Non-payment of wage is a fairly widespread practise in India for companies to their employees, which is especially popular when terminating employees. This is because relatively few employees are aware of their rights under the Indian Constitution and regulations. Employers have the belief that employees lack the legal knowledge and resources necessary to bring a claim against the company. The truth is that an employee can actually do a variety of tasks. Multiple legal options exist to recover overdue wages and interest in order to protect employee rights. This article explains the methods an employee can use to recover unpaid wages from an employer as well as the necessary actions. If the employee is deceased, his or her relatives or legal heirs may also file a claim for non-payment of salary by the company.
Acts and rules applicable.
1. CONTRACT LABOR (REGULATION AND ABOLITION) ACT
According to Section 21 of the Act, the contractor shall be responsible for payment of wages to each worker employed by him as contract labor and such wages shall be paid before the expiry of such period as may be prescribed.
If the contractor fails to make payment of wages within the prescribed period, then the principal employer shall be liable to make payment of wages in full or the unpaid balance that is due to the contract labor employed by the contractor and recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.
2. SHOPS AND ESTABLISHMENT ACT, 1953
- Many states have their own legislation governing the conduct of various shops and establishments within their States. According to the provisions of the Model Act, “Where any worker is required to work on any day in excess of nine hours and forty-eight hours in a week, he shall be entitled to wages at the rate of twice his ordinary rate of wages or such higher amount as may be prescribed.”
- If the employer violates any provisions of the Act or any rules made under this Act by the State Government including non-payment of wages, he or she is liable to pay a fine that may extend to Rs. 2 Lakhs. The additional fine can also be levied.
3. WAGES ACT
- The Minimum Wages Act, 1948 and the Payment of Wages Act, 1936 are the two key legislations that govern and regulate wages paid by the employer to the employee. The former Act seeks to fix the minimum wage that must be guaranteed to all workers. The amount of pay is determined with respect to the nature of the work, which is mentioned in the Schedule of the Act. The minimum wage differs from State to State.
- On the other hand, the Payment of Wages, Act 1936 guarantees timely payment of wages to the employee or the workman.
- Accordingly, the appropriate Government is provided with the power to appoint the officers to deal with claims arising out of deductions from wages or delay in payment.
4. INDUSTRIAL DISPUTES ACT
Section 33C of the Act deals with the recovery of money that is due to be paid to the employee. According to this provision, any employee or someone authorized by the employee, or legal heir in case of the deceased employee can file an application for payment of salary to the appropriate government. On being satisfied that such money is due, the appropriate government issues a certificate for payment of dues. However, if there is a need to compute the amount of money then, it shall be decided by the Labour Court.
Documents required for sending the legal notice:
- Copy of employment contract
- Copy of bank statement as evidence for non-payment of salary.
- Appointment letter
- Details of all additional benefits and perks.
Steps to be taken
1. Approach the Labour Commissioner
The employee might go up to the labour commissioner and explain the situation to the commissioner. It is suggested that the complaint made to the labour commissioner be accompanied by copies of any legal notices that were delivered to the employer, the employment contract, and a bank statement. It is the responsibility of the labour commissioner to settle disputes between the employer and the employee.
2. Approach the labour court
The employee may approach the labour court if the labour commissioner is unable to offer a resolution. The Industrial Disputes Act, 1947, may be used to bring this lawsuit. The lawsuit must be brought, though, within a year of the date on which the compensation is due. Within three months, the Labour Court must render a decision.
The Labour Court establishes a deadline without any possibility of extension. When the Presiding Officer of a particular Labour Court determines that it is appropriate or essential to do so, the time range is typically three months. The Presiding Officer may, for certain justifications, extend the time limit in writing as they see fit. The Labour Court will also check to see if the employer has received a legal notice regarding the pending payment of provident fund.
3. Approach the civil court
Employees holding executive or managerial posts can file a suit for non-payment of salary in a civil court, in accordance with the provisions of Civil Procedure Code, 1908. However, it is advised that this should not be the remedy sought by the employee in the first instance.
4. Application in the NCLT
The Insolvency and Bankruptcy Code, 2016 considers employees as operational creditors. Therefore, an application can be filed in the NCLT for the recovery of unpaid salary. However, for the application of the IBC, certain conditions must be met. These are:
- The applicant must be an employee of the company
- The minimum amount of unpaid salary must be Rs. 1 Lakh.
- The maximum amount of unpaid salary is Rs. 1 crore.
This application must be accepted or rejected within 14 days by the NCLT. The whole corporate insolvency resolution process must end within 180 days. However, the NCLT may extend this by another 90 days.
The employer and the management of the establishment where the employee was employed must treat legal notice to an employer for non-payment of wage seriously. The manager, the person in charge of the location, or the directors of the business where the employee was engaged may get notice of the payment that is due. A legal notification to a business may also be used as proof in court. A court may rule in favour of the employee as a result of the legal notification submitted to the business
- First and foremost, send a thorough legal notice outlining all the reasons why you are upset to your employer or firm. It is advised that you send this legal notice no later than 90 days from the last date of payment of wages. The law separates employees into two groups: those making less than Rs 18,000 and those making more.
- Blue-collar workers who make less than Rs 18,000 per month are subject to the Payment of Wages Act, 1936. According to Section 4 of this Act, “no wage period shall exceed one month.” One might go to the labour commissioner to seek remedy in the event of any difference or non-payment of salary.
- Cases brought before the labour court must be resolved within three months. The employee may file a lawsuit against the employer if the labour commissioner is unable to address the issue.
- You can take the dispute to a civil court if your pay is higher than Rs 18,000 per month.
- You may bring a lawsuit against the business in civil court in accordance with Court of Civil Procedure Order 37.
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