Legal Remedies for Non-Payment of Salary by Employer in India

Encountering non-payment of salary by employer in private companies is a challenging situation that requires a systematic approach for resolution. Employees facing this issue may explore various legal remedies to ensure fair compensation, and this issue can arise during employment or in the form of pending salary post-relieving from the company, including dues related to serving the notice period.

To navigate this issue effectively, it's crucial to be well-versed in the terms and conditions of salary payments. When joining an organisation, it is essential to have a comprehensive employment contract that delineates details such as salary breakdown, incentives, bonuses, and monthly payment terms. The contract will also specify the notice period and the timeline for disbursing the salary post notice period completion.

As a first step, initiating communication with the employer in writing is a crucial step when facing non-payment. Keeping meticulous records of all communication on emails letters, and communication messages. These records can be used as evidence and are important for building a case if legal action becomes necessary.

What are the acts through which an employee can claim remedy for non-payment of salary?

1. The Payment of Wages Act, 1936: It holds significance in regulating timely wage payments. Applicable to workers with wages not exceeding Rs 24,000 per month, the act mandates full and final settlement of wages within two working days of removal, dismissal, retrenchment, or resignation. However, the inclusion of "resignation" in this timeline may vary across states. For legal recourse, employees can file a complaint under the Payment of Wages Act, 1936, with the labor department, providing necessary documents. The department will investigate and issue orders for pending salary payments.
   

2. The Industrial Disputes Act, 1947: It contains essential provisions related to wages, offering mechanisms for fair compensation and dispute resolution. Section 33C deals specifically with the recovery of money due from an employer. Workmen can make an application to the appropriate government for the recovery of due money, with a one-year limitation from the date it became due. Filing a case under the Industrial Disputes Act, 1947, with the labor court or industrial tribunal is a viable option for addressing issues like non-payment of salary. Here's a brief overview of the process:

   1. Preparation: Gather all relevant documents and evidence related to the non-payment of salary, such as employment contracts, pay slips, and any communication with the employer.

   2. Lodging a Complaint: Identify the appropriate labor court or industrial tribunal based on your company's location. You will need to file a complaint or application outlining the details of your case.

   3. Hearing: Actively participate in hearings and present your evidence to support your claim. The court will review the case and may issue a decision or order.

   4. Follow-up: Depending on the court's decision, further actions may be required to enforce the order or reach a resolution.
      

Filing a Complaint in the Labour Court – Step-by-Step

Before approaching the Labour Court, you must first go through the Labour Department of the respective state. Here's how the process typically works:

1. File a Complaint with the Labour Department: You need to first submit a complaint to the Labour Commissioner’s Office (or the relevant Labour Officer) in the state where the company or employer is registered. This helps determine:

• Whether your grievance falls under industrial dispute or individual dispute

• The jurisdiction of the appropriate Labour Court or Industrial Tribunal

Documents usually required to be submitted:

• Employment contract or appointment letter

• Salary slips or proof of wage payment

• Any termination/dismissal letters or notice

• Written grievance (nature of complaint, such as non-payment of wages, unfair dismissal, etc.)

2. Conciliation Process: Once your complaint is filed, the Labour Department may initiate a conciliation process between you and your employer. A Conciliation Officer may be appointed to mediate and help both parties reach an amicable resolution. Scenario 1: If a resolution is reached, the dispute is closed. Scenario 2: If no settlement is reached, the Conciliation Officer will issue a "Failure of Conciliation" report, which allows you to escalate the matter to the Labour Court.

3. Filing a Case in the Labour Court

With the failure report in hand, you can now File your complaint/petition with the appropriate Labour Court or Industrial Tribunal. Attach the conciliation failure report and supporting documents. Attend hearings and follow the legal process for resolution.

As part of the relief, you can also claim interest for delay in payment of salary.

Typically companies tend to pay during the conciliation process stage, as they would like to avoid the scenario of legal proceedings.

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Also Read: Non-Payment of TDS by Employer