Employers regularly fail to pay their employees’ salaries. Employers commonly feel that their employees are uninformed of their rights or are afraid to submit a complaint against them due to the lengthy procedure. There are, however, several laws in place to safeguard employees’ rights to reclaim unpaid pay and interest.
Due to unpaid dues, the employee has sent a legal notice
Employees get their wages on schedule thanks to the Payment of Wages Act of 1936. However, if an employer refuses or delays paying an employee’s or worker’s salary or wages, the employee or worker is entitled to interest on the amount owed for the delay in paying the wages or salary. The employee can then issue a legal notice to the employer demanding that the wage be paid. When submitting a legal notice to an employer, a certain list of papers is necessary, such as:
- Bank statements, for example, can be used to prove underpaid pay.
- Letter of appointment
- Salary, benefits, compensation, and perks information
- Copy of Contract of Employment
When an employer receives a Legal Notice from an employee, he is obligated to pay the overdue dues plus interest to the employee. If the employer refuses or fails to do so, the employee may pursue other legal remedies such as Insolvency and Bankruptcy Mode, Arbitration and Mediation, and a lawsuit to recover unpaid wages.
2016 Insolvency and Bankruptcy Code
In this technique, the employee or a group of workers files a petition under the Insolvency and Bankruptcy Code, 2016 for the payment of outstanding salary. Following the filing of a petition, a resolution professional is appointed, and a creditors’ committee is formed. If a satisfactory solution for wage payment cannot be found, the firm will be liquidated.
To register a complaint under the IBC, the employee or workers must send the employer a demand notice for payment of overdue dues. If the employer fails to pay within the specified period, the firm will be placed into insolvency. In most cases, such a procedure can be started by applying to the adjudicating body, which in this case is the National Company Law Tribunal or NCLT.
Arbitration and Mediation
Arbitration is an expensive process that can only be employed if it is included in the employment contract. In addition, the execution of the decision reached in arbitration takes time. Mediation is a procedure in which a neutral third person listens to both parties’ disagreements and assists them in reaching a peaceful resolution. However, mediation can be beneficial in this situation only if the employer is ready to follow the mediator’s conclusion.
Filing of Lawsuit
Under the legislation, an employee can pursue two types of lawsuits for non-payment of salary:
Civil Suit: A civil suit can be filed by an employee under the Civil Procedure Code. Typically, the employee is obliged to issue a formal notice to the employer seeking payment of dues. If the employer refuses or fails to do so, the employee has the right to file a lawsuit against them. You may bring a summary suit in District Court under order 37 of the Civil Procedure Code. Following the filing of a lawsuit, a summons is issued, and the employer has 10 days to appear in court. If the employer fails to present, the decision is made in the employee’s favor. The employee must also have documentation of employment and must launch a lawsuit within three years after the date on which he was due his wage.
Criminal Suit: It is the employer’s responsibility to pay the employee’s wage on time. If he rejects, refuses, or fails to do so, the employee might file a criminal complaint under Section 420 of the Indian Penal Code for deceit and breach of trust.
If an employer pays a salary via cheque that bounces and then refuses or forbids issuing a new payment, the employee might launch a lawsuit under the Negotiable Instruments Act of 1881.
Conclusion
You must be aware of your rights as an employee. Please keep in mind that if you work as an independent consultant or professional, you may not be able to pursue the options listed above, except for bringing a lawsuit for breach of contract. To further understand and assess your alternatives, you should consult with a lawyer.
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