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Company not paying You salary? Know How to Recover

Home » Labour Law Guide » Company not paying You salary? Know How to Recover

If your employer is not paying your salary, follow this article, this will guide to recover your unpaid salary.

What Documents you need?

  • A copy of your employment contract
  • Bank statement to prove non-payment of salary
  • Joining letter
  • Any additional details about benefits being offered

Payment of Wages Act, the fixation of the wage period. It states that as per the wages, the period of salary distribution is fixed. The wage period cannot exceed one month.

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Requirements for monthly salary distribution:

  1. A person having a wage not more than one thousand shall be paid before the expiry of the 7th day.
  2. A person having a wage of more than INR 1,000/ shall be paid before the expiry of the 10th day.
  3. In case of the termination done by the employer, then the amount shall be paid to the employee before the expiry of the second working day from the day his/her employment is terminated.

What steps can be taken by employee to recover salary?

Legal notice for non payment of salary
Most important step is to send a legal notice before filling a criminal case

A. Send a Legal Notice

Draft a Notice in a plain paper or green dummy paper address to the HR of the Company, mention your grievances, and also Mention the consequences for non-payment of salary . Many times, the companies clear the due immediately to avoid the litigation process.

B. Approach Labour Commission:

If an employer doesn’t pay up your salary, you can approach the labour commissioner. They will help you to reconcile this matter and if no solution is provided by the labour commissioner then this will hand over this matter to the court whereby a case against your employer may be pursued.

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Time Frame of Labour Commission:

Cases have to be decided by such labour court within period not exceeding Three Months provided that where the presiding officer of a labour court considers it necessary or expedient so to do, he may for reasons to be recorded in writing, extend such period by such further period as may he think fit.

Non-Payment of Salary who earn above INR 18,000 a month?

Generally, non-payment of salary does not happen with the employees who are not the below rank of executives or managerial level or those salary more than 18,000 per month . But, in case, if it happens, then they can file a civil suit against the employer as per the Order 37 of CPC, 1908. This is the faster procedure than the usual procedure in civil courts, called Summary Suits.

C. File a Case under Industrial Dispute Act:

  • An employee can file a suit under Section 33(c) of Industrial Dispute Act, 1947 recovery of money due from an employer.
  • When the salary is due from the employer, the employee himself or any other person authorized by him in writing on his behalf can claim recover money.
  • In case of the death of an employee, either the authorized person or his heirs can claim the recovery of due money by writing to the labor court.
  • The court will further issue a certificate on being satisfied that the salary is due and the collector shall proceed to recover the same.
  • If the question arises for the amount of money due or amount at which the benefit shall be awarded then it shall be dealt with as per the provisions of this Act
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D. Arbitration (Optional):

Arbitration is the another way to recover salary from employer. Generally Arbitration Clause is present in the Service agreement/Contract. So, in the case of the Arbitration Clause, the employee can proceed further to settle the dispute through Arbitration and Conciliation Act 1996. It is an outside-the-court settlement and saves time.

Fraudulent or dishonest intent of Company for the Non-Payment?

Employer Punishment for Cheating & Fraud:

The following remedies would be available in such cases:

  • Section 447 of Companies Act, 2013 lays down punishment for fraud.
  • Person shall be liable for imprisonment not less than 6 months which may extend to 10 years.
  • Fine not less than amount involved in fraud which may extend upto three times of the fraud amount.
  • Subsequent measures can be taken under Section 447 of the Act.
  • An employee can also file a criminal case against the company under Indian Penal Code.

Step By Step methods To recover unpaid salary

Step 1: Legal notice: It is primary and essential too. You can write a Legal Notice also , if you are unable to write up a Legal Notice You can consult with any Lawyer regarding the same. Please Note: Mention a time frame in the Legal Notice is must by which company has to resolve this non payment issue. The notice is a very important and act as a psychological tool, and getting the salary in less time is also a psychological game. If the employer understands the consequences quickly, he will settle before you need to go to court, which keeps costs low as well.

Step 2: Police Complaint: If the Step No.1 does not work or if company not giving any response to the legal Notice mentioned in Step-1, approach police station of competent jurisdiction to lodge a cheating & fraud case, where there is enough evidence for such fraud. At this stage, it is important to prepare a detailed case file to give to police, and your lawyer should assist you in this. A majority of such complaints are not accepted as FIR due to weak drafting and lack of prima facie evidence. This is where a good lawyer can make a lot of difference.

Step 3: Litigation: Last Step is to file a criminal case. But remember where filling a criminal case is not an option or doesn’t provide a result then one should proceed for a summary suit or labor court. Usually a smaller number of cases proceed to this last stage, else many of the disputes related to the non-payment of salary are settled at the initial stage only.

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