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Hi, Happy New year to each one of you.
There's a lot of laws that are pro-employee or in the favor of the employee. I just want to understand is there any law that is in favour of a company? Especially a start-up? When the company is facing a crisis in terms of funds generation but is still supporting its employees in arranging salary release as and when the funds are received even though it constitutes a little delay, are there no laws that can support a company during this period?
Is the role of HR only in support of employees irrespective of what the company faces and how bad the situation is? In any way the company can defend themselves in legal terms as accepted by the labor court if an employee wants to go legally because of delayed payment?
Let me know whats in support of the company. As it is common I feel for a start-up to face these ups and downs before stabilizing themselves to a much better position.
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Dear Aishwarya,
There are different rules / laws applicable to different categoties.
Your concern related to laws in favor of a company. In some cases there are exemptions to start ups, like if a new establishment facing loses than company is not bound to pay Bonus (applicable only for first 05 accounting year).
The HR role can be vital by recruiting and deploying adequate employee as per company budget. If any employee want to go legally with mutual understanding than it is fine (unless any employee lodge complaint for delayed salary and other compliance).
If you are not making profit than need not to pay income tax and even you can carry forward your loses as per the Income Tax Act, so that when you will start earning profit than first adjust your initial loses than only liable to pay Income Tax.
It seems your concern is related to Fund Crisis. Pls be noted facing loses and facing fund crisis are different scenario. If the fund crises is related to non collection from client or making exp. on huge capital items, than you canít avail the above exemptions.
There could be N numbers of your problems, so I will suggest to go for the basic reasons.
Seniors can put more light on the matter.
Sir,
It is fund crisis. The clients have not released payments to us on time quoting to some issue of theirs. As and when we get funds we are paying off resources. But when we don't get on time, what can the company do?
If the employee starts demanding for bank interest which would have been paid to her by the bank if we didn't delay the salary and asking the company to pay that interest if not legal action will be taken, what kind of right path is that? I am not able to understand where is the big issue happening to create chaos. The salary is only delayed by a month/ 30 days. Its not like its been stopped entirely.
Dear Aishwarya,
In today's dynamic market scenario after doing the operation part (successful service / material delivery ) it is equally important to fund collection well in time. It is a general practice by many establishments to get optimized service from start ups and delay their payments by pointing silly issues.
The most reliable and best solution for the same is to take Bank OD and release employee salary well in time. This will put positive image of the company among the employees. As and when you get funds make the OD at par. By doing so you have to bear the interest only for limited period. While quoting rates, you can add some amount in your costing as "Finance Charges" (being interest bear on Bank OD for the gap period).
However, you can also delay your vendor's pymt (in related to operation, marketing, admin etc.).
Make your product / service contractually strong as per client requirements, so that the client can't raise issue on silly points. And you can ask them to release your payment as per agreed terms.
Your view is more related to Employer favor hence considering the "Delayed salary" as small issue, but for an employee getting monthly salary in time is a "Right" and legal obligation for you.
You can look for other cost optimization issues and make adequate fund flow system to come out from the tough situation.
Hope you will agree my points. Senior can throw more light on the matter.
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