Legal Options If Your Employer Is Not Paying Your Salary in India: A Complete Guide
- Legal Associate
- Apr 11
- 8 min read
Introduction
Salary is not just a monetary component—it is the fundamental right of every employee in exchange for the services rendered to an employer. In India, issues of salary delay, partial payment, or non-payment are unfortunately common, especially in small and medium-sized enterprises or startups. While the corporate culture in India continues to evolve, thousands of employees still face hardship when employers fail to release rightful dues.
Whether you are a full-time employee, contract worker, or consultant, the law is clear: denial of salary is a violation of your legal rights. Fortunately, Indian law provides multiple legal remedies to address such grievances.
This comprehensive blog post will guide you through the available legal remedies If Your Employer Is Not Paying Your Salary in India. We will discuss the relevant laws, case precedents, and the step-by-step procedure to assert your rights.
Background and Overview of Salary Disputes in India
Salary disputes may arise due to various reasons:
Financial instability of the employer
Disputes regarding termination or resignation
Alleged performance issues
Disagreements over notice periods
Informal employment arrangements
However, none of these reasons allow an employer to withhold salary that has already been earned. Indian labour laws are structured to protect employees across all sectors, regardless of their job title or company size.
Before proceeding legally, it's important to understand the legal classification of your employment, as different laws apply to different categories of workers, such as:
Workmen under the Industrial Disputes Act
Employees under Shops and Establishments Acts or Labour Codes
Managerial personnel governed by contractual obligations
Each of these classifications impacts the type of legal remedy available to you.
Classification of Employees and Applicable Laws
Understanding your employment status is the first step in knowing your rights. Here’s how Indian law broadly classifies workers:
1. Workmen
Covered under the Industrial Disputes Act, 1947, "workmen" includes those employed in manual, skilled, technical, operational, or clerical work but excludes managerial or supervisory roles earning above a certain threshold.
2. Non-Workmen/White-Collar Employees
These include managers, supervisors, consultants, and administrative staff. They are not covered under the Industrial Disputes Act but can claim remedies under:
Shops and Establishments Act (State-specific)
Payment of Wages Act, 1936
Contract Law (Indian Contract Act, 1872)
Labour Codes (post-2020 reforms)
3. Contractual and Fixed-Term Employees
Remedies depend on the contract terms, but employers are still bound by applicable labour laws.
Legal Framework: Key Statutes Protecting Employee Salary Rights in India
India has a robust set of legal provisions that empower employees to claim their unpaid wages. Depending on the nature of employment, location, and quantum of salary, an employee can proceed under one or more of the following statutes:
1. Payment of Wages Act, 1936
Applicable To: Employees earning less than Rs. 24,000 per month (as per the latest amendment).Purpose: Ensures timely payment of wages and prevents unauthorized deductions.
Key Provisions:
Salary must be paid by the 7th or 10th of every month, depending on the size of the establishment.
Wages must be paid in current coin, currency, or via bank transfer.
Delays beyond the statutory date allow employees to file complaints before the Labour Commissioner.
Remedy: File a complaint with the Labour Inspector or Authority under the Payment of Wages Act.
2. Industrial Disputes Act, 1947
Applicable To: Workmen, as defined under the Act.Purpose: Governs disputes between employers and workmen, including disputes related to wages.
Key Provisions:
A workman can raise an industrial dispute regarding non-payment of wages.
The dispute can be resolved through conciliation, and if not settled, referred to the Labour Court or Industrial Tribunal.
Remedy: File a complaint through the Labour Department and initiate conciliation proceedings.
3. State Shops and Establishments Acts
Every state in India has its own Shops and Establishments Act, governing working conditions, payment of wages, and terms of employment in shops, commercial establishments, and private businesses.
Example: Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017
Key Provisions:
Employers are obligated to pay salaries within a prescribed period.
Violations can attract penalties and legal action through the local labour commissioner.
4. Indian Contract Act, 1872
Applicable To: White-collar employees or managerial staff not covered under labour statutes.Purpose: Enforces terms agreed in the employment contract.
Key Provisions:
If salary payment is contractually promised but not made, it amounts to a breach of contract.
The employee can file a civil suit for recovery of salary along with interest and damages.
Remedy: File a civil suit in the appropriate court of jurisdiction.
5. Code on Wages, 2019 (Yet to be fully enforced in all states)
This new legislation consolidates multiple laws including:
Payment of Wages Act
Minimum Wages Act
Payment of Bonus Act
Equal Remuneration Act
Once fully operational, it will provide a uniform wage code applicable across employment categories.
Real Indian Case Laws: Salary Disputes
Facts: Employee denied full payment of dues post-retirement.
Held: The Supreme Court ruled that denial or delay in legitimate payment of dues is a violation of fundamental rights and actionable under writ jurisdiction.
Held: The employer is legally bound to make timely salary payments. Withholding wages without valid reason or inquiry is illegal.
Held: Salary is a vested right, and denial without procedure established by law is unconstitutional and can be challenged in writ jurisdiction under Article 226.
Practical Steps to Recover Your Unpaid Salary
When an employer withholds salary—whether by delaying payment, paying only a portion, or refusing payment altogether—employees have several avenues to assert their legal rights. This section outlines a step‑by‑step roadmap for recovery, specifying the forum, procedure, and timelines under Indian law.
1. Internal Grievance Redressal
Before approaching external authorities, check whether your organisation has an Internal Complaints Committee or Grievance Redressal Mechanism as mandated under the Industrial Employment (Standing Orders) Act, 1946, or under corporate policy.
Submit a Written Grievance: Address it to HR or the designated officer, detailing the period of non‑payment, amounts due, and any prior reminders.
Timeframe: The committee typically must resolve grievances within 45 days of receipt.
Advantage: Demonstrates you exhausted internal remedies, which courts often view favourably.
2. Issue a Formal Legal Notice
If internal redressal fails or does not exist, send a legal notice through a lawyer to your employer demanding payment within 15–30 days.
Contents of the Notice:
Your employment details and designation
Salary due for specific months
Reference to applicable law (e.g., Payment of Wages Act, Industrial Disputes Act)
Demand for payment with interest (typically at 9–12% p.a.)
Warning of further legal action
Benefit: A formal notice often prompts employers to settle to avoid litigation costs and reputational harm.
3. Filing a Complaint under the Payment of Wages Act, 1936
If your monthly wages fall below ₹24,000, you can lodge a complaint under the Payment of Wages Act.
Where to File: Office of the Inspector of Labour or Deputy/Assistant Labour Commissioner in your jurisdiction.
Procedure:
Submit a written complaint along with proof of employment and unpaid wage slips.
The Inspector issues a notice to the employer.
After inquiry, if the employer is found guilty, a penalty (up to ₹1,000 per day of default) may be imposed.
The Inspector can order immediate payment of dues.
Timeline: Complaint must be filed within two years of the due date of wages.
4. Industrial Dispute under the Industrial Disputes Act, 1947
If you qualify as a “workman” under the Act:
Conciliation: File a dispute with the Conciliation Officer of the Labour Department.
Reference to Tribunal: If conciliation fails within 30 days, the dispute can be referred to the Labour Court or Industrial Tribunal.
Relief: These forums can order payment of wages, reinstatement (if terminated), and compensation.
5. State Shops and Establishments Act Complaint
For employees in shops, commercial establishments, and private offices:
Applicable Legislation: Varies by state (e.g., Maharashtra Shops and Establishments Act, 2017).
Authority: Labour Inspector or Local Commissioner under the Act.
Procedure:
File a written complaint with details of unpaid salary.
Authority conducts an inquiry.
Penalties (often daily fines) may be levied against the employer, along with an order for payment.
6. Civil Suit for Recovery under the Indian Contract Act, 1872
If you are a supervisory, managerial, or white‑collar employee not covered by labour statutes:
Cause of Action: Breach of employment contract.
Forum: Civil Court (District Court) with jurisdiction over your workplace.
Relief Sought: Principal salary amount, interest, and damages.
Limitation Period: Three years from the date salary became due (Limitation Act, 1963).
7. Writ Petition under Article 226 of the Constitution
When statutory remedies are inadequate or unreasonably delayed, employees may approach the High Court under its writ jurisdiction.
Grounds: Violation of fundamental rights (Article 21 – right to livelihood), or breach of statutory duty.
Relief: Writs of mandamus (compelling payment) or certiorari (quashing wrongful orders).
Limitation: No strict period, but courts expect prompt action.
Key Case Law: Regional Manager, SBI v. Rakesh Kumar Tewari – The Supreme Court held that salary is a vested right and can be enforced by writ petition.
8. Execution of Decrees and Orders
Once you secure an order—whether from a Labour Court, Civil Court, or High Court—it must be executed:
Execution Petition: File under Order XXI CPC in the same court.
Modes of Execution: Attachment of bank accounts, garnishee proceedings against third parties, attachment of movable/immovable property.
Timeline: Execution proceedings should commence within 12 years of the decree (Limitation Act, 1963).
Strengthening Your Case
1. Documentation: Building a Strong Foundation for Your Claim
The strength of your legal case heavily depends on how well you can prove your employment and unpaid salary. Maintain and organise the following:
Essential Documents:
Employment Offer Letter / Appointment Letter: To establish the terms and nature of employment.
Salary Slips / Pay Stubs: Past records help establish the salary pattern.
Bank Statements: To show the absence of credited salary during the relevant period.
Email/WhatsApp Communication: Any correspondence where you’ve requested your salary or acknowledged your employer’s confirmation.
Attendance Records / Work Logs: Especially important if your employer alleges abandonment or poor performance.
Resignation / Termination Letter (if any): Establishes whether your claim is for ongoing employment or final settlement dues.
Tip:
Create a timeline of your employment and salary default. This helps the court understand the pattern of non-compliance.
2. Expected Timelines for Relief
Each legal route has a distinct average resolution time:
Legal Route | Typical Timeline |
Internal Complaint | 1–2 months |
Labour Commissioner | 2–6 months |
Civil Court | 1–3 years |
Labour Tribunal | 6 months – 2 years |
Writ Petition (High Court) | 3 months – 1 year |
Arbitration | 6–12 months |
Pro Tip: While faster remedies exist (labour commission, mediation), they might not yield full compensation or damages. Higher courts offer stronger remedies but with longer delays.
3. Avoiding Retaliation or Harassment
In some cases, employers retaliate with threats, termination, or negative references. Know your rights:
Whistleblower Protections: Especially in large corporations and public enterprises.
Unlawful Termination: You may challenge dismissal under ID Act or Shops and Establishments Acts.
Defamation Safeguards: Any derogatory remarks or threats by the employer can be legally challenged.
4. Proactive Legal Strategy: Prevent Future Issues
Always sign a written contract.
Insist on monthly salary slips.
Record all professional communications, especially related to payment.
Use company email for salary-related communications—this is strong evidence.
Consult a lawyer before resigning or initiating a legal proceeding to ensure your claim remains valid and timely.
Conclusion: Protecting Your Right to Wages
In India, the right to receive timely and full salary is protected by law, regardless of whether you're a labourer, an IT professional, or a senior manager. The employer–employee relationship is governed by both statutory rights and contractual obligations.
If your employer is withholding your salary:
Know your classification: Are you a “workman” or managerial staff?
Choose the correct legal remedy: Labour commissioner, civil suit, writ petition, or arbitration.
File timely claims and preserve evidence.
Seek professional legal help where needed to avoid procedural delays or dismissals.
Employers delaying or denying wages not only breach trust but also violate labour rights and attract legal consequences including penalties, damages, and even criminal liability.
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