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This article is written by Priyesh Singh pursuing Certificate Course in Advanced Civil Litigation from LawSikho.


It is quite common for employers in India not to pay allowances to their employees. The employers remain quite certain that the employees will not take any action against them if they do not give them their remuneration on time. Generally, employees don’t know what action to take if they are in a situation like this or if they want to file a lawsuit against their employer. The majority of employees are not aware of the Payment and Wages Act, Companies Act, and other laws regarding their rights in payment, and for those who are aware, they think that it will be too time-taking and tedious to go through the process of litigation and therefore, instead look for a new job. 

The Publicity of Specifics Act is not readily available to the public, and legal advice is too costly for most of them to afford. An employee can follow several processes to recover a payment. An example would be sending a notice by lawyers to the opposing party, followed by filing a complaint. This article will talk about the delay in disbursement of allowance, the remedial measures available with the employees and discuss this in the light of case laws.

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What is the disbursement of allowance?

Disbursements refer to the act of giving from funds, while allowances refer to all types of remunerations paid to an employee for their employment or for work performed on the job.

Paying allowances is a way of remunerating employees for the work they did during their employment. Wages are defined under Section 2 clause (VI) of the Payment and Wages Act, 1936 as any remuneration paid to an employee by his employer, whether in the form of salary, allowances, or otherwise, for the work performed during the employment period. Even if the terms are expressed or implied, employers must adhere to them.

Several allowances are detailed in the sub-clauses of Section 2, which include:

  • Any payment or award arises from a settlement between the parties, or order of a court.
  • A person is entitled to payment in respect of overtime work during employment.
  • Additional payment under the terms of the employment whether it’s a bonus or anything.
  • Any sum is payable to the person as per the contract or instrument which by reason of termination of employment, with or without deductions, but does not provide for the time within which the payment is to be made.
  • The person employed is entitled to every scheme framed under any law for the time being in force.

But does not include:

  • Any bonus which is not part of remuneration payable under the terms of employment like profit sharing or otherwise. And also not payable under any award or settlement between the parties or order of a court.
  • House accommodation, light supply, water, medical treatment, and other basic needs are excluded from the computation of wages by general or special order of the appropriate government.  
  • And any travelling allowance and special expenses and other gratuities payable on the termination of employment. 

Define delay disbursement

In a case of delay disbursement, the employer does not disburse the payment to the employee within the allotted time frame. The reason for not disbursing payment to an employee may be genuine, fraudulent, or intentional. It is not uncommon for them to intentionally delay the remuneration of employees.

In Yuvraj N Rodye V. Maharashtra state Electricity board,1975. Royde filed a petition seeking to recover the amount of delayed payment (3,33,518), which were due in 1989 but were paid in Sept. 1994. He moved the Nagpur Bench of the High Court seeking to recover interest at a rate of 16% on the total payment. According to the court, the employee was entitled to receive the payment as per the service conditions on due dates and/or in a particular case within a reasonable time. If the employees had received the payment within time and/or on time, they could have utilized it for various purposes. Taking more time to fix arrears made no sense. As the court pointed out, 16% was an unreasonable rate of interest, petitioner was to be paid interest at the rate of 8% from the due date of the arrears payment. We require payment within four months of receiving the order after the calculation has been completed.

As part of the latest case of delayed disbursement, United Nurse Association v. District Program Manager, 2019 wherein a petition was filed in the Kerala High Court against the order of the District Program Manager constraining the monthly salary of staff nurses to 27 working days. The nurses association called the new order illegal as an entire month’s salary was allowed as per an earlier directive if a nurse has worked 26 days in a month. The petitioner also raised the issue of delayed salary payments. The petition pointed out that with regard to the COVID-19 situation, for the period of August to November 2020, all districts are supposed to be receiving funds of Rs. 40,61,23,630 from the state Mission Director as ‘incentives and risk allowance’. The central government’s order requires the timely payment of salaries to health workers engaged in COVID-19. The petition has referred to such an order as illegal and violative of natural rights. As the court is yet to decide on this,  the petitioner has sought a stay of implementation of the order.

Filing of case

A suit to recover money from a defaulter is a civil remedy. Under order IV of the Civil Procedure Code, 1908 suit can be established.

