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Remedies for non-payment of salary by an employer

LCI Thought Leader Rajesh Tandon
16 September 2023  
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The payment of salaries is the basis for the employer-employee contract in the context of employment agreements. Payment of salary is an essential component of maintaining livelihoods as well as a representation of an employee's contribution. But regrettably, there are times when employees may have to deal with the problem of their employers failing to pay their salaries. This article examines the different legal remedies open to employees who find themselves in the upsetting situation of their employers failing to pay their wages.


Before delving into the remedies, it is crucial to highlight the significance of timely salary payments. In addition to reflecting an employee's value to the company, adequate pay also provides the employee's financial security, which improves their general well-being. This equilibrium is upset by late or nonpayment of wages, which not only causes financial stress but also erodes the relationship of trust and loyalty between the employer and employee.

Salaries are the cornerstone of a person's financial security outside of the boundaries of the workplace. From providing for necessities to enabling personal growth and aspirations, salaries form the bedrock of an employee's economic life. Timely payments ensure the ability to meet financial obligations, from rent and bills to education and healthcare expenses. An employee who can count on receiving their salary as scheduled is better equipped to plan for their future, make informed financial decisions, and weather unexpected challenges.

Timely salary payments transcend the boundaries of a mere financial transaction. They symbolise respect, value, and mutual commitment. Beyond financial stability, they shape the emotional well-being of employees and the overall dynamics of the workplace. Recognizing the multifaceted significance of timely salaries underscores the importance of addressing the issue of non-payment promptly and decisively. Only by honouring this pivotal aspect of the employer-employee relationship can organisations create a sustainable, productive, and harmonious work environment.


A. Informal Resolution and Communication        

The initial step for an employee facing non-payment of salary is to engage in open and respectful communication with their employer. Misunderstandings or administrative errors might be the cause of the delay, and a candid conversation can often resolve the issue amicably. By maintaining a record of all correspondence, the employee can establish a timeline of their efforts to address the problem, which can be valuable should more formal action be required.

The path to resolution of non-payment of salary begins with the art of conversation. Engaging in open, respectful, and candid communication with the employer can unravel misunderstandings, rectify errors, and foster an atmosphere of mutual understanding. By documenting these interactions, employees lay the groundwork for any potential escalation of the issue. This informal approach not only offers a practical solution but also sets the tone for more constructive steps should the need arise.

B. Internal Company Procedures

In the intricate tapestry of corporate structures, the gears of internal mechanisms turn to address a multitude of issues that can arise in the dynamic realm of employment. When the unsettling cloud of non-payment of salary casts its shadow, employees can find solace in the internal avenues that organisations often provide for dispute resolution. These mechanisms, housed within the corridors of Human Resources (HR) departments and guided by specific protocols, offer a structured path toward resolving the issue while upholding the organisation's ethos.

Many companies have established mechanisms for addressing workplace disputes, including issues related to non-payment of salary. Human Resources (HR) departments or specific protocols might exist for employees to escalate their concerns. Engaging these internal channels can not only expedite the resolution process but also demonstrate the employee's commitment to resolving the issue within the framework of the organisation.

When the spectre of non-payment of salary casts its shadow, employees need not traverse the path of resolution alone. Organisations frequently establish internal procedures, guided by HR departments and structured protocols, to address workplace disputes. By engaging these mechanisms, employees not only expedite the resolution process but also demonstrate their commitment to resolving the issue within the organisation's framework. In these internal channels, a balanced blend of professionalism, documentation, and transparency paves the way toward equilibrium and harmony, aligning with the shared goal of nurturing a productive and amicable work environment.

C. Legal Notices and Demand Letters

If informal approaches fail, employees may consider sending a legal notice or demand letter to their employer. The issue is described in this formal communication, together with the steps the employee has already taken and what they want the employer to do to make things right. An employee's intent to seek legal redress can be demonstrated by a legal notice, which frequently motivates employers to take immediate action.

D. Government Intervention and Labor Departments

Employees might turn to regulatory or labour departments of the government for support if their employer continues to be unresponsive. Ensuring that employers follow labour laws and regulations is the responsibility of these organisations. By making a formal complaint, you may start an investigation, mediation, or other intervention intended to fix the non-payment problem.


A. Breach of Employment Contract

If there is an employment contract, the employer's failure to pay wages may be viewed as a breach of that contract. Based on the conditions stated in the employment contract, employees may investigate legal options. Before proceeding, it's vital to double-check that all terms and conditions have been understood because certain contracts may have provisions that influence the employee's entitlement to pay.

The breach of an employment contract presents employees facing non-payment of salary with a potential path to resolution grounded in legal principles. However, this avenue necessitates a comprehensive understanding of the employment contract's terms, potential clauses that might impact the employee's rights, and the complexities of legal action. By approaching breach of contract claims with diligence, seeking legal counsel, and evaluating the potential outcomes, employees can make informed decisions that align with their pursuit of equitable redress.

