Is It Legal for Companies to Delay Salary Payments Until After the 10th Each Month?

Dear All,

I want to confirm, can a company pay salary to employees by the 10th or 15th of every month to prevent cases of employees receiving their salary early and then leaving the job? Is it legal to pay the salary after the 10th of each month?

Vaishali

Dear Vaishali,

Please note, as per the Payment of Wages Act, you can pay salary to the employee on or before the 7th of every month. Salary can be paid until the 10th if the count of employees is more than 1000.

Thank you.

You are paying salary to the employees for the work already done by them in the previous month, and that is their entitlement. How can you delay the payment beyond the 7th or 10th of the succeeding month for the lame excuse that they might quit? Even if they quit, they are not taking any salary in advance. So, this practice is not only illegal but unethical.

B. Saikumar
HR & Labour Relations Adviser
Navi Mumbai

Thanks for the views. I just needed to know what is correct as per HR laws. Our company has been very employee-oriented and never delayed any salary beyond the 7th. We have always been ethical. However, lately, we have had very terrible experiences with employees leaving, taking their salary without serving the notice period, and exceeding their entitled leaves. Obviously, we need to find a solution that is beneficial to both management and employees.

Vaishali

As an employer, you have the right of lien over dues such as bonuses, unpaid wages, or any payments to be made under the contract of service to an employee. You can adjust the same against the dues recoverable from him at the time of making F&F settlement.

B. Saikumar
HR & Labour Relations Adviser
Navi Mumbai

"Lately, we have had very terrible experiences of employees leaving without serving the notice period, taking their salary, and exceeding their entitled leave days. Obviously, we need to find a solution that benefits both the management and the employees. If you claim to be employee-friendly, such occurrences should not be regular.

Reviewing the leave system

Taking more leave than entitled requires a review of the system. If an employee exceeds their entitled leave, it should result in leave without pay and potential further administrative or disciplinary actions. What kind of work is being done by employees who leave without notice? Analyzing this trend and its underlying reasons is crucial before considering payment after the 10th of the succeeding month, which is illegal.

Identifying root causes

Look inward to identify the root causes. In today's labor market, employees are mobile and will leave for better offers. Retaining them poses a challenge that necessitates decent pay, fair treatment, and good working conditions."

Well, sometimes even with a very friendly environment and decent pay, employees tend to leave if they have done anything wrong, which is affecting the company financially. We have had experiences where an employee has caused losses for the company and, before the company could find out, smartly took the salary and left the company.

In such cases, the company loses on the 30-day notice period, loses on the leaves taken by the employee, and faces financial losses to address.

Question about employee leave entitlement

When it comes to leaves, that is why my question was: Is an employee entitled to 21 days of leave and, let's say, 2 days per month accumulate the leave for 4 months and wants to take them together? Can we just deduct 6 days' salary for 2 days of the 8 days' leave and pay the rest of the 6 days at the end of the financial year? In this way, we are providing them with paid leave but in a different manner.

Regards, Vaishali

Payment of Wages Act, 1936

1. The time of payment of wages to any industrial or other establishment in which less than one thousand persons are employed shall be before the expiry of the seventh day.

2. Industrial or other establishments with more than one thousand employees shall pay wages before the expiry of the tenth day after the last day of the wage period for which the wages are due.

3. In the case of termination, if the employment of any person in an establishment is terminated due to the closure of the establishment for any reason other than a weekly or other recognized holiday, the wages earned by that person shall be paid before the expiry of the second day from the day the employment is terminated.

Please also review the State Wages Rule.

Thanks & Regards,

Sumit Kumar Saxena