What Can An Employee Do When The Employer Withholds Their Salary

Pinterest LinkedIn Tumblr +


The government has made various laws for the development, upbringing, and protection of the rights and interests of the workers and employees through various Central and State legislations. These employment legislations differ for different categories of workers