Startup Shutdown Without Notice: How Can We Ensure Our Salaries Are Paid?

Hi all, I joined a startup firm as an HR Manager in the last week of August. On 9th October, we received a call from our seniors informing us that they were going to shut down the firm on the same day. They promised to give us one month's salary within 2-3 days; however, they are now not responding to our calls and messages, and none of the four employees have received any payment from them. Additionally, we have not received any written communication about the company's closure.

Kindly help me with a solution to this problem or suggest what kind of legal action can be taken against them.

Warm regards,
Lata Joshi

As an HR Manager, unfortunately, you have no remedy under Labour Law. If the total strength of employees is less than 50, the employer can close down the undertaking without assigning or justifying reasons. However, the Closure Compensation stipulated under the Industrial Disputes Act 1947 will have to be paid unavoidably to "workmen" conforming to the definition under the same law.

However unfortunate the situation is for all of you, a reasonable solution is possible primarily through dialogue, discussion, and through Labour Law. Whether Civil Law can entertain such a complaint, I do not know. But even if it does, it will be a costly and time-consuming process.

This response is based on your inputs. If there are more facts, we may want to review the situation.

Regards,
Samvedan
October 21, 2014

Advice on Salary Claim for Startup Closure

You mentioned it is a startup firm with 4 employees, and hence I assume your salary to be $10,000 - $15,000. If you have the offer letter and material evidence of your presence at work on all working days in October, you can legally claim your one-month salary. However, I would advise you not to pursue this. It is not a small amount, and you deserve it. Still, considering the cumbersome legal procedures and the time you would have to spend in court, it would be in your best interest to forgo this and seek a new job. Take this as a learning experience.