of the employees.

My understanding is that since reduction in salary have adverse impact on calculation of gratuity and other benefits as such reduction may only be done after paying the previous accrued benefit and then starting afresh with the new terms of employment.

Kindly advise so that we may counter the resolution professional proposal.

Any judgment to support the contentions will be appreciated

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Quick Summary

This discussion addresses concerns about a resolution professional proposing salary reductions for employees during insolvency proceedings. The core issue is whether such reductions are legal, particularly concerning their impact on accrued benefits like gratuity. The advice suggests that salary reductions might be illegal, especially if they don't account for previously earned benefits, and recommends consulting an advocate to challenge the proposal at the NCLT.

Isaac Gabriel (Expert) 22 August 2020
Whether the employer is Govt,Quasi,or Private ? If so it is illegal.

Adv chirag Vajani (Expert) 19 October 2020
Kindly consult advocate and approach NCLT for reliefs sought

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