How Can I Recover Salary Dues When My Employer Claims Financial Hardship?

Please advise on how to recover salary dues from employers. The employer admits that the dues are genuine but does not pay, claiming a lack of funds and poor financial conditions. The labor commissioner is unwilling to act as they only have jurisdiction over workers and not managerial staff. Early advice via email will be highly appreciated.

Quite a few employees are going through this. Look at what is happening to Kingfisher. Despite DGCA instructing them to pay salaries, they threw up their hands. Last month, Spicejet faced the same situation. DGCA threatened them. The employees were lucky to get their salaries. Many more companies are existing like that. There is nothing much one could advise from the point of view of a relationship between employer and employee.

The Company's Act of 1956

The Company's Act of 1956 could come to your rescue if you are able to file a winding-up petition. But that's a long-drawn process. You obviously have to consult a good lawyer and see whether they could help. But do you have the wherewithal to withstand long durations incurred on account of the slow process of litigation in India?

As you are aware, your employer/organization is currently experiencing a financial crisis, which is preventing them from paying salaries to many employees, including yourself. It is important for you to understand the current situation of the company.

We all acknowledge the challenges that come with such difficult times, especially when facing financial difficulties and delayed payments from the employer. However, it is crucial to remember that they have not refused to pay your pending dues or salary. The manager who has provided insight into the company's situation is also an employee, just like you.

I do not believe that filing a complaint with the labor commissioner or any other official department will be beneficial at this time. It would be best to patiently wait for the company's condition to improve. Once the situation stabilizes, you can expect to receive all your outstanding dues.

Ensuring Payment of Dues Under the Shops and Establishments Act

It is the duty of the inspector under the Shops and Establishments Act to ensure that an employee receives their relieving and dues. Approach the inspector under the Act, and also seek information under the RTI Act, 2005, to inquire about the steps taken to ensure compliance with the provisions of the Shops and Establishments Act regarding the payment of dues.

The easiest way to recover dues is to seek sanction from the inspector under the Shops and Establishment Act, for example, under section 45 of the Delhi Act, and prosecute the employer through the criminal court. There are chances of early settlement; otherwise, the magistrate can order compensation under CrPC while convicting him.

I feel that personal discussions and gentle persuasion could be more effective than legal proceedings. Pursuing legal action against the employer might not be beneficial, as it could potentially delay the payment even if the employer is capable of paying. I have experienced a similar situation, and hence, this is my advice.

Regards,
Deepak Vasudevan
HR Professional

When you want to send a legal notice to the employer, double-check that you have no issues with them. In case of any issues, they might reopen the file and reply to your legal notice. In this process, you have to bear more expenses from the returns. My advice is to follow up with the employer and try to negotiate.

Hi Ravi, I'll advise that you try to understand the financial condition of your company. Ups and downs are a part of life, so keep in touch with your employer and negotiate when needed.