The sad scenario of non-payment of salaries to employees by their employer is faced by many workers in India. Sadly legal awareness is not as widespread as maybe it ought to be, and some employers take advantage of that. If you find yourself in such a situation, actual action can be taken against the employer for the non-payment of salary. A primary step is sending a legal notice to the employer regarding the non-payment of salary. In this article, we guide you through the sending process of a legal notice along with the relevant law that protects your rights and further steps to facilitate the recovery of your unpaid salary.
Importance of Legal Awareness
The post-COVID job market, especially in 2023, increasingly faces instability, layoffs, and salary delays. Many companies, especially in the technology industry, have resorted to laying off employees or delaying salary payouts while their employees go through financial turmoil. Employees must know that they are not voiceless in these situations. There are various legal remedies to claim unpaid salary and even seek compensation for delays.
Legal Protection for Employees
In India, the timely payment of salaries to employees is regulated by various laws. These include:
The Payment of Wages Act-1936-Age-old provision to ensure payment of wages to employees who were prompt in the munificence of their employers. Interest becomes due at the rate of 6% on the delayed amount.
The Industrial Disputes Act-1947-An Act that assists employees to recover any money due to them by the employer, especially in the case of various industries where conflicts arise frequently.
The Shops and Establishment Act-A similarly far-ranging act is in various states and is binding on all establishments for timely payment of wages to workers.
Minimum Wages Act, 1948-Lay down a certain parameter for minimum wage rates so that no employee gets less than the minimum wage per his or her type of work.
Send Legal Notice For Non-Payment Of Salary
A legal notice is an official document sent to the employer requesting him to settle the amount of salary due within a stipulated time. It is a formal notice as to the applicant’s intent to act further in case of failure to pay by the employer. Here is how it can be done:
- Documents You Need
Ensure to have before drafting and serving a legal notice-the set of documents relevant to your claim. These include:
The copy of the employment contract
Bank statements showing no salary premiums
Salary slips or any official communication concerning the salary
Appointment letter and all details concerning benefits or perks - Content of the Legal Notice
Legal notice; it should be in plain language, concise, and formal. It should contain:
Your name and address
Employer’s name and address
Details about the amount of salary owing
The period in which the amount was due
Reference to any past correspondence on the issue
A time frame for payment is set (usually 7-15 days).
Finally, mention that if the other party fails to make the payment within the stipulated time, you shall initiate legal proceedings.
Sending The Notice
It could be sent via registered post or even via email. It is usually better to send a notice through registered post with acknowledgment due to proof of delivery.
Reliefs You Can Claim
Following can be claimed in your legal notice:
Immediate payment of unpaid wages
Interest on delayed payment (as per law)
Compensation for any loss caused by the delay
Consequences If The Employer Does Not Respond
If, after the receipt of a legal notice, the employer does not pay the dues, you may proceed with other actions to recover your salary. - Approach the Labour Commissioner
If the employer does not respond to your legal notice, you may file a complaint before the Labour Commissioner. Attached to your complaint should be:
A copy of the legal notice sent to the employer
A copy of your employment contract
Bank statements reflecting the unpaid salary
The Labour Commissioner will try to bring about a resolution through reconciliation. - Approach the Labour Court
If the Labour Commissioner fails to resolve the matter, the next step will be approaching the Labour Court. The Industrial Disputes Act of 1947 allows employees to file cases for unpaid salary. This case must be filed within one year of the due salary date, and it is to be decided by the Labour Court within three months. - Going for the Civil Suit
You may need to move to the District Court under the Civil Procedure Code to file a civil suit if quite a hefty chunk of salary remains unpaid. The process could take a long period, but this is an option if the employer continues to hold back your salary. - Insolvency and Bankruptcy Code, 2016
In cases of employees, where the salary unpaid is higher than ₹1 lakh, they can approach the National Company Law Tribunal (NCLT) under the Insolcency and Bankruptcy Code (IBC). This law provides for employees to claim recovery as operational creditors.
Arbitration, Mediation, and Legal Actions
Though a legal action may be intimidating, mediation and arbitration can be an option. Some employment agreements may contain arbitration clauses that mandate arbitration in resolving any dispute. Also, mediation can be sought, where a neutral third party will help both parties in reach a resolution.
On the contrary, where arbitration and mediation are not possible, civil and/or criminal action may be pursued. Employees can file a criminal suit for fraud under Section 420 of the Indian Penal Code if the employer is not paying. They can also file a suit under the Negotiable Instruments Act if the employer has counter-signed a check that bounced in payment of the salary.
Judgement
The problem of salary non-payment is still looming over the employees in India, especially in the current spell of uncertainty like the one experienced post-pandemic. It is imperative that an employee knows and acts within his rights and the legal remedies available to him. The first step is sending a legal notice to the employer to get back the wages owed to him/her. As the case may be, if there’s no reply from the employer regarding the notice, an employee can take the matter further to the Labour Commissioner, Labor Court, or even to court.
By taking prompt action, your financial interests can be protected, and employers may be punished for not complying with their obligations according to the law. Remember-a worker is entitled to receive that salary and the law affords many avenues to ensure this right is protected.
FAQs
Q: Can I send a legal notice for non-payment of gratuity?
Yes, as gratuity is a statutory benefit, there is a provision for sending a legal notice to your employer for demanding gratuity.
Q: For how long can an employer withhold salary?
According to the Payment of Wages Act, 1936, wages should be paid within the 7th or 10th following the close of wage period. After that period, legal actions can be initiated.
Q: Can I claim unpaid salary while my employer is under insolvency?
Yes, employees are operational creditors under the Insolvency and Bankruptcy Code and upon a claim exceeding ₹1 lakh in unpaid salary can file claims to the NCLT.
