Stuck Without Pay: How Should We Handle Our Employer's Broken Promises?

We work in a private limited company in Hyderabad (approximately 20 people). Our employer has delayed salary payments by more than 3 months, citing a lack of funds and no revenue coming in. Even those who left the company due to non-payment have not had their dues cleared. For those of us who remain, it is challenging to decide what to do. If we leave the company, there is a fear that our salaries for about 2-3 months may never be paid.

Upon inquiring with the CEO about the situation, he claims that things will improve from next month. However, he has been making this promise for the last 2 months, and there is no visible improvement in the situation.

What should we do? Please suggest.

There are always ups and downs in business; it is part and parcel of the business life cycle. As I understand, your company team is very small. Hence, your CEO might be directly interacting with you regarding salary delays and assuring you of a better future in the coming months. However, it all depends on revenue generation for survival.

Your CEO needs you in difficult situations because the business is driven by employees, and employees are key in running the business. Therefore, the CEO might be motivating you to stay, assuring that you will receive the pending salaries.

Choices to Consider

Now, you have two choices:
1. Stay with the current company and look towards a better future.
2. If you do not see a future in the current company, explore opportunities outside. You can also provide references from the current CEO, as everyone has an equal chance at opportunities.

If you decide to pursue new opportunities with a different company, you may have to forgo two months' salary. Consider this sacrifice for future career growth and better prospects. You can request the pending salary from the CEO based on improving situations. Maintain good relations so that your cooperation is kept in mind.

Regards,
BrainLight HR Solutions

Addressing Unpaid Dues

Ask him to pay your dues, or else you might consider legal action. The business cycle can never be an excuse for not paying salaries for months. Possibly, he is waiting for you to get tired and leave, and then your dues might vanish just as those of others who left before you.

Non-Payment of Salaries: Legal Implications

Non-payment of salaries to employees is an offense. An employer can shut down their business if revenue cannot be generated, but the source of livelihood for people hired for the business cannot be denied.

You may consider sending a legal notice to your employer.

Yes, this is what we are thinking. Since most of us have good CVs/profiles, finding a new job would not be a challenge. Can anyone please guide us on the legal procedure? Is there some government body we can contact? How much time might it take? What might be its effect? Any reference to previous cases?

Query on Company Bankruptcy

Also, one more query... What happens in the case a company is declared bankrupt? Don't the owners/founders have to clear the dues from their personal income from other sources? What if they close this company and just open a new one?

Addressing Salary Delays: Steps to Take

Have a word with him. Let him know that you are willing to take extreme steps if need be. Most likely, once he realizes that you are not going to let him get away with not paying your dues, he will pay the amount.

If he still dilly-dallies or gives you some sob story or assurance (next week, month, year, etc.), send him a notice stating when you started the job, for how many months you have not received the salary, and request him to clear your dues within 15 days, else you will be forced to take legal action. Attach a copy of your appointment letter. Give him the letter and ask him to receive a copy (i.e., keep a copy of the notice with you with his signature saying received on this date).

If he refuses to accept the letter and sign a copy, send him the letter through registered post and keep the receipt of the registry. In 90% of cases, this much would be enough.

In the meantime, talk to a lawyer. Tell him everything but don't ask him to do anything as yet. Just get the information.

If he doesn't pay even after 15 days or receipt of the letter, talk to the lawyer again and ask him to sue your boss.

Bankruptcy vs. Paying Salaries

Declaring a company bankrupt is such a lengthy legal process. For a company of 20 people, your boss would find it much easier to pay salaries instead of trying to get himself declared bankrupt.

Regards

The situation is precarious. You should keep in mind the case of KFA, which seems similar to yours, except that KFA is a huge organization compared to yours. It is better to look forward to a change and pursue the release of payments due to you under the provisions of the Payment of Wages Act.

Regards,
S.K. Johri

You could demand the denied payment from the employer through a notice. Upon receiving a negative reply, file a claim petition under the Payment of Wages Act either before the Authority under the Payment of Wages Act or the Labour Court.

Since you are still with the company, you may also file a complaint before the Assistant Labour Commissioner, Labour Inspector, or Factories Inspector if your firm is a factory. Request their intervention or to file a claim on behalf of the workers.

Here are a few suggestions you may be interested in:

1. Are they holding the complete salary or part of the salary? You may request payment of part of the salary or basic pay, with the rest to be paid when the company is in a position to pay the whole salary.

2. Employees together may come to an understanding with the management and let the management hold your salaries, considering it as an investment. When it is paid back, it shall be with interest at the bank rate or an interest rate you both decide on.

3. Along with the due benefits, if the company is holding your pay, the company must always protect the employees and assure future employment guarantees, either for a specific period of benefit as a former employee to rejoin if interested.

Hope you now have an idea of demands where employees can extract benefits from the situation, making it a win-win for both. Whatever adjustments you agree upon should be in writing with authentication.

Wishing you all success.

Addressing Salary Delays and Legal Compliance in Business

Please don't misguide juniors. Just because Vijay Mallya could withhold the salary of Kingfisher staff, it should not become a trend to do so. When giving opinions in public forums, you should always take a dispassionate look.

