Company threatening legal consequences when I asked for Final Salary Settlement

Hi All,

I was working in a Bangalore startup that is registered in Mumbai. Its CEO sits in the US office. I joined in March 2016 as a fresher with a salary of 3 lakhs per annum, out of which I used to receive 2.4 lakhs per annum, and the remaining 60 thousand would be paid by the company after successfully completing 1 year.

After completing 1 year in the company and due to the lack of projects, I started looking for a job elsewhere, which I found and subsequently resigned. I served a 1-month notice period (even though the offer letter suggested 2 months) and joined another company.

None of the local Indian managers prevented me from joining another company within 1 month, and they assured me that I would receive my last month's salary and final settlement within 1 month. However, it has now been almost 3-4 months, and despite my repeated follow-ups, including emails to the CEO, I did not receive any response. Today, I received an email from him stating:

"We are reviewing your employment contract, and it appears that you did not serve the required notice period. The India Center should not have provided clearance to your current employer. I have involved a law firm, and our company lawyer will contact you regarding the next steps."

P.S: I have already received the "relieving letter" and "experience letter" from the India center but have not received my last month's salary and final settlement (60 thousand).

Please advise if I should continue to follow up with him via email or let it go, considering it could potentially create problems for my current employer.

Thanks in Advance.

Dear Sagar,

I recommend you contact the labor office under whose jurisdiction your office falls. Make a formal complaint to the labor officer as non-payment of wages is illegal. Labor officers take a stern view of this unfair labor practice.

Thanks,

Dinesh Divekar

Dear Sagar,

As our learned friend Mr. Dinesh suggested, you can approach the Labour Officer to get the issue resolved because the relieving letter has been issued to you, and you need to be paid your dues. Additionally, please check if the company has sent any notice from the legal department, as informed by the CEO, for providing a proper reply to it.

Thank you, Mr. Divekar, for the reply.

Thank you, Mr. Patnaik. I am still a little skeptical about the labor department complaint (as I don't know how things will get around there) but have emailed the CEO about any updates regarding the Final Salary Settlement.

Thank you for the help; I will keep you all posted.

Regards,
Sagar

Dear Sagar,

Please do not be skeptical about the helpfulness of the labor department. They are helpful to the employees. The labor department does not get deterred by the might of the MNCs. Non-payment of wages is illegal under the provisions of the Karnataka Shops and Establishment Rule, 1963. If a formal complaint is received, it will not be taken lightly.

When you approach the labor officer, carry with you proof of your employment like an appointment letter, a photocopy of your ID (in case you have it), salary slips, bank account statements, etc. Try speaking in the local language. If you do not know the local language, then take someone with you who speaks the local language.

Upon receipt of your formal complaint, they will schedule a meeting to hear both parties. Both parties are given a fair chance to prove their point. Nevertheless, in general, there is an invisible tilt towards employees.

Lastly, since you are confronting your ex-employer by approaching the labor department, they may get incensed and attempt to sabotage your Background Verification (BGV) conducted by future employers. Therefore, while talking to the labor officer, explain this issue and try to obtain a good conduct certificate on the company letterhead.

All the best!

Dinesh Divekar

Dear Sagar,

I strongly agree with Mr. Divekarji. You can seek the help of the labor office of the area under which this establishment exists. You need to check the "relieving letter" and its contents before going to the labor office.

Dear Sagar,

You need not worry as they cannot take any legal steps against you. Since you have already confirmed that they have provided you with a relieving letter and an experience letter, it suggests that you were relieved in good faith and in agreement with your employer. Any action they take against this will be seen as an afterthought with ulterior motives to withhold your money. You are entitled to the same, and do not worry, the Labour Department is always helpful towards employees. Your complaint will not only be entertained, but they will close it once and for all and ensure to stop any further harassment. Best of luck.

Dear friend,

I agree with the suggestions of the friends above. You need not worry. However, please review the release letter to see if there are any conditions attached. Your salary for the following month is not payable to you as your resignation notice was short by one month, as per the conditions of the offer letter. The rest of the payments are due to you, subject to the issuance of a clear No Demand Certificate.

Thank you.

Dear Sagar,

I think the company involved in this issue must be one in the IT or ITES sector. Then, it is an establishment falling under the Karnataka Shops and Commercial Establishments Act, 1962. If so, the source for redressal suggested by our learned friend Mr. Dinesh is quite appropriate. Your grievances with the ex-employer are:

1. Non-refund of the sum of Rs. 60,000 deducted from your salary even after completion of the one-year service in the company.
2. Withholding of your last month's salary.

There is no question of being skeptical or hesitant as Section 18 of the KNS&CE Act, 1962 prescribes the mode of recovery of unpaid wages under the provisions of the Payment of Wages Act, 1936, while Section 21 of the Act enables the application of the PW Act, 1936 to the employees of the shops and commercial establishments by reference. If your resignation was unconditionally accepted, and you were relieved after serving one month's notice period, it should be deemed that your offer of one month's notice period was accepted by the employer with a waiver of the remaining one month, and as such, they cannot withhold your last month's salary.

I think the law firm or the company lawyer cited by the CEO would also appreciate this legal position. Even otherwise, they cannot deny the refund of the deducted amount of Rs. 60,000 from your monthly salary. Therefore, write back to the company about all these matters. If it is not fruitful, file a claim under Section 15 of the PW Act, 1936 before the authority, who will normally be a State Deputy Commissioner of Labor for the area.