What if you are not paid your salary? What are your legal remedies?

Legal remedies in the event of delayed salary

There are some basic statutes which protects the right to salary of Indian citizens:

1. Payment of Wages Act:

This Act is primarily useful for low-wage blue-collar employees, who earn less than Rs 18,000 per month. Section 4 states that the payment of salary can only be extended to a fixed period, typically one month. It cannot be extended more than that.

2. Minimum Wages Act 

This Act provides for the minimum wage that every employee should receive. The minimum payment depends on type of work the worker is carrying out, and it varies on a state-to-state basis

3. Insolvency and Bankruptcy Code, 2016:

A petition can be filed by employees in the event of unpaid or delayed salary, and this is a means to make a legal claim on the payment. A legal professional is appointed after filing the petition, following which a committee of creditors is formed. If an appropriate conclusion is not met regarding the payment of the unpaid salary, the company is liquidated.

4. Arbitration and Mediation

Arbitration can be an expensive method and can be applied by the employee only if it is one of the clauses of the “Employment Contract”. However, since arbitration is being frequently used as a mechanism for dispute settlement, it is included in most employment contracts. However, the process is quite long-drawn-out.

On the other hand, when a neutral third party is involved to hear both sides of the dispute and help come to decision peacefully, it is known as mediation. However, mediation can only take place if the employer is willing to go in front of a mediator.

5. Filling of Lawsuit

Another means of claiming salary is by filing a lawsuit against the employer. Two types of lawsuits can be filed-

-   Criminal Suit: 

Legally, it is the duty of the employer to pay their employees salary on time. However, if the employer denies this, breach of trust and cheating criminal suits can be filed by the employee under section 420 of Indian Penal Code, 1860.

-   Civil Suit: 

The employee can file a civil suit against his employer under the Civil Procedure Code, 1908 after following the procedure of sending the employer a legal notice alleging for dues of payment by him. If the denies the salary, the employee may proceed legally.

6. Negotiable Instruments Act, 1881

In some cases, the employer has already paid the salary to their employee by means of a cheque, which may bounce. If the employer refuses making a renewed payment of the same amount, the employee can file a suit under the Negotiable Instruments Act, 1881.

7. Labour commissioner:

The labour commissioner will provide the solutions to the delayed salary payment. In case they cannot provide a solution, they will hand the matter over to the court, indicating that a case against the employer should be raised. 

8. Labour court

The employee can file a case under section 33C of the Industrial Disputes Act and present the complaint to a labour court if the labour commissioner is unable to resolve the dispute. However, the employee must contact the court within one year of the salary default, and the labour court must resolve the matter within three months. However, there is an exception that says the time limit can be extended if the presiding officer of the labour court thinks it is expedient in the interest of justice to extend it by three months.

Law for Executives, Managers, and Others:

Typically, non-payment of salary issue does not happen with executives or employees at the managerial level. However, if it does happen a civil suit can be filed against their employer as per the Order 37 of CPC, 1908. 

Employer not paying with fraudulent or dishonest intent:

If the employee is affected because of the employer’s fraudulent or dishonest intent, the following remedies are available:

1. Under the Companies Act, of 2013, section 447, punishment for fraud is laid down. The repercussions are imprisonment at least 6 months, however this may extend up to 10 years.

2. The employer will be fined an amount which will not be less than the amount of fraud. It may extend to up to thrice the amount of fraud. 

3. Filing of criminal case under Indian Penal Code.

Documents to keep at hand while filing a notice

Here are some documents which are useful to have, regardless of which approach you decide to take:

• Proof of unpaid or delayed salary. This can be established with the help of bank statements

• Appointment letter of the concerned company

• Details of salary, perks, benefits, and pay

• Attached copy of the Employment Contract

Frequently Asked Questions

• If I take sick leave, will I not be compensated?

Regardless of your immigration status, you can always file an allegation of wage with the Labour Commissioner to get your unpaid wages back if you were not compensated for being on sick leave.

•  What is the absolute amount of time an employer can hold onto an employee's salary?

If an employer has a total of 1,000 employees, the employer is required to pay those employees before the seventh day following the end of the wage period. Wages must be paid before the 10th day after the end of the wage period if there are more than 1,000 employees. This comes under the Payment of Wages Act. 

•  Can a legal notice be sent if the bonus or EPF are not paid?

A legal notice can be issued for non-payment of a bonus or EPF, which are discretionary duties. Receiving a bonus or EPF amount is a discretionary right and is mutually agreed upon by the employer and employee in the employment agreement.

Why Lawtendo?

Lawtendo is a platform for you to help in hiring legal counsel. We work twenty-four hours to provide the best lawyers who suit the needs of the customers. We work with a wide range of lawyers whose areas of expertise range from divorce, court marriage, and registration, property possession delay, cheque, and money recovery; to will drafting and agreement, employment issues, and builder disputes. In addition to this, we also deal with cases of wrongful dishonour of cheques. Lawtendo is a hassle-free platform that works rigorously to make sure the best lawyer reaches their client in time.