Altering Basic pay Scale to implement new VDA Scheme

Once an employer enters into a service contract with the employee, it is binding on the parties and its terms can be altered mutually. In the case of  workmen ( coming under the protection of Industrial Disputes Act ), alteration of wage structure can only be  as per section 9A of the Act

Even for non-workmen cadre, the basic cannot be altered (reduced) to factor in VDA. However, the future increase can be mutually agreed by way of allowances.

vasudevan

You can alter basic/DA etc., provided the employee will not loose either in hsi direct or indirect  benefits. For example if yoru are reducing basic he will loose in pf,gratuity also. This should not happen. But after merger of basic and da if the employee is getting same pf, esi you can do.