Are Companies Legally Required to Pay Salaries by the 7th? What If They Don't?

I have seen a video in which a lawyer informs that each and every company, even private ones registered under the Shop and Establishment Act, needs to pay salaries by the 7th of every month. Is this true? What happens if they pay salaries after the 7th, maybe by the 11th of the month? Many employees' EMIs are bouncing due to this delay. Can an employee sue the company?

Yes, it's true. Companies, including private ones under the Shop and Establishment Act, should pay salaries by the 7th of every month. If salaries are consistently paid late, causing EMI issues, an employee may have grounds to sue the company.

There is no need for you to go and sue the company. There is a simpler method: collect all the data on delayed salary payments for as many past months as possible. Then take it to the Labour Inspector and make a vocal complaint against the firm. If the Labour Inspector insists, you need to give the complaint in writing. The Labour Department has to initiate action based on the complaint, and the rest will be taken care of.

There are Acts and Rules to govern the payment of salary and wages by the 7th or 10th day of the succeeding month, considering the workforce strength. Neither the authorities are proactive in monitoring nor do the employees lodge specific complaints for undue delays in payments.

In most countries, there is no single hard rule that salary must be paid by the 7th specifically. However, many have labor laws that require regular and timely payment of wages.

Under the Payment of Wages Act - Due Date for Salary Payment and Wages

As per the provisions of the Payment of Wages Act, 1936, wages need to be paid to employees before the expiry of the 7th day from the last day of the wage period, where the number of employees is less than 1,000. In case the number of employees is more than 1,000, wages must be paid before the expiry of the 10th day from the last day of the wage period.