WHAT IF THE EMPLOYER DOES NOT PAY THE SALARY DUES OF AN EMPLOYEE?

ABSTRACT

Salary is an intervallic compensation from an employer to an employee, which is paid to the employee by the employer as per the employment contract. Salary is a fixed amount of money or reimbursement remunerated to an employee by an employer in response to work performed by the employee. Companies going through pecuniary or debt crisis every so often resort to discriminating practices and one of which is non-payment of the wages payable or deferring the wages to their staff and predominantly the one who is getting laid off. The employers of such establishments take advantage of the nonexistence of awareness of their employees concerning the rights existing for them. The denial of rights arises owing to the certainty that the employees don’t have other prospects or funds to proceed against the establishment. The employees have every right to get their share of salary irrespective of the financial conditions of the company. It is illegal, unfair, and unethical to deprive the employees of their salary. The situation of ‘non-payment of the salary of employees or delayed payment’ refers to ‘not getting paid for the work done’.

The unforeseen circumstances of the pandemic have led to unfortunate adverse effects on our economy which has had some terrible consequences for the employees. The Acts which govern the salary payment by employers are Contract Labour Act 1970, Shops and Establishment Act 2016, Payment of Wages Act 1936 and Industrial Dispute Act 1947. To safeguard employee rights, multiple legal remedies exist to claim the unpaid salary as well as the interest on the same. This article deliberates the ways in which the unpaid salary can be recovered from an employer, by the employee and the steps to be taken in such recovery.


KEY WORDS: Salary, Employer, Employee


INTRODUCTION

Salary originates from the Latin word salarium, which also means "salary" and has the root sal, or "salt." In ancient Rome, it was salt and not money that was used for commerce or trading. The soldiers who worked for the Roman empire got a handful of salt in return as their payment each day. This is where the common proverb of "being worth one's salt" arises from. In ancient Rome, it precisely meant the amount of money allotted to a Roman soldier to buy salt, which was an expensive but vital commodity. Soldiers who did a good job were worth the salt they earned. Nowadays, salt is a cheap purchase at the grocery store, and your salary is unquestionably to be paid in your country's currency. The first salary could have been paid sometime between 10,000 BCE and 6000 BCE, in the period of the Neolithic Revolution as before this time, we did not yet have a proper bartering system prepared or a system for organised employees.[1] It is pretty ordinary in India for the employers to refuse wages to the employees, generally in the period of sacking of the employee. The employer is of the belief that the employee has no possible course of action or the funds to institute a case against their employer. In fact, there are numerous resources an employee can resort to that can land an employer in real distress. However, the knowledge regarding the same is not existing in the public domain and lawyer’s assistance is expensive.

There are numerous legal processes that can be resorted to by an employee to recover their salary or wages. The primary step is sending a decent notice from a trustworthy lawyer who has a track record of undertaking such matters. However, before we tell you more about that, let us get you introduced to some basic concepts in Indian labour laws that deal with the issues of non-payment of wages or salary. India has a complete law on payment of salary called Payment of Wages Act 1936, however it does not apply to all employees. It generally applies to low-wage blue-collar employees[2].

First and foremost, the employee must send an in-depth legal notice to the employer/company stating all the reasons why the employee is aggrieved. The law splits the employees into two categories of those earning below Rs 18,000 and those who earn more.


PROVISIONS OF LAW IN QUESTION

CONTRACT LABOR (REGULATION AND ABOLITION) ACT

As per Section 21 of the Act, the contractor is accountable for payment of the wages to each employee hired by him as contract labor and such remunerations are to be compensated before the expiration of such time as prescribed.

In the event the contractor is unsuccessful to make payment of wages within the given period, then the principal employer shall be legally responsible to make payment of wages in full or the unpaid balance that is due to the contract labor.


Payment of Wages Act, 1936:

Section 3 has fixed the period in regard of which wages shall be paid by every person in authority for the payment of wages. No wage period should surpass one month.

Documents the employee needs to send a legal notice:

● A copy of the contract of employment

● Copy of the statement of the bank as a proof of non-payment of the salary

● Joining letter or appointment letter

● Any additional details about benefits being offered to the employee[3]

If the employer does not give a reply to the legal notice and refuses to pay the wages then the employee can take the following steps, after a legal notice is sent to the employer: Legal notice to employer for non-payment of salary should be taken seriously and the management of the organization where the worker was employed. Notice for payment due can be sent either to the manager or to the person-in-charge of the place or directors of the company where the employee was employed.


