We often come across hearing that employees have been denied salary by their employers especially while firing them. Liquidation or non-payment of salary to employers is quite common in the country. Poor employers often stay in a misconception that they can do nothing about it whereas there are various laws that can shelter the rights of the employees and also to allege their unpaid salary along with interest.
For taking things smoothly and not directly jumping to conclusions, one must obviously send a notice or letter to their employer stating why they are aggrieved and the proper reasons/ justifications for no salary or delayed salary. If no bounteous outcome arises, there’s no other way than to proceed legally. However, before going deeper into that, let us know about certain basic concepts on statutes that can help such victimized employees.
LEGAL REMEDIES OR RECOURSE FOR DELAYED SALARY
- Payment of Wages Act, 1936 [Act 4 of 1936]- Although it is not felicitous for each and every employee, rather focuses on low-wage blue-collar workers who earn less than INR 18,000 a month.
- Section 4 of the Act specifies that “Fixation of wage period every person responsible for the payment of wages under Section 3 shall fix periods in respect of which such wages shall be payable. No wage period shall exceed one month.”
- Insolvency and Bankruptcy Code, 2016- An employee or a group of employees can file a petition alleging for the payment of the unpaid or the delayed salary. After filling a petition, a legal professional is appointed, and a committee of creditors is made. If a befitting conclusion is not arrived at for the payment of the unpaid salary, then the company is liquidated.
- For the purpose of filing a complaint under IBC, the employee(s) have to send a demand notice to their employer asking for the payment of their dues. If the same isn’t reverted back by the employer in the stipulated period of time, then the insolvency resolution process will be initiated against the company, usually by filing an application with the arbitrating authority I.e., National Company Law Tribunal (NCLT).
- Arbitration and Mediation- This can be an expensive method to fight for their rights by an employee and can be applied by him only if it is one of the clauses of the “Employment Contract”. This method is also long-drawn-out, whereas in “mediation” a neutral third party comes to the rescue of both by hearing both the sides’ disputes and helping in concluding the decision peacefully. However, mediation can only be an option when the employer is pleased to suffer the decision of the Mediator.
- Filling of Lawsuit- Last and the ultimate way to allege salary is to file a lawsuit against the employer. Again, the employee can file two types of lawsuit-
- Criminal Suit: It is an implied duty of the employer to pay the wages of his employees on time. However, if the employer contradicts, turns down or repudiates from the same, a criminal suit of breach of trust and cheating can be filed by the employee u/s 420 of Indian Penal Code, 1860.
- Civil Suit: The employee can obviously file a civil suit against his employer under the Civil Procefure Code, 1908 after following the usual procedure of sending the employer a legal notice alleging for dues of payment by him. If the employer contradicts or denies to do the same, the employee may proceed legally.
“As per order 37 of the Civil Procedure Code, you may file a summary suit before the District Court. After filing a suit, summon is issued, and the employer has a period of 10 days to appear before the court. In case the employer fails to appear, then the decision is made in favour of the employee. The employee also must have some proof of employment and must mandatorily file a suit within three years from the date when the salary was due to him.”
- Negotiable Instruments Act, 1881- At times when the employer has already paid the salary of his employee through a cheque, which unfortunately has been bounced, and, the employer refuses or opposes making a fresh payment of the same amount, then the employee can file a suit under the Negotiable Instruments Act, 1881.
DOCUMENTS TO KEEP AT HAND WHILE FILING A NOTICE
- Proof of unpaid or delayed salary (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
FAQs RELATED TO UNPAID SALARY
For executives and managers, getting more than INR 18,000 a month, a case might be filed at the civil court under Order 37 of the Code of Civil Procedure.
If any employee is undergoing their company’s activities that deemed to be dishonest or fraudulent, they can always take help from Section 447 of Companies Act, 2013, which specifies punishment for fraud, which lays down imprisonment for not less than six months which might extend to ten years; or the employer can always file a criminal suit against the company under IPC.
If you were not paid for being on leave because you were sick, you can always file an allege of wage with the Labour Commissioner to turn back your unpaid wages notwithstanding your immigration status.
The “Payment of Wages Act” says if there are a total of 1000 employees in an “establishment”, the employer must pay the employees before the termination of the 7th day after the last day of the wage period. Where there are more than 1000 employees, wages must be paid before the termination of the 10th day after the last day of the wage period.
Receiving of bonus of EPF amount is a discretionary right, hence a legal notice can be sent for nonpayment of bonus or EPF which are discretionary duties or are mutually agreed upon by the employer and the employee in the employment agreement.
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