I am working in a metal manufacturing industry. Due to some financial issues, we are not able to pay salaries to our executives and above for the time being.
Legal Implications of Withholding Salaries
Are there any legal implications if we are forced to withhold salaries for more than two months? If so, could you please provide references as well?
Thank you,
Regards,
Shailendra
Senior Executive HR & IR
From India, Silvassa
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Legal Implications of Withholding Salaries
Are there any legal implications if we are forced to withhold salaries for more than two months? If so, could you please provide references as well?
Thank you,
Regards,
Shailendra
Senior Executive HR & IR
From India, Silvassa
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Instead of thinking in a legal way, please consider a more humanitarian approach. You may be in a good position to support your family without your salary for more than two months. However, not everyone can manage to go without their salary for that long. Therefore, I urge you to resolve the issue as soon as possible, rather than prolonging it for more than two months.
Thank you.
From India, Kumbakonam
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1189Thank you.
From India, Kumbakonam
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Thank you very much, Ramakant Sir. You have provided really useful information. Dear Bhaskar ji, you are also right. However, if the organization is unable to pay salaries on time, we as HR personnel will need to think outside the box.
From India, Silvassa
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From India, Silvassa
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Payment of Wages Act, 1936
The only Act to deal with the payment of wages in India is the Payment of Wages Act, 1936, which unfortunately is not applicable to persons with wages above Rs. 18,000 per month. Therefore, there is no legal impact if the salary is delayed for employees with a salary above Rs. 18,000 per month.
Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]
From India, Thiruvananthapuram
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The only Act to deal with the payment of wages in India is the Payment of Wages Act, 1936, which unfortunately is not applicable to persons with wages above Rs. 18,000 per month. Therefore, there is no legal impact if the salary is delayed for employees with a salary above Rs. 18,000 per month.
Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]
From India, Thiruvananthapuram
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I totally agree with Mr. Verghese's view. As mentioned above, executives are not considered workers or labor. Therefore, the Payment of Wages Act shall be applicable in this case.
On the contrary, in view of Mr. Ramakant, I would like to share here that the Delay of Payment Act shall be applicable only when a payment date is specified in the contract.
So, the Delay of Payment Act can be valid under The Indian Contract Act, 1872, as there should be a commercial contract between two parties. However, it is challengeable to appeal under the Delay of Payment Act as I believe that none of the companies mentioned the committed salary payable date in any employment letter.
Regards.
From India, Mumbai
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On the contrary, in view of Mr. Ramakant, I would like to share here that the Delay of Payment Act shall be applicable only when a payment date is specified in the contract.
So, the Delay of Payment Act can be valid under The Indian Contract Act, 1872, as there should be a commercial contract between two parties. However, it is challengeable to appeal under the Delay of Payment Act as I believe that none of the companies mentioned the committed salary payable date in any employment letter.
Regards.
From India, Mumbai
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I have read numerous articles on this topic within the past 24 hours, and the conclusion is that if an employee is earning more than ₹18,000 per month and the company halts their salary, they cannot take any legal action. If I am mistaken, please correct me.
Regards,
Shailendra
From India, Silvassa
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Regards,
Shailendra
From India, Silvassa
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Your perception is entirely wrong. It is not that the individual cannot do anything legally. As they are qualified and thinking of their future and livelihood, they are not approaching the court of law. However, whenever the tolerance level crosses its border, the company has to face the consequences. They can easily create records for non-payment and approach a good lawyer to drag the company in front of the court of law and potentially close its operation. So, do not underestimate their power.
Regards.
From India, Kumbakonam
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Regards.
From India, Kumbakonam
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Dear Shailendra,
Instead of thinking in a legal way, please consider a humanitarian approach. You may be in a good position to support your family without your salary for more than 2 months. However, not everyone can manage without their salary for an extended period. Therefore, try to resolve the issue as soon as possible instead of prolonging it for more than 2 months.
I completely agree with Mr. Bhaskar. Put yourself in your subordinate's shoes and consider what you would do in that situation. Not every problem can be solved through legal means; sometimes, a humane perspective is necessary. Remember, we are all part of HR - which stands for Heart Relations as well as Hard Relations.
Regards,
boss2966
From India, Rudarpur
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Instead of thinking in a legal way, please consider a humanitarian approach. You may be in a good position to support your family without your salary for more than 2 months. However, not everyone can manage without their salary for an extended period. Therefore, try to resolve the issue as soon as possible instead of prolonging it for more than 2 months.