Approach Labour Commissioner:

In case an employer refuses to pay the salary to an employee, the employee can approach the labour commissioner. Labour commissioner will support the employee to resolve the issue and in case no solution is reached then the labour commissioner shall hand it over to the court where a case against the employer will be instituted.


Industrial Dispute Act 1947:

Section 33C of the Industrial Dispute Act 1947 governs the recovery of money that is outstanding to the employee. As per this provision, an employee or somebody approved by the employee, or the legal successor in the case of the deceased worker can file an application for the payment of salary to the suitable government. A suit under Section 33(c) of Industrial Dispute Act, 1947 by the employee can be filed for the recovery of money unpaid by an employer.

● In the event the salary is unpaid by the employer, the employee or any other person approved by the employee in writing on his behalf can claim recovery of money due from the employer.

● On the occasion of the employee’s demise, the approved person or the heirs of the employee can make an application to the labour court for recovery of money due from an employer.

● The court will issue the certificate on being content that the wage is outstanding and the collector will begin to recover the dues from the employer.

● In the event there arises any question as to the sum of money outstanding or as to the amount at which the benefit must be calculated, it would be calculated as per the rules under the Industrial Dispute Act 1947.[4]


Judgement of Labour Court:

The labour court in a period not beyond three months has to decide the cases on the condition that where the presiding officer of a labour court considers it needed or beneficial to do, the Presiding Officer may for the reasons to be noted in writing, increase the period by such a further time as the Presiding Officer may he think appropriate as per Section 33C (2) in The Industrial Disputes Act, 1947.


Approach the Civil Court

Employees in executive or managerial positions may file in a civil court a suit for non-payment of remuneration, as per the provisions of Civil Procedure Code, 1908. Nevertheless, it is recommended that this ought to not be the recourse sought by the employee in the initial occasion.


Application in the National Company Law Tribunal

As per The Insolvency and Bankruptcy Code, 2016 employees are considered as operational creditors. Consequently, an application can be filed in the National Company Law Tribunal for the retrieval of salary due. Nevertheless, for the application of the The Insolvency and Bankruptcy Code, some requirements should be met. They are:

● Applicant should be an employee of the company

● Minimum amount of salary dues must be Rs. 1 Lakh.

● Maximum amount of salary dues is Rs. 1 crore.

The application should be accepted or rejected within a span of 14 days by the National Company Law Tribunal. Entire corporate insolvency resolution process should finish in 180 days. Nevertheless, the National Company Law Tribunal might increase it by 90 days.


Shops And Establishment Act, 1953:

Some states have their own separate law governing the conduct of establishments and shops inside their respective states. As per the provisions of the Model Act, in case a worker is required to work in addition to nine hours on any day and forty-eight hours in a week, the worker shall be eligible to wages at the amount of twice the ordinary rate of wages of the worker or such amount prescribed.

In case the employer contravenes any provision or any rules of this Act by the State Government including the non-payment of the salaries, the employer will be liable to pay a fine which may extend to rupees two lakhs. Imposition of additional fines can also happen.[5]


AUTHORS CONTENTION:

There are many instances in India where an employer does not pay salary for a month or couple of months and easily get away with the same.

A good case is of Kingfisher Airlines. When it shut down its operations, many of the employees were not rewarded their dues. If you are facing such an issue, don’t be reluctant to use the resources above. The legal notice is a very vital apparatus and getting the salary in less time is a mental game. Nevertheless, only a limited number of lawyers do this kind of work because it may not be very lucrative for them. If the employer comprehends the consequences and penalties in time, the employer will settle the wage dues before there arises a need to approach the court for the aggrieved employee, which keeps expenses low as well.


-- [1] WIKIPEDIA, https://en.wikipedia.org/wiki/Salary, (last visited Aug. 6, 2022) [2] IPLEADERS, https://blog.ipleaders.in/what-to-do-if-employer-does-not-pay-salary/, (last visited Aug. 6, 2022) [3] Anshal Dhiman, Non-payment of salary by an organization, IPLEADERS, (Aug. 6, 2022 7:00 PM), https://blog.ipleaders.in/non-payment-salary-organization/ [4] IPLEADERS, https://blog.ipleaders.in/what-to-do-if-employer-does-not-pay-salary/, (last visited Aug. 6, 2022) [5] MYADVO MAKING LEGAL SIMPLE, https://www.myadvo.in/blog/send-legal-notice-non-payment-salary-employer-company/ (last visited Aug. 6, 2022)



This article is written by Aditya Jain of Maharishi University of Information Technology.

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