Legal remedies available to an employee when there is non-payment of salary by employer
Non-Payment
of salary in India is one of the most commonly enjoyed practices by the employers
and prevailed at the time of firing the employees. The employers presume that
the employees don’t have any knowledge or resources whereby they can file the
complaint or case against the employer. There exist multiple remedies for
employees to claim their unpaid salary. The present article talks about the
legal remedies available to the employees when there is non-payment of salary
by the employer.
The wage ceiling under the Payment of Wages Act,
1936 was increased to an average wage ceiling of INR 18,000/ month pursuant to
a notification by the Indian Govt. effective from 11 September 2012 and if a
person is not covered under this act, other remedies shall still available.
Steps were taken by the employees against the employer for non-payment of salary/wages under POW, 1936:
1. Approaching
the Labour Commissioner
An employee can approach and convey the issue to the labor commissioner. A copy
of legal notice sent to the employer, appointment letter, bank statement and
employment contract, details of additional benefits and perks should be
attached with the application/ complaint filed before the labor commissioner.
The commissioner will try to reconcile the matter and if not reached to a the solution they will transfer the matter to court, whereby filing a case against
the employer.
2. Approaching
the Labour Court
An employee can file a case u/d Sec 33(c) of IDA, 1947[i],
for recovery of the amount due by the employer whose salary is less than Rs.
18000/-. When an amount is due by the employer, the employee or any other
person is given the authority can claim the amount on his behalf. Such a type of
case must be filed within 1 year from the due date of salary. The court has the responsibility to decide the case within 3 months except in certain matters
where the Presiding Officer gives the reason in writing; the court can extend the
time limit of filing[ii].
In case of death, the authorized person can claim the amount. If the court is
satisfied, it will issue a certificate for recovery of the due salary and
recovery shall be preceded by the collector.
3. Approaching
the Civil Court.
If
an employee is a manager or at the executive level whose salary is Rs. 18000 or
more can file the case against the firm or the entity in civil court u/d Order
37 of CPC,1907, which is usually faster than other slow procedure in civil
courts known as summary suits. The summary suits must not be pursued at 1st
instance.
4. Approaching
the National Company Law Tribunal (NCLT)
Sec
447 of Companies Act, 2013 states and lays down the punishment for fraud done
by the employer company. The person acting on behalf of the company will be
liable for imprisonment for at least 6 months which may extend to 10 years. Fine
of the amount at par of due amount or may extend to 3 times of the fraud due
amount.
When
the Company becomes insolvent- The employees
considered as operational creditors under Insolvency and Bankruptcy Code, 2016[iii]
can file an application in NCLT for recovery of unpaid salary. The following
are certain condition which should be kept in mind at the time of filling the
application in NCLT:
a) An
applicant must be the employee of the company
b) Minimum
unpaid salary should be Rs. 1 lakh
c) Maximum
unpaid salary should be Rs. 1 crore
The
application filed before NCLT will be accepted or rejected within 14 days. The
process of corporate insolvency resolution must be completed with 180 days;
however, the NCLT may extend it by 90 other days.
5. A a criminal case can also be filed in the Sessions court against the company under
IPC, 1860. Before which a Legal Notice should be served to the employer
(company) for non-payment of salary, it can be either sent to the manager or
the director of the company or to the person-in-charge. The legal notice served
acts as evidence against the company in the case filed.
6. Any
worker working as per the Shops and Establishments Act, 1953, for 9 hours on
any day or 48 hours a week shall be entitled to get wages at the rate of twice
his ordinary rate of wages or such higher amount as may be prescribed[iv].
If the employer violates any provision of the Act or the rules made by the
State Govt. shall be liable to pay fine extending up to Rs. 2 lakh or more as
per courts discretion.
Part I of the Code deals with the Insolvency Resolution and Liquidation of Corporate Persons. Section 4 of the Code provides that Part I of the Code applies to matters where the minimum amount of default is Rs.1 Lakh. Proviso to Section 4 empowers the Central Government to notify an amount of default of higher value with an outer limit of Rs.1 Crore. Utilizing the powers conferred by the proviso to Section 4 on 24.03.2020, a notification was issued to specify the minimum amount of default as Rs. 1 Crore
Written by
Kaushal Modi (Intern at Advicebiz)
[i]Section 33(c)
Industrial Dispute Act, 1947.
[ii] Section 33(c)(2) Industrial Dispute Act, 1947.
[iii]
https://www.myadvo.in/blog/importance-of-demand-notice-under-the-insolvency-bankruptcy-code
[iv] https://www.myadvo.in/blog/send-legal-notice-non-payment-salary-employer-company/
Disclaimer: This article is the personal opinion of the author. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any Indian Government or any other Government of the world. This article is only opinion and does not render any personal or professional advice
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