When can salary be reduced?
Salary reduction is permissible under § 73 of the Employment Contracts Act (ECA) and § 112 of the General Part of the Law of Obligations Act (LOA). To clarify, this requires a written notice specifying:
Under what circumstances can salary be reduced?
In essence, salary reduction is allowed when an employee fails to follow the employer’s instructions. Specifically, the failure must impact the quality or outcome of the work. However, instructions must:
How quickly must the decision be made?
The employer must act promptly. For instance, the decision should ideally be made immediately after reviewing the work. Then again, the reduction can be applied on the next payday.
What is the extent of salary reduction?
To illustrate, the reduction must be proportional to the quality of the work performed. Furthermore, if the employee corrects their mistakes, the salary cannot be reduced for that portion of the work.
How is the employee notified?
The employer must issue a clear and detailed written notice. Moreover, this notice should explain the reasons for the reduction, its extent, and any other relevant details.
Minimum salary guarantee:
On the whole, salary reduction cannot lower an employee's income below the statutory minimum wage. In addition, dependents must be considered in such decisions.