Section 15(2) of the Payment and Wages Act, 1936 says that any deduction from the allowances of the employed person, or any delay in the payment of allowances to such person, or any legal advisor or official of registered trade union authorised in writing to act for any inspector under this Act, or any other person acting as an authority with permission as per subsection 15(1). Such a request must be submitted within 12 months of the date on which the deduction from wages was made under Section 15(2). Further, if the application is made after the said period, the applicant must show that he/she has good cause for not making the application within the allotted time. 

Where to file the case?

According to Order IV of the Civil Procedure Code, 1908, a suit can be filed at any place where the defendant resides, conducts business, or works for a living.

Pecuniary jurisdiction is determined after territorial jurisdiction is determined. The court will determine whether a suit should be filed in the High Court or District Court based on the amount of money involved. As an employee, if your employer does not pay your remuneration, then you can take these steps to seek redress:

Approach the Labour Commissioner

A person can approach the labour commissioner if an employee fails to pay allowances. Once the matter has been reconciled, if no resolution has been reached, the labour commissioner will submit the case to court for prosecution against the employer. Cases in labour court are decided within a period not exceeding 3 months. 

Industrial Dispute Act

1) An employee can file a suit under section 33(c) of this Act for the recovery of money.

2) An employee himself or anyone on his behalf can claim for recovery of money.

3) In the death of an employee, his heirs or an authorised person can claim for recovery of money.

4) Question arises on the amount of money due, should be computed. It would be computed according to rules under this Act.

What to include in a plaint?

Plaints are the basis for every lawsuit. A plaint consists of the factual information about the case as well as the amount and interest that the plaintiff is claiming and is supported by an affidavit.

 A plaint contains the following particulars:

  1. Name of the court,
  2. Name, description, and place of residence of the plaintiff,
  3. Name, description, and place of residence of the defendant,
  4. Facts constituting the cause of action, when it arose,
  5. Facts showing that the court has jurisdiction,
  6. The relief the plaintiff claims; the plaintiff’s costs (prayer clause),
  7. Any set-off or relinquishment of his claim by the plaintiff,
  8. Value of the subject matter of the suit for the purposes of jurisdiction and court fees,
  9. Signature and verification.

Proceeding after institution

  1. Issue of summons: A summons is a document presented by the court, calling upon the person in a court for a certain purpose. Summons are sent to the defendant within 30 days of the institution of the suit.
  2. Written statement: A written statement is a reply of the defendant to the plaint filed by the plaintiff. Defendant before 30 days from the date of summons summoning, presents the written Statement to the court. In a written statement, the defendant also mentions facts which he/she thought were missing in the plaintiff’s case.
  3. Trial and argument: Trial commences after the framing of the issue involved in the suit, and the final argument would be heard after the conclusive evidence and after that suit is decreed.

Limitation period

According to the Limitation Act, 1963 the limitation period for filing a claim for recovery of money in India is 3 years from the date of action has arisen given in the schedule of the said Act. After the expiry of the time, the suit is not considered if the petitioner does not satisfy the court that he/she has a reasonable issue.

Following are the other modes of recovery of money

Sending a legal notice

Draft a legal notice to the employer, provide all details including the employment contract and bank account statement as proof to show that the salary was not credited and mention all prime consequences you suffer due to money.

Resort to arbitration

In employment contracts, usually contains a clause of arbitration for any dispute arising out of the contract. If such a clause is present in the contract then the employee can refer a matter to arbitration.

Filing a civil suit

A civil suit may be filed to recover money due from an employer. As per Order IV and shall apply the rules contained in Order VI and VII.

Filing complaint

Under Section 447 of the Companies Act, 2013 employees give a complaint to the concerned authority if the employer is not paying the salary. And if the employee will be able to prove that the fraudulent intent of the employer is not paying the salary, the employee under IPC will complain about the cheating to the concerned authority.


People need to be aware of these legal remedies related to employment and salaries. Where and how can they file a case, what are the initial steps they can take, and what are the time limitations? If one is acquainted with the provisions, safeguarding one’s rights in cases of non-payment or delayed payment of salaries becomes easier. Using legal notice is always the best method or tool for forwarding your claims. The employees need to know what their options are if they have been delayed with their allowances payments.  Therefore, the notice should be drafted carefully and precisely, and an advocate can help you include all the important details precisely in a notice or a suit. It is the right of every man to be credited for the work he does during his employment and they cannot be kept away from this.


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