I completely agree with Mr. Bhaskar. Put yourself in your subordinate's shoes and consider what you would do in that situation. Not every problem can be solved through legal means; sometimes, a humane perspective is necessary. Remember, we are all part of HR - which stands for Heart Relations as well as Hard Relations.
Regards,
boss2966
From India, Rudarpur
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I have seen all the above posts. However, I still question the motive behind the question, "Is there any law or act to recover these withheld salaries from the employer?" If the full or more than half of the salary per month has been on hold for more than 6 months, or the total salary amount has increased by 1.5 Lac or 2 Lac and is still accumulating, does it reflect the non-competitiveness of the worker?
The question that arises is: if a person is not getting their salary for that long (more than 6 months), why are they still working with that employer? Why didn't they leave? Are they competitive or not? Please reply.
From India, Delhi
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The question that arises is: if a person is not getting their salary for that long (more than 6 months), why are they still working with that employer? Why didn't they leave? Are they competitive or not? Please reply.
From India, Delhi
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My opinion is that the stoppage of anyone's salary is an offense and goes against natural justice. Don't think that the persons "come under the purview of the word employee or worker or labor" and that his salary is not defined under some limitation of rupees. Okay?
Beyond any act, there is one law of the land, the Constitution of India. All labor laws and other existing acts are framed based on that.
Regarding Salary Stoppage
Do not consider stopping salaries. If you are unable to run the factory at a profit, cease operations and declare closure according to the law's norms. Those employees are covered under the Minimum Wages Act, and you have an obligation to pay all your employees before the 7th of every month.
Legal Precedents
In the Bhopal gas tragedy, even foreign owners and partners were brought to trial here. It is better to take loans from suitable banks and pay regularly.
Minimum Wages Act Guidance
According to the Minimum Wages Act, if the employer lacks the capacity to pay full salaries for 100 workers but can only pay 60 persons, engage only 60 persons and pay their salaries regularly.
Legal Consequences
One more suggestion: these types of inquiries go against labor laws. If any trade union or NGOs file a case against the firm, or if any related court takes suo motu action against the company, it may lead to legal consequences.
From India, Nellore
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Beyond any act, there is one law of the land, the Constitution of India. All labor laws and other existing acts are framed based on that.
Regarding Salary Stoppage
Do not consider stopping salaries. If you are unable to run the factory at a profit, cease operations and declare closure according to the law's norms. Those employees are covered under the Minimum Wages Act, and you have an obligation to pay all your employees before the 7th of every month.
Legal Precedents
In the Bhopal gas tragedy, even foreign owners and partners were brought to trial here. It is better to take loans from suitable banks and pay regularly.
Minimum Wages Act Guidance
According to the Minimum Wages Act, if the employer lacks the capacity to pay full salaries for 100 workers but can only pay 60 persons, engage only 60 persons and pay their salaries regularly.
Legal Consequences
One more suggestion: these types of inquiries go against labor laws. If any trade union or NGOs file a case against the firm, or if any related court takes suo motu action against the company, it may lead to legal consequences.
From India, Nellore
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It is quite strange and unfortunate that a Senior Executive of HR & IR (he himself being a victim?) asks about the legal consequences of forceful non-payment of salary beyond two months to the executives of his company! First and foremost, it is a clear breach of the contract of employment on the part of the management.
If any one of the affected executives sues the company (though time-consuming and retaliation-prone, it is the only source of remedy to gold-collar employees), what would be the image of the company? If any creditor or banker comes to know of this, he will certainly move the High Court for the closure of the company in case it is registered under the Companies Act or stop overdraft facilities, declare NPA, and suspend your banking operations.
If you can, impress upon your management that no executive can work with a trust deficit. Every sailor knows that it is always better to jump out of the sinking ship before it fully drowns. Instead of brooding over postponing payment of salary further and its legal impacts, better try to resolve the problem as expeditiously as possible.
From India, Salem
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If any one of the affected executives sues the company (though time-consuming and retaliation-prone, it is the only source of remedy to gold-collar employees), what would be the image of the company? If any creditor or banker comes to know of this, he will certainly move the High Court for the closure of the company in case it is registered under the Companies Act or stop overdraft facilities, declare NPA, and suspend your banking operations.
If you can, impress upon your management that no executive can work with a trust deficit. Every sailor knows that it is always better to jump out of the sinking ship before it fully drowns. Instead of brooding over postponing payment of salary further and its legal impacts, better try to resolve the problem as expeditiously as possible.
From India, Salem
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