What to do if your company is not paying your salary?
Your employer cannot legally hold your salary, even if the company is in trouble. You have worked for that money, and it is yours. If they stop paying, you can send a formal legal notice. If that doesn't work, you can complain to the Labour Commissioner or file a case in the Labour Court. You can even ask for interest on the delayed amount.
Constitutional Basis: Article 23 — Prohibition of Forced Labour
The Supreme Court in 'PUDR v. Union of India' clarified that 'forced labour' includes working for less than the minimum wage or not being paid at all. Withholding salary is a violation of human dignity.
Legal Reality & Statutory Framework
The 'Payment of Wages Act, 1936' and the 'Companies Act, 2013' protect your right to remuneration. Under the Payment of Wages Act, an employer must pay the salary by the 7th or 10th of the following month. If the company is going through insolvency, employees are 'preferential creditors,' meaning their salaries are among the first things to be paid from the company's assets. You can also file a 'Summary Suit' under Order 37 of the CPC for faster recovery.
Practical Example
If your employer says 'we have no funds this month' for three months straight, they are violating your Fundamental Right under Article 23.
Recommended Action Steps
- Send a formal demand letter via email and registered post to the HR and Directors.
- File a complaint with the 'Labour Commissioner' of your district. They will summon the employer for mediation.
- If the amount is large, have a lawyer send a statutory 'Legal Notice' under the Insolvency and Bankruptcy Code (IBC).
- Keep all proof of work: Salary slips, offer letter, and attendance records.
Frequently Asked Questions (FAQs)
Q: Can a company hold salary for 3 months as 'Security'?
A: No. This is an illegal practice. Any deduction or withholding must be authorized by law or the specific contract, and even then, it cannot violate the Payment of Wages Act.
Q: What if I resigned without notice?
A: The employer can deduct 'Notice Pay' (as per contract), but they cannot withhold the remaining salary for the days you actually worked.
Q: Can I get compensation for the delay?
A: Yes. The Labour Court can order the employer to pay the outstanding salary along with 10-12% interest and a penalty for the delay.
Q: Is a verbal promise of salary valid?
A: While a written contract is best, a verbal agreement is also a legal contract. Proof of bank transfers from previous months can serve as evidence of your salary amount.