I am a little surprised. Do you provide these kinds of HR solutions to your clients that are contrary to the law?

Any business leader should be intelligent enough to understand the ups and downs of business. If the business were to decline, they should have kept sufficient cash reserves to pay the staff. These so-called business leaders should not conduct business at the expense of employee salaries. In India, anyone can do business, but it should be done within the framework of the law. You cannot disregard the law.

Instances like these do not occur in the USA because the laws are very strict. Business owners of this kind would have been jailed for non-payment of salaries.

Labor laws were established to prevent the exploitation of labor. Unfortunately, the implementation of labor laws, or any other laws for that matter, is so weak that business owners can get away with any nonsense. Solution providers like you are always ready to praise these defaulters.

Advice for Abhijit: Taking Legal Action

You need to stand up against your employer and report the matter to the labor officer in your area. If the labor officer is unable to resolve the issue, you may approach the labor court with the help of a lawyer. You will get the justice you deserve. You shouldn't have to go without a day's salary. If you decide to file a lawsuit, ensure to include the clause regarding the issuance of a service cum experience certificate. This is important because, to seek revenge, your employer may refuse to provide an experience certificate.

Thanks,

Dinesh V Divekar

Business Challenges and Employee Decisions

There are always ups and downs in business; it is part and parcel of the business life cycle. As I understand, your company team is very small; hence, your CEO might be directly interacting with you regarding the salary delay and assuring you of a better future in the coming months. However, it purely depends on revenue generation for survival.

Your CEO needs you in difficult situations because the business is driven by employees, and employees are key to running the business. The CEO might be motivating you to stay, assuring you will receive the pending salaries.

Now, you have two choices: (1) stay with the current company and look for a better future, or (2) if you do not see any future in the current company, try outside and provide a reference from the current CEO, as everyone has an equal chance of opportunities.

If you have decided to move ahead with new opportunities in a new company, then you may need to forgo 2 months' salary and think about future career growth and better prospects. (Regarding pending salary, you may request it from the CEO based on the improving situations; maintain good relations so that he will keep your cooperation in mind).

Regards,

BrainLight HR Solutions

Considerations for Unpaid Salaries

2 months' salary is not a coffee bite chocolate to let go!! All our employees are not so well-settled and living their lives with sophisticated luxuries!! Think of the cost of living, the dependents, financial settlements like loans. If the employer fails to pay for continuous months, where shall they go and what shall they do for all those? Will your bank accept the delay in paying the interest amounts? Or will they facilitate any concessions upon hearing your reasons for not getting paid by the company yet? This is India, and the population is huge; maintenance obviously is difficult, yet we are ahead in all without being a burden on the government for living. Depending on the wealth of the nation, employees do not accept the salary as charity; they earn it!!

Limitations of the Payment of Wages Act

Practically, nothing can be achieved by the Payment of Wages Act. It is not applicable to persons with a salary above Rs 18,000 per month. It is applicable to Contracting Officers under the S&CE Act unless the government notifies otherwise. Action by the Labor Department is possible, but its speed and outcome are limited. Even after that, if the employer is not paying wages, the maximum punishment is a fine of Rs 7,500 or attachment of the employer's property. If the employer has no property in their name, attachment is impossible. These kinds of ineffective laws are breeding grounds for trade unions.

Regards,
Varghese Mathew
Labor Consultant
[Phone Number Removed For Privacy Reasons]

In light of all the opinions expressed above, I would like to share my life experience outside of government service:

- While working in the private sector, a give-and-take policy should be adopted. If there is no pay, why should one beg for a salary without work?
- It's important to consider alternative employment during a job crisis.
- Offer suggestions to overcome such situations.
- Merely demanding a salary is not the only solution. Instead, consider seeking or demanding an alternative job based on the experience gained in your current job. Remember, "knowledge is power"; think in this direction.

Have a bright future.

When the company undergoes losses, the struggle is continuous, and there will be a lot of work pressure on employees. Assurance from the CEO implies this point, and yes, searching for another job is always a safe option.

In addition to the discussions above, I would like to suggest something to you, which might seem a bit unusual but has worked for me in the past. Instead of immediately resorting to legal action to avoid complications, consider approaching your CEO in a gentle manner, especially since you have had previous interactions with him that have not yielded results.

When you visit your boss's cabin, sit with your legs crossed in front of him, look him straight in the eyes, and then slowly scan him from top to bottom. In that moment, ask him a simple question: "DO YOU WANT ME TO APPROACH THE MEDIA/PRESS TO GET MY SALARY...???????"

Given the size of the company, your boss may feel uneasy about the idea of involving the media. Show him that you have media contacts in your phone which could potentially escalate matters, and this might be the push he needs to address your concerns.

It's worth taking a chance with this approach. If it doesn't yield the desired outcome, then you can consider legal options as a last resort.

A word of caution: Remember, your primary focus at work should not be solely about maintaining a good relationship with your boss or making friends. I trust you comprehend the implications of this statement.

Regards, Bharghavi