Facing Salary Delays in Our Factory: Can We Legally Postpone Payments?

Our management is asking to hold the salaries for the workers for another 5 days. We have been paying salaries on or before the 7th of every month. Nowadays, factory production is dull, so it has become very difficult to arrange funds for their salaries. They said this situation will continue for another 6 months. Is there any provision in the act to obtain permission for the same from the Inspector of Factories? Please advise.

Thanks,
Stephen

State Government Reporting Guidelines for Workforce

Generally, when the workforce strength is less than 1000, the guideline set by the state government is to submit reports on or before the 7th of each month. For establishments with a workforce exceeding 1000, the deadline is extended to the 10th of each month as per the state government's directive. It is crucial to adhere to these rules to avoid potential issues. Failure to comply may lead to employees filing complaints with the labor court under the Payment of Wages Act.

Yes, employees would be able to go to the labor court. However, can the company get permission to pay salaries on or before the 15th of every month for the next six months? The company has been paying salaries on time (7th) for the past 30 years.

There is no chance to stop the payment for employees. Every month, all industries should pay. You can take the benefits from their allowance-cutting process; there is no demand on that. Alternatively, you can provide their bonus based on the year-ending calculation, considering a six-month basis; there is a loophole in that.

Consideration of EPF and ESIC

Kindly consider the employees' EPF and ESIC; there are norms of pay. So, you can take a path in allowance and additional benefits for cutting the amount.

Regards,
M. Murasolimaran Sr. HR Crew (P) Ltd.

Thank you, Mr. Murasolimaran. So, can we pay Bonus + DA before the 7th and the remaining amount before the 15th? Management does not want to cut their allowances as they have only recently raised their salaries. Due to the current market situation, Management was unable to pay their full salaries on time. However, they aim to remain clear on legal matters.

We have already paid the full bonus along with some ex gratia, and statutory payments will be made on time.

Thank you,

Stephen

Change the Perspective on Salary Payments

Salary has to be paid once every 30/31 days. What difference does it make to the management? Whether the company's finances are under pressure or not, the salary outgo will occur every 30/31 days. The payment date is immaterial; in fact, salary should be paid a few days before the month ends to motivate workers.

Are all the employees covered under the Payment of Wages Act, i.e., drawing less than Rs. 15,000 salary? If so, the Payment of Wages Act will apply, and you have to follow the provision of paying by the 7th of each month.

Thank you.

I wanted to know if, due to the tough situation, the company can pay Basic + DA on or before the 7th, and the remaining allowances can be paid between the 10th to 15th for the next six months.

Payment of Wages Act Applicability

I believe the Payment of Wages Act will be applicable for salaries less than Rs. 10,000. The ESIC limit is 15k.

I wanted to know if, due to the tough situation, the company can pay Basic + DA on or before the 7th, and the remaining allowances can be paid between the 10th to 15th for the next six months. I think the Payment of Wages Act will be applicable for salaries less than Rs. 10,000. The ESIC limit is 15k.

Payment Schedule and Legal Compliance

Wages must be paid on or before the 10th of every month. In case of any delay, you should inform employees, post a circular on the Notice Board after obtaining permission from the Recognised Union and ALC beforehand, explaining the circumstances leading to the delay and indicating the tentative date of payment. However, there cannot be any delay in the remittance of EPF & ESI contributions, as any delay in these may result in penalties/interest. If possible, part salary could also be disbursed before the due date. It may also be possible to change the payment date with the agreement of the Union & ALC to suit the availability of funds (once in 30/31 days). Please refer to the Payment of Wages Act.

Regards,
Kumar.s.

The Government of India, Ministry of Labour, has revised the ceiling limit under the Payment of Wages Act, 1936, from Rs. 6500 to Rs. 10,000 effective from 8th August 2007, as per their notification S.O. No. 1380(E). Mr. Harshil Patel has rightly pointed out that if the workforce strength is less than 1000, the payment must be made on or before the 7th of each month. However, if the strength exceeds 1000, the payment deadline is extended to the 10th of each month, as mandated by Section 5 of the Payment of Wages Act, 1936. While the appropriate Government has the authority to exempt certain classes of individuals from these payment conditions, it is rare for such exemptions to be granted in practice. Therefore, seeking such permission from the government may prove to be a futile exercise.

In response to your query regarding whether the company can pay Basic + Dearness Allowance (DA) on or before the 7th, and the remaining allowances between the 10th to 15th for the next six months, I would advise you to refer to the definition of wages under the Act, which encompasses all forms of remuneration (be it salary, allowances, or otherwise) expressed in monetary terms.

Thank you.

Regards.

Considerations for Salary Payment Timing

It is best to consider how other aspects affect the timing of salary payment. The ESI and PF contributions are required to be made before the 21st and 15th, respectively. It can be challenging for management to allocate funds and prepare salary, PF, and ESI payments within a short timeframe.

Thank you.

It is true that we need to follow statutory provisions. The Labour Department normally acts when there is a complaint. You may discuss with your union and come to an understanding in writing, then submit the same to the Labour Department. Since your requirement is for a short time, you may consider this option if the union cooperates. However, do not delay in dealing with ESI, PF, etc.

Regards.