B. Wage and Labour Laws

Labour laws and regulations in various jurisdictions typically mandate timely payment of wages to employees. Penalties may be imposed on the employer for non-compliance with these laws. The right to seek redress for nonpayment based on these infractions is granted to employees who turn to labour courts or other pertinent legal agencies.

Labour laws stand as sentinels guarding the sanctity of the employer-employee relationship. When the unsettling reality of non-payment of salary emerges, employees can turn to these laws for protection and redress. The legal recourse through labour courts serves as a bastion of justice, upholding the principles of fairness, equity, and timely compensation. While navigating this legal avenue, employees must be cognizant of the potential benefits and challenges, ensuring that their pursuit of justice aligns with their goals and circumstances.

C. Small Claims Court

In cases involving relatively smaller amounts, employees might opt to pursue remedies through small claims courts. These courts handle disputes with simplified procedures, allowing individuals to present their cases without legal representation. If successful, employees can obtain judgments for unpaid wages, which can then be enforced against the employer.

Small claims court is a beacon of accessible justice for employees navigating the daunting terrain of non-payment of salary. The streamlined process, absence of mandatory legal representation, and potential for obtaining enforceable judgments make this avenue an attractive option for cases involving modest amounts. However, employees should approach this path with careful consideration, ensuring that their decision aligns with their goals, the complexities of the case, and their capacity to navigate the legal landscape.

D. Mediation and Arbitration

If you want to settle a dispute without going to court, mediation or arbitration may be a good alternative in some jurisdictions. With the aid of impartial third parties who promote discussions between the parties to arrive at a conclusion that is acceptable to both, these alternative conflict resolution techniques help resolve disputes.

Mediation and arbitration can be quicker and less adversarial than going to court. Mediation and arbitration emerge as guiding lights for employees navigating the intricate maze of non-payment of salary disputes. These alternative dispute resolution methods, facilitated by neutral third parties, offer swift, less adversarial, and more collaborative avenues for reaching resolutions. Mediation and arbitration show off the potential of negotiation and communication in creating solutions that go beyond the limitations of conventional litigation by enabling employees and employers to engage in open discussion and look for common ground.


J. Aswartha Narayana, vs The State Of Andhra Pradesh, 2021

In this case, it was ruled out by the Supreme Court of India that the non-payment of part of the eligible salary to the employees in service is violative of Article 21 of the Constitution of India. The major contention of the petitioner from the beginning of the dispute was that, the deferment of part of salary, is in contravention of Article 300-A of the Constitution of India.

Union Of India (Uoi) . vs Ram Nath Chitory, 1966

The facts of the case were that Ram Nath Chitory Knowal, plaintiff, was employed as a clerk in the Posts and Telegraph Department and after a departmental enquiry was dismissed on 19th January, 1952. From 9th April, 1946, to 18th January 1952, he remained under suspension. He filed the suit on 5th March 1957, challenging the order of his dismissal and claiming Rs. 32,737.70 P. as arrears of his pay till 28th February, 1957, and also future pay and allowances at Rs. 275 per month till the decision of the suit. In this case, it was held that if an employer fails to pay the wages within the prescribed time, the employer is liable to pay compensation to the employee.

Air India Statutory Corporation vs United Labour Union & Ors, 1996

In this precedent, the appellant did not abolish the contract system and failed to enforce the notification of the Government of India dated December 9,1976. The respondents came to file writ petitions for direction to the appellant to enforce forthwith the aforesaid notification abolishing the contract labour system in the aforesaid services and to direct the appellant to absorb all the employees doing cleaning, sweeping, dusting, washing and watching of the building owned or occupied by the appellant-establishment, with effect from the respective dates of their joining as contract labour in the appellant's establishment with all consequential rights/benefits, monetary or otherwise. Here, the Supreme Court held that the wages under the Payment of Wages Act, 1936, include not just the basic wages but also other allowances that are ordinarily necessarily payable to the employee.


The following are the related statutes that enable employees to receive fair and timely remuneration for the work done from the Employers:-

  • Equal remuneration Act, 1976
  • Payment of wages Act, 1936
  • The Payment of Bonus Act, 1965
  • The Minimum Wages Act, 1948

In recent times, these four statutes mentioned above have been subsumed into a Single Labour code known as THE CODE ON WAGES, 2019.


An employee's financial situation and sense of job satisfaction can be greatly impacted by the nonpayment of compensation, which is a disturbing issue. Although it is the responsibility of employers to give timely and accurate remuneration, disagreements can occur. A variety of legal options are available to employees, from informal discussions and internal procedures to formal legal action, government intervention, and alternative dispute-resolution techniques.

Employees need to be informed of their rights and responsibilities under the law and any employment agreements when navigating these remedies. The best course of action based on the unique circumstances can be determined with the help of legal counsel. By pursuing the available remedies effectively, employees can not only recover their unpaid salary but also assert their rights and contribute to fair and ethical workplace practices.

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