What to do if employer fails to pay your salary?
By Lawfarm Team November 11, 2021
By Mihika Awate
After struggling and studying for many years prior to starting your career, everyone wishes that they get a well-paying job that provides for financial stability in one’s life. Unfortunately, that is not always the case. Employers may not pay you on time, and especially since the COVID-19 pandemic, these occurrences have increased. What do you do in such times?
There are a few steps that you can take to demand your rightful pending salary from your employer.
1) Sending a Legal Notice demanding payment of the due salary
It is always recommended that you first send a legal notice to your employer demanding that they pay you your pending salary before resorting to other statutory remedies. You can avoid the time and cost spent in litigation by sending a legal notice first. If even after sending a legal notice your employer refuses to pay your pending salary, then you may resort to other statutory remedies as given below.
2) Statutory Remedies:
- Under the Payment of Wages Act, 1936
Only employees whose salary is not more than ₹24,000/- (Twenty Four Thousand Only) per month can avail of the remedies available under this act. Those whose salary exceeds the given amount have other remedies available under other acts, which will be discussed below.
The act specifically states that the employer shall be responsible for the payment of salary to the employees. The wage period can be fixed by the employer, but it cannot exceed more than one month. As for by when should the employer pay, where there are less than 1000 employees, the payment should be made before the expiry of the 7th day after the last day of the wage period in respect of which wages are payable, and where there are more than 1000 employees, before the expiry of the 10th day.
Claims for delay in payment of salary have to be filed under Section 15 of the Act in front of the authority appointed by the State Government. The State Government can appoint any commissioner or officer with experience as a Judge of a Civil Court or Judicial Magistrate. The appropriate authority will have to be found in respect of each state, like for example, Maharashtra has stated that these claims would be dealt with by the Presiding Officer of a Labour Court. The application for claiming delayed payment of salary must be made within twelve months from the date on which the payment should have been made, however, the delay can be condoned if the authority is satisfied that the person had a sufficient cause for not making application of the claim within the said period. The Act mandates that the authority should try to dispose of these applications within three months.
Where there are multiple employees from the same establishment who have not been paid, a single application can be filed for claiming the unpaid salary of all.
Under the Industrial Disputes Act,1947
The act is mainly applicable to workmen and does not include those employed mainly in managerial or administrative capacity, or those employed in a supervisory capacity and earn more than Ten Thousand rupees per month.
Any workman whose employer has not paid any money due to them can make an application under SEC. 33C of the Act to the appropriate Government for recovery of the same. The appropriate Government if satisfied will issue a certificate for the amount to the Collector who then proceeds to recover the same. It is not necessary that the workman themselves must make the application, even any other person authorised by them in writing on this behalf, or in case of death, their assignee or heirs may make the application.
- Under the Code of Civil Procedure, 1908
There is no salary limit for applying to the remedies available under this Act. Under Order 37 of the Act, anyone can institute a summary suit to recover money due to the employer. The suit is to be instituted by the presentation of a plaint in the appropriate civil court. This process can be time-consuming as is the case with any litigation matters.
- Under the Companies Act,2013 and Indian Penal Code, 1860
If the case is such that the non-payment of salary has happened because of the fraudulent activities of the company, then the employer can file a complaint under SEC. 447 of the Companies Act,2013 which punishes any person guilty of fraud that involves public interest.
A criminal case can also be filed against the company under the Indian Penal Code,1860 under SEC. 415-420 for Cheating, or any other appropriate remedy available under the said Act.
3) Alternative Dispute Resolution mechanisms
Apart from resorting to the usual Court system established for ages, employees can make use of alternative dispute resolution mechanisms such as mediation, conciliation and the current cult-favourite, Arbitration. Most contracts nowadays contain an arbitration clause, and where there are arbitration clauses in the contract which state that all disputes arising out of the contract will be resolved by arbitration, the employee can only approach the arbitral tribunal for the same. So do read your contract in detail to find out where an arbitration clause has been incorporated in your contract or not.
Therefore the Indian legal system has provided employees with multiple remedies that they can make use of to recover unpaid salaries. Now you know what you can do if you ever find yourself in such a situation, and if you already have found yourself in such a situation, you must wisely choose which remedy to resort to.
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