What to do if you are thinking that the employer does not pay salary on time or makes unlimited delays. We have written a step by step process that you can follow to make sure that you get paid on time.
What to do if the employer does not pay the salary on time:
Employer to pay interest if salary is delayed: The HC Bombay High Court has held that if the payment due to the employee is delayed, the employer will have to pay reasonable interest.
A division bench of Justices Anoop Mohta and CL Pangarkar said whether the employee’s contract of service provides for payment of interest is immaterial.
The petitioner Yuvraj N Rode was working in the Maharashtra State Electricity Board since 1975.
In 1989, Royde became entitled to arrears of salary from August 1975.
However, the payment was delayed without any reasonable reason. In September 1994 itself, he was asked to deposit his dues.
He got the amount but applied for interest for the period of delay.
It is quite common in India for employers to refuse to pay wages to employees, especially while laying them off. They believe that the employee has no options or resources to pursue a case against the employer. In fact, there are many things an employee can do that can get an employer in real trouble. However, information about the same is not available in the public domain and consulting a lawyer is costly. There are various legal procedures that can be followed by an employee for recovery of salary or remuneration. The first step we suggest is to send a good notice from a trusted lawyer who has a track record of handling such cases. However, before we tell you more about it, let us introduce you to some basic concepts of Indian labor laws that deal with issues of non-payment of wages or salaries.
India has a comprehensive law on payment of wages called the Payment of Wages Act, although it does not apply to all levels of employees. This usually applies to low paid blue collar workers.
With effect from September 11, 2012, according to a notification of the Government of India, the wage ceiling under the Payment of Wages Act, 1936 was raised to an average wage ceiling of Rs 18,000 per month. If you are not covered under this Act, other remedies are still available.
Let us see what the Payment of Wages Act says in this matter.
Section 4 of the Payment of Wages Act states –
Determination of wage period Every person responsible for the payment of wages under section 3 shall fix the period in respect of which such wages shall be payable. No pay period shall exceed one month.
Monthly Pay Distribution Requirements:
If a person is working in an establishment on a salary exceeding one thousand rupees, then the salary to that particular person shall be paid before the expiry of the seventh day. A person having more than one thousand wages shall be paid before the expiry of the tenth day. If the employee is dismissed by the employer, the wages earned by him shall be paid before the end of the second working day from the day of termination of his employment. What steps the employee can take: If your employer is not paying you salary then you can take these steps.
A) Contact the Labor Commissioner:
If an employer does not pay your salary, you can approach the Labor Commissioner. They will help you sort out the matter and if no settlement is reached, the Labor Commissioner will refer the matter to the court for prosecution of your employer.
b) Industrial Disputes Act:
An employee can file a suit under section 33(c) of the Industrial Disputes Act, 1947 for recovery of money due from the employer. When wages are due from the employer, the employee himself or any other person authorized in writing on his behalf can claim recovery of the money. In case of death of the employee, the authorized person or successor applies to the Labor Court for recovery of dues. The court will issue a certificate on being satisfied that the salary is due and the collector will proceed to recover the same. If any question arises as to the amount of money payable or as to the amount on which such benefit should be calculated, it shall be calculated in accordance with the rules made under this Act. You May Also Like: How To Sue Employer For Wrongful Dismissal?
Labor Court Time Line:
Cases shall be decided by such Labor Court within a period not exceeding three months, provided that where the Presiding Officer of the Labor Court considers it necessary or expedient so to do, he may, for reasons to be recorded in writing, extend such period. Can increase further. such period as it may deem fit. Here are some things about what to do if the employer does not pay salary on time
What about officers, managers and those who earn more than Rs 18,000 per month? If you are a manager or executive level employee, you can file a case in a civil court against the company under Order 37 of the Court of Civil Procedure. This is faster than the usual slow process in civil courts, called summary trial. It is quite effective, but should not be adopted as a first resort. There are simpler things available to you as well. Out of 100 cases, perhaps 5-7 cases require such an effort. However, many lawyers jump on it right away. Before opting for this, ask your lawyer to consider other options.
What if the company is not paying due to fraud or dishonest intention? If any employee is affected by the fraudulent activities of the company, then he/she can demand some stringent action.
In such cases the following remedies will be available:
Employer Fraud Punishment:
Section 447 of the Companies Act, 2013 provides for punishment for cheating. The person will be punished with imprisonment of not less than 6 months which may extend to 10 years. The fine shall not be less than the amount involved in the fraud which may extend to three times the amount of the fraud. Further measures can be taken under section 447 of the Act. An employee can also file a criminal case against the company under the Indian Penal Code. First Steps to Recover Unpaid Wages Step 1: We strongly recommend that you send a legal notice to a trusted attorney listing all the actions you plan to take. Before going to a lawyer, make sure that they have a track record of doing such work.
Step 2: If this does not work, it is important to approach the police for a case of fraud where there is sufficient evidence for such fraud. At this stage, it is important to prepare a detailed case file to give to the police and your lawyer should assist you in this. Most of such complaints are not accepted due to poor drafting and lack of prima facie evidence. This is where a good lawyer can make a huge difference.
Step 3: Where criminal case is not an option, or does not yield results, we recommend moving to a summary suit or Labor Court, as the case may be. In our experience of handling a large number of such cases, we can say that not more than 10% of such disputes need go to this stage if the matter was handled well at the first stage. The challenge is that lawyers are more comfortable at this stage and make more money, so they may rush this stage if they don’t have your best interests in mind.
Important things to keep in mind when you are trying to recover your unpaid wages Notice is a very important psychological tool and getting the wages in less time is a psychological game. If the employer understands the consequences quickly, it may settle before you go to court, which also keeps costs down. However, only a few lawyers take up this kind of work as it may not be very profitable for them.
There are many cases in India where the employer does not pay salary for a month or a few months and gets away easily. A good example of this is Kingfisher Airlines. When it ceased its operations, many workers were not paid their dues.
Hope we were able to answer the question what to do if the employer does not pay salary on time.
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