Unpaid or delayed salaries are not just workplace grievances — they are legal violations, and Indian law offers clear remedies to address them.
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NEW DELHI: Non-payment or indefinite delays in salary by employers is an ongoing issue in India, especially during terminations, layoffs, or corporate restructuring. Many employers bank on the assumption that individual employees either lack the legal awareness or the resources to address their rights. However, Indian law provides several mechanisms to recover unpaid salary, backed by a solid framework of labour legislation and judicial precedents.
This article aims to provide a comprehensive guide to your legal rights and options — with relevant statutory provisions and case law references — to help employees take informed action.
Legal Framework Governing Salary Payments
The Payment of Wages Act, 1936
Applicable primarily to workmen earning up to ₹18,000/month, this Act mandates timely payment of wages and prevents unauthorized deductions.
- Section 4: Wages must be paid in a monthly cycle, and no wage period shall exceed one month.
- Section 5:
- Wages of those earning less than ₹1,000/month must be paid by the 7th day of the next month.
- Others must be paid by the 10th day.
- If employment is terminated, final wages must be paid within 2 working days.
Case Law: Municipal Council Hatta v. Bhagat Singh & Ors., (1998) ILLJ 1320 MP
The Madhya Pradesh High Court held that delay in payment of wages beyond the statutory period amounts to a violation and is subject to penalties under the Act.
The Industrial Disputes Act, 1947
Applicable to “workmen” (as defined under Section 2(s)), this Act enables recovery of dues under Section 33C(2).
- Section 33C(2): An employee or their legal heir may approach the Labour Court for recovery of wages.
- The Court is empowered to compute the benefit in terms of money and issue a recovery certificate.
Case Law: Central Inland Water Transport Corp. Ltd. v. Workmen, AIR 1974 SC 1604
The Supreme Court emphasized that Labour Courts have the jurisdiction to decide the quantum of dues and direct employers to pay withheld wages.
Civil Remedies for High-Income or Managerial Employees
Employees not classified as “workmen” or those drawing above ₹18,000/month (e.g., managers, executives) can initiate civil proceedings under:
- Order XXXVII of the Civil Procedure Code (CPC): This allows for a summary suit, a fast-track recovery process where the employer can be directed to pay unless they present a valid defense.
Case Law: Kanhaiyalal Agarwal v. Factory Manager, 2010 SCC OnLine Del 2231
The Delhi High Court accepted the maintainability of a summary suit for salary dues of an employee not covered under labour laws.
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Criminal Liability Under the Companies Act & IPC
In cases where the non-payment is fraudulent, or the employer willfully deceives employees:
- Section 447, Companies Act, 2013: Imposes criminal liability for fraud. Punishable with imprisonment (6 months to 10 years) and fines up to three times the amount involved.
- Sections 406 (Criminal breach of trust) and 420 (Cheating) of the Indian Penal Code can also be invoked for criminal action.
Case Law: N. S. Batra v. Delhi Administration, 1980 Cri LJ 680
The Court held that wrongful withholding of salary could amount to criminal breach of trust if dishonest intention is proven.
Step-by-Step Remedies for Employee
Step 1: Send a Legal Notice
Begin by sending a well-drafted legal notice through a lawyer with experience in employment law. This serves as a psychological nudge and lays the groundwork for future legal action.
A clear legal notice often prompts settlement without the need for litigation.
Step 2: Approach the Labour Commissioner
File a complaint with the Labour Commissioner. If conciliation fails, the matter is referred to the Labour Court.
Labour Court matters under Section 33C(2) are to be resolved within three months, extendable for valid reasons.
Step 3: Civil Proceedings for Executives
If you’re a high-income or managerial employee, consider filing a summary suit under CPC Order 37. It’s faster than an ordinary civil suit and is specifically designed for cases involving liquidated dues (like salary).
Step 4: Criminal Complaint (if Fraud is Suspected)
Where an employer intentionally misleads or defrauds employees:
- File a complaint under Section 447, Companies Act, 2013.
- Consider lodging a police FIR under IPC Sections 406/420, depending on the facts.
Ensure that all evidence (emails, appointment letters, salary slips, conversations) is well-documented.
Important Practical Considerations
- Documentation is your best defense. Maintain appointment letters, emails, salary slips, and communication records.
- A strong legal notice is often enough to prompt employers to pay up.
- Avoid delay. Unjustified delays in filing a case may weaken your position.
- If you’re part of a group of affected employees, consider filing a representative suit or approaching authorities jointly for greater impact.
Real-World Examples
- Kingfisher Airlines: When the airline ceased operations, hundreds of employees were left without pay. Despite media coverage and protests, many employees couldn’t recover their dues due to lack of coordinated legal action.
- Jet Airways: Employees took legal recourse and formed associations to recover dues through NCLT proceedings under the Insolvency and Bankruptcy Code (IBC), 2016.
The law offers multiple remedies to employees who are denied their rightful salary — from filing complaints before labour courts to initiating civil or criminal proceedings. However, the key lies in strategic legal action, timely intervention, and proper documentation.
Non-payment of wages is not merely a civil wrong; in many cases, it can rise to the level of criminal liability. Don’t be disheartened — the law is on your side, and with the right steps, justice can be ensured.
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