Facing Unpaid Salaries and Layoffs: What Legal Steps Can Employees Take?

Hi All,

I am working for a Pvt. Ltd. software company for the past 1 year. The company used to pay the salary on the 5th of every month. However, this month, on 6th Nov, the CEO declared that the company cannot pay the salary of the employees for the month of Oct as the company is going through a difficult phase and will have to lay off jobs.

Ques1: Is a company legally permitted to do this?
Ques2: What are the legal steps an employee can take?

Regards,
Atul

Legally, an employer is expected to pay the salary not later than the 7th day of the salary month if the total number of employees does not exceed 1000. Similarly, an employer employing more than 1000 employees can pay salary by the latest on the 10th of the salary month. Failure to comply with this will be a contravention of the provisions of the Payment of Wages Act, 1936.

Non-payment of salary shall also be viewed as an offense on the part of the employer for which the employees can sue the employer under section 15 of the Payment of Wages Act. However, these laws are applicable only to employees/workers as defined in the Act for which reference to salary is the criterion.

Under the Payment of Wages Act, one who receives a salary of not more than Rs. 10,000 shall be considered an employee.

Regards,
Madhu.T.K

Thanks, Madhu, for your prompt reply.

1) My salary is more than 30k. Does this mean that I cannot sue my employer?

2) What if the company says they don't have money to pay?

3) Till date, the employees have not been formally communicated with.

Regards,
Atul

Dear Atul,

Since your pay exceeds Rs 10,000, you may not be able to seek assistance from the labor departments. If there is any violation of the contract, you will need to find a solution independently. However, you can seek help under the civil procedure code. The verbal notice of a layoff will be considered as an advance indication of termination. By the time you receive the official letter, you should start looking for another job.

Regards,
Madhu T.K