wages

In this article, Jagriti Bharti discusses the steps to sue an employer for unpaid wages.

Searching for work to earn living is a tough task and what makes it tougher is the unwillingness of the employer to pay their employees timely wages or salary[1] for the work they have performed for him. Non-payment of the salary by the employer to the employee has become a common concern nowadays. Employers generally avoid paying salary to the employees either by firing them or pushing them to a limit so that they get forced to resign by themselves.

Employers are bound to pay their employees. It is their legal obligation towards their employees even if the employer is getting bankrupt. Many employers when on a verge of getting insolvent start delaying in paying their employees. Some of them even deduct salary of their employees as a matter of punishing them. Any unauthorised deduction from the salary of the employee by the employer amounts to non payment of the salary.

Following deductions from the salary of the employee can be termed as unlawful and will amount to non payment of salary:

  • If the deduction is not mentioned in the contract of the employment.
  • If the employee has not agreed for the following deductions.
  • If the deductions are not as per the law.

Usually, employers think that denying and delaying payment, non-payment of salary, making unlawful deductions are in their own hand and employees don’t have any right to speak up against it. But this is not the case. Various labour laws has been made in favour of employees to deal with these kind of matters.

When an employment contract is signed between an employer and an employee with free consent[2] it becomes binding on both the parties and neither of them can deny performing the contract, as after acceptance it becomes enforceable by law[3].

According to section 3(2)(a) of  Minimum Wages Act, 1948, the appropriate government has authority to fix minimum wages of the employees for the time rate and as per Section 3(1) of Payment of Wages Act, 1936, every employer has a responsibility to provide wages or salary to the employee employed under him. So, when a contract has been been formed between an employer and an employee, employees are entitled to receive salary for their work and if it is not paid, they can sue employer for it.

Remedies available against non-payment of salary to the employees by the employer under different Acts are as follows

PAYMENT OF WAGES ACT, 1936

Under section 15 of Payment of Wages Act, 1936 procedure has been provided to entertain the claims arising out of unlawful deductions from wages and delay in payment of wages and penalty for malicious and vexatious claims. It provides that appropriate government may appoint following officers to whom complaints can be filed with regard to above matter by the employed person or his legal practitioner, inspector[4] appointed under this Act or any trade union under his behalf within 12 months from the happening of the said event:

  1. Commissioner for workmen’s compensation,
  2. Regional Labour Commissioner or assistant labour commissioner having at least two years experience (to be appointed by central government),
  3. Officer of state government not below the rank of regional labour commissioner having at least two years of experience,
  4. Presiding officer of any labour court or Industrial labour tribunal,
  5. Other officer with experience as a civil judge or judicial magistrate.

While entertaining the application filed, the authority will hear both the sides and may order for payment of salary which has been not paid by the employer alongwith the compensation which the authority may think fit. No direction for the payment of compensation can be made if the authority is satisfied that delay in payment was due to:

  • Bonafide error or dispute regarding amount paid to employed person.
  • Occurrence of emergency or exceptional circumstances because of which employer was unable to pay the wages.
  • Failure of the employed person to accept the payment.

Penalty not exceeding 375 rupees shall be ordered to be paid to the the employer if the claim is found to be malicious or vexatious. An application of appeal can be made by aggrieved party under section 17 against the order made under section 15 together with certificate by the authority to the effect that the appellant has deposited the amount to be payable under the direction appealed against within 30 days of the making of such order before court of small causes or before district court.

INDUSTRIAL DISPUTE ACT, 1947

Under Industrial Dispute Act, 1947 complain against employer[5] can be filed with:

Conciliation officer

Complaint can be filed against employer by the employee regarding non payment of salary or any other dispute relating to employment to the conciliation officer appointed under section 4 of the Act who will work as a mediator between the parties and will promote settlement of the dispute.

If settlement of dispute has arrived while conciliation, the conciliation officer will send a report of the same to the appropriate government together with the memorandum of the settlement signed by the parties to the dispute.[6]

If it is evident to the conciliation officer that settlement can’t be reached, he will make a report as to why the settlement is not possible between the parties and forward it to the appropriate government.[7] After considering the report if the government thinks fit, it will forward the case to the labour court or labour tribunal.[8] While mediating between the parties, the conciliation officer will have all the powers of a civil court provided under Code of Civil Procedure, 1908.

Labour Court and Labour Tribunal

Where no settlement has been approached by the parties to the dispute by the conciliation officer, the matter will be referred by the appropriate government to the labour court or labour tribunal within 30 days. Where an industrial dispute has been referred to a Labour Court, Tribunal or National Tribunal for adjudication, it shall hold its proceedings expeditiously and shall, [within the period specified in the order referring such industrial dispute or the further period extended under the second proviso to sub-section (2A) of section 10], submit its award to the appropriate Government.[9] While deciding the case the court shall have all the powers of a civil court provided under Code of Civil Procedure, 1908.

The award made shall be binding to the parties to the agreement only when it gets published in a manner provided by appropriate government within 30 days of its receipt.

If the employee whose salary is not paid is of manager or executive category and is earning more than 18k per month, he can file his case through his lawyer directly to the civil court. But it is better to exhaust other available option first before approaching to the civil court.

COMPANIES ACT, 2013

If any employee has suffered personal loss due to fraud committed by the company then he can file a case against that company under section 447 of the Companies Act, 2013. Person found guilty of the fraud will be liable of imprisonment which shall not be less than six months and which may extend to ten years. He shall also be liable to fine which shall not be less than the amount involved in the fraud and can extend up to three times the amount involved in the fraud.

Approaching to court is always a tedious and delaying process. Going through the technicalities of the court procedure doesn’t always serves its best with every person. Hence, it is advisable to settle down the matter with conciliation and mediation unless it is inevitable to approach the court. Avoiding the court will save both money and time and also reduce the burden of the court.

References

[1] Section 2(21) in The Payment of Bonus Act, 1965

[2] Indian Contract Act, 1872: Sec.14.

[3] Section 2(h) of Indian Contract Act, 1872

[4] Section 14 in The Payment of Wages Act, 1936

[5] Section 2(g) of the Industrial Dispute Act, 1947

[6] Section 12(3) of the Industrial Dispute Act, 1947

[7] Section 12(4) of the Industrial Dispute Act

[8] Section 12(5) of the Industrial Dispute Act

[9] Section 15 of the Industrial Dispute Act

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