Is My Employer Breaching Contract by Delaying Monthly Payments? Seeking Advice on Resignation

I have been facing this issue for the last two months since I joined my company. I am a contract employee, and in the offer letter, it is mentioned that I will be paid monthly. Below is the line from the offer letter:

"You will be paid a consolidated Consulting Fee of Rs. XX,000/- (Rupees XX Thousand) per month, subject to TDS as per the tax laws."

Breach of Contract Concerns

Is it a breach of contract by the employer if I am not paid monthly on time? I received the first payment after 50 days and the second payment after 40 days. I have not been paid monthly in a 30-day pay cycle but instead on a 40 or 45-day cycle. Is this a breach of contract? I am on a 6-month fixed contract.

Seeking Guidance on Resignation

Please guide me on how to proceed. I do not want to continue with the company as I am not being paid on time. How should I resign? Please guide as I have a 30-day notice period.

Payment of Wages Act and Breach of Contract

The contract employees, whose salary does not exceed Rs. 18,000/-, are covered under the Payment of Wages Act, 1936. As per Section 5 of the Act, an employer is supposed to pay the monthly salary before the 7th day of the wage month where less than 1000 persons are working, and before the expiry of the 10th day where more than 1000 persons are working. Your contention is correct; it is certainly a breach of contract by an employer if the salary is not paid on time.

However, to enforce it, you need to take legal recourse if your salary exceeds Rs. 18,000/- per month, or file a complaint with the concerned labor authority of the state if the salary doesn't exceed Rs. 18,000/-. As mentioned by you, you can put in your resignation by giving a month's notice or pay the one-month salary to the employer if you are interested in being relieved immediately, provided your employer agrees.

Regards,
BS Kalsi

"You will be paid a consolidated Consulting Fee of Rs. XX,000/- (Rupees XX Thousand) per month, subject to TDS as per the tax laws.

In my opinion, the above line stipulates a consulting fee and not a monthly salary. It is further pointed out that this simply depicts a per month rate with no specific mention of when the payment is to be made. Therefore, how can we claim a breach of contract, and how can we prove the same?

Clarification on Consulting Fee as Salary/Wages

I wish to clarify whether a Consulting Fee can be considered as Salary/Wages. Also, does the term 'per month' legally bind the payer to make the payment upon the expiration of the month?

Regards, V K Gupta"

Contractual Payment Terms and Legal Implications

Mr. Gupta's contention is correct. It is a contract with fees, not a salary. The fees are a monthly amount and for a fixed term. Therefore, it is not covered under the Payment of Wages Act, irrespective of the salary limit.

I don't think the letter states he will be paid on the 30th day of each month. It is normal for bills to be paid after they are processed, and therefore 50 days (meaning 20 days after the end of the month, assuming that he has submitted his bill on time) is a normal payment cycle. The second time he was paid within 10 days of the end of the month.

The legal stand is as above.

In practical terms, if it is actually a salaried job shown as a contract for tax purposes or to avoid long-term employment commitments, then it's unfair of the employer to pay late. The employee is free to resign and search for alternate jobs. However, he cannot simply resign; he needs to send a notice of termination of the contract due to the delay in payment of fees. But I suspect the employer can hold back his payment in such a case. It's a point we can't predict as we don't know the circumstances of the employment/contract.

Now, I want to know from the original Vitsb 1 what amount of TDS is being deducted from his monthly payment, if any. This I just want to know for further clarification on the topic.

V K Gupta

Consideration, whether in the form of a consulting fee or salary, is the basis of a contract. In turn, the employee renders services as a consultant or employee.

A delay in salary or fees constitutes a breach of the agreement or contract, and remedies can take the form of giving notice to cease contractual obligations.

I am certain that the contract or terms of engagement would include provisions regarding the termination of the contract.

Dear sir, I am facing a situation with the MNC company. There is no issue for permanent employees. However, as a contract employee with a salary of less than 15k and 10% TDS deducted from my salary every month, I am encountering difficulties. I have drafted an email to the VP, RMG, and Assistant Manager Head as I work in recruitment. They have mentioned that they are working on the payment cycle. I submit my invoices and timesheets by the last day of each month, but I am finding it hard to continue here. I raised a grievance 2 months ago, and I have been with the company for the last 3 months. Please advise on how to resign or be relieved from the company. My reporting manager, who is also an Assistant Manager, has informed me that I can resign and wait for a 30-day notice period. However, I am concerned about whether the accounts department will release the cheque within that time frame. He has taken 50 days previously and mentioned that for a contract employee, they keep 20 days' pay in advance. Please guide me on the appropriate steps to take in this situation. Thank you.

From what you have reported in this post, you are not an employee under contract. Therefore, you do not have any protection under the labor laws. Your payment terms and payment cycle should have been finalized when you started the work. Otherwise, the standard payment cycle of 50 days is quite common. There is no law stating that they have to pay you the day you submit your invoice.

Since you are not an employee, you cannot resign. Instead, you need to give a notice of contract termination due to payment delays. A reasonable notice period of 30 days, as requested by your manager, should be provided. I am sure your payment for the last bill you raised will be paid by them at the end of the termination period within the normal 50-day cycle.

Without delving into what the other members suggested, I recommend you look at the situation from a different perspective. You are on a contract for 6 months, out of which 2 months (or is it 3?) have already elapsed. The balance would be 4 or 3 months. Even if you resign now, your notice period would be 30 days, meaning whether you like it or not, you will have to serve for another month at least from the date of resigning.

You also need to keep in mind the scenario Saswata Banerjee mentioned, "I suspect the employer can hold back his pay, net in such a case," is quite possible.

Another point to consider is that you have focused only on the delayed salary. How about the work culture or the work itself? Do you think you are adding positively to your resume? You mentioned this is an MNC, so I see at least the brand name being added in a positive way to your resume.

Nathrao is right about our legal system, "remedy is worse than the disease."

My suggestion is for you to continue until your completion of the contract and move on with the experience docs. Since it's a contract, the company may not hold any of your last month's fees/salary.

In a way, you are better off than permanent employees who don't get their salaries on time. In your case, you at least know when you need to move on. While this may not be the best-case scenario one desires, it surely is not the worst-case scenario too.

All the best.

Regards,
TS