In India, timely salary payments are a basic right of employees. However, there are instances where employers fail to pay employees their due wages, either intentionally or due to unforeseen circumstances. This article outlines the steps and legal remedies available to employees when their employer fails to pay their salary.
Understanding these remedies can help employees safeguard their financial rights and take action if needed.
Understanding the Issue of Unpaid Salary
Unpaid salary refers to the wages an employer owes an employee but has not paid by the agreed-upon date. This issue can arise due to several reasons:
- Financial difficulties faced by the employer.
- Administrative errors in payroll.
- Intentional withholding of salary due to disputes or malpractices.
- Disputes regarding resignation, termination, or other employment matters.
Employers are legally obligated to pay their employees as per the terms outlined in the employment contract. Failure to do so not only harms the employee but also breaches labour laws. The law provides several remedies to ensure employees are paid their due salary, either through informal means or through legal action.
Step-by-Step Process to Recover Unpaid Salary
Review Your Employment Contract
The first step in addressing salary non-payment is to thoroughly review your employment contract. Your contract should detail the salary amount, payment frequency, and terms related to salary deductions. Understanding these terms is crucial, as it helps you assert your rights effectively.
- Payment frequency: The contract will specify whether you are paid monthly, weekly, or according to any other terms.
- Deductions: Check for any clauses about permissible deductions, bonuses, or incentives that might affect the salary amount.
- Termination clauses: If there are any provisions related to salary payment upon resignation or termination, these are important to note in case of disputes.
Maintain Detailed Records
To strengthen your case for unpaid salary, it’s essential to maintain detailed records. Keep track of:
- Communication with your employer: Save copies of emails, letters, and any other correspondence regarding salary delays.
- Pay slips: Retain all pay slips as evidence of what was agreed upon and paid in previous months.
- Working hours: Keep a record of your hours worked, especially if the payment is linked to hourly wages or overtime.
These documents will serve as crucial evidence if the matter escalates to legal action.
Communicate with Your Employer
Before taking legal action, it is always advisable to attempt informal resolution by communicating directly with your employer.
Step 1: Initial Discussion
- Approach your employer or HR department to discuss the issue of unpaid salary.
- Maintain a professional tone during the conversation. Avoid sounding confrontational, and focus on resolving the issue.
- Ask for clarification about why your salary has not been paid and request a timeline for payment.
Step 2: Formal Communication
- If informal communication does not work, escalate the matter by sending a formal letter or email to your employer.
- In the letter, provide specific details like the amount owed, the period of non-payment, and a clear request for immediate payment.
- Set a reasonable deadline (usually 15-30 days) for the employer to respond and pay the salary.
Seek Legal Assistance
If your employer continues to ignore or refuses to pay the outstanding salary, it’s time to seek legal assistance. Consulting with a lawyer who specialises in labour law can help you understand your legal options and guide you on the best course of action.
Legal Notice:
- Your lawyer can help you draft a legal notice demanding the payment of the unpaid salary. This notice should be sent through a registered mail or another verifiable method.
- The notice will typically give the employer 15-30 days to settle the dues.
- If the employer fails to respond within this period, you can proceed with more formal legal action.
Filing a Complaint with Labour Authorities
If sending a legal notice doesn’t result in payment, you can file a complaint with the relevant labour authorities. In India, the labour department or labour courts handle such complaints. To file a complaint:
- Identify the appropriate authority: Depending on your location, you may need to approach the labour department, labour tribunal, or industrial tribunal.
- Submit a formal complaint: The complaint should detail the unpaid salary issue and provide evidence like your employment contract, pay slips, and correspondence with your employer.
- Mediation: Labour authorities may offer mediation services, where a neutral third party tries to resolve the dispute amicably.
- Arbitration: If mediation fails, arbitration may be the next step, where a third-party arbitrator makes a binding decision on the matter.
Legal Action in Court
If all other attempts fail, you can file a lawsuit in civil court. This is a more formal process and requires the assistance of a lawyer.
Consult a Lawyer: The first step in this process is to consult a lawyer and prepare for legal action. Your lawyer will help you gather evidence and file the appropriate legal documents.
Court Proceedings:
- The case will proceed through the court system, where both parties (you and your employer) will present their arguments and evidence.
- Depending on the facts of the case, the court may pass an order directing the employer to pay the unpaid salary, along with interest or penalties.
Possible Outcomes:
- Salary Payment: The court may order the employer to pay the unpaid salary along with interest and penalties for delayed payment.
- Legal Costs: If you win the case, the employer may be ordered to bear your legal costs.
- Damages: In some cases, the court may award additional damages for the inconvenience caused by the unpaid salary.
Filing Under the Insolvency and Bankruptcy Code (IBC)
In cases where the unpaid salary is substantial, employees can file a petition under the Insolvency and Bankruptcy Code (IBC), 2016. Under this law, employees are recognised as financial creditors and can take legal action to recover their unpaid dues.
To initiate a complaint under the IBC:
- Demand Notice: You must first send a demand notice to your employer requesting payment of the salary within a specified period.
- Insolvency Resolution: If the employer fails to comply, you can approach the National Company Law Tribunal (NCLT) to initiate the insolvency resolution process.
This process could eventually lead to the liquidation of the company if the issue is not resolved.
Conclusion
Non-payment of salary is a serious issue that affects an employee’s financial stability. However, Indian labour laws provide a range of legal remedies to recover unpaid wages. It’s important to take a step-by-step approach, starting with informal communication, followed by legal notices and complaints to labour authorities, and if necessary, legal action in civil court or under the Insolvency and Bankruptcy Code (IBC).
By understanding your rights and the legal process, you can take proactive steps to ensure that you are paid the salary you deserve. Always keep records of your employment, maintain professionalism, and seek legal assistance when needed. Employees must assert their rights and hold employers accountable to safeguard their financial well-being.
Source –https://lawbhoomi.com/what-to-do-if-your-employer-doesnt-pay-your-salary-legal-remedies/