gpareek 28 August 2015

Salary not paid to any employee by a start up

I never thought this would happen to me but unfortunately I am been fooled by this new Startup company. I have over 15 years of experience in large companies each having turn over in 1000's of crores. This year in April I got in touch with a new E commerce startup which was doing a lot of marketing on Social Media and had already published articles in newspapers claiming that they will be receiving about 100 crore of funding from some of the well-known investors. The articles also contained the name of VC's and were published in some of the most reputed newspapers of our country.

I tried to do my own due diligence with whatever little information available and asked these guys about basics like registration of company, Vat TIN Numbers etc. At that time they were operating a website of some seasonal products and had a payment gateway on their website. Hence they told me that all legalities are in place. I thought it will be a nice opportunity to be a part of this emerging group because if it becomes successful, i could also benefit immensely as lot of professionals in the startups have already done in India.

I joined this new company in the month of Jun 2015 and have been working since last 75 days. Initially they told me that you will receive your June salary by July 10th but when I did not receive my salary till 15th I pressed the panic button and started writing mails to the founder. He promised me in writing that the salary will be credited in next couple of days. I waited for a week and then travelled to Delhi to meet them face to face. the founder said that he is facing financial crisis but will clear my al my dues by 15th August. But I am already on end of august and haven’t received any salary. i also came to know that none of the employees joined in April May have been paid and two of them have already left after working for four months without any salary.

I am still working for him, I have company e mail ID from which I have send mails to over 60 top companies for tie up. he gave me offer letter on 9th of July but it is not signed. They are releasing full page ads in newspapers promoting their company but not releasing salary of any employee.

I have mails from him assuring me release of my salary but now I am sure he does not intend to pay anyone. Can someone please guide me what action should I take because I do not want people like him spoil the great platforms startups are giving to Indian economy. Even our Prime Minister spoke about Start up's on this independence day. About 20% of IIT'ians are joining startups instead of working for more established companies.

For a startup today you don't have many check's except that you go on trust.

Sorry for the long post but I wanted to make things as clear as possible.

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4 Replies

Kumar Doab (FIN) 28 August 2015

Scan the offer letter and send it by email and demand to sign it.

Demand appointment letter, salary slip of each month as well.

Avoid such unscruplous employers. They suffer from mindset that they shall attaract employees that will work for free for them or leave without getting paid.

Inspector appointed under (Name of the state) Shops & Commercial Establishments Act, : Such establishments are covered by the Act and you must be covered by the def. of ‘Employee’ as in the Act. This Act does not discriminate between ‘Workman’ and ‘Non Workman’……………and it is inserted in the Act that in case service conditions are not defined then this Act shall govern the service conditions.

O/O Labor Commissioner; if you are covered as “workman’…………………and your counsel may opine that you are covered.

Higher/Highest Officials of Dept. of labor of your state...............

Employee's/Trade Unions e.g. CITU/INTUC/AITUC/BMS etc

Your counsels may opine that you can lodge complaint u/s 406,420 and file ‘winding up’ petition as unpaid wages are debt on employer, civil suit for recovery etc.

gpareek 28 August 2015

Thanks Kumar for your reply. My problem is that I am based in Bangalore and the employer is based in Noida. So how do i go about the legal process. should I appoint a counsel in Noida or bangalore. if in Noida then I will have to travel number of times which will be an additional cost and difficulty. Also i havent resigned yet. So should i resign first and then serve the notice or continue as an employee and serve the notice.

I asked him to sign the letter but he shrugged it saying the appointment letter is from company Email Id so its legal.

Kumar Doab (FIN) 28 August 2015

What is issued to you ; offer letter or appointment letter?

Has it been inserted in offer letter /appointment letter that jurisdictional courts shall be at Noida?

Have you accepted the offer/appointment by email?

You may not have to necessarily agitate at Noida until or unless you are not covered as ‘Workman’ as in ID Act or ‘Employee’ as in Shops and Establishments Act.

Minute everything in writing under proper acknowledgment. However before you write anything now, let it be drafted by an able Labor Law Consultant/Service Matters lawyer/Law Firm, and you may proceed further after understanding merits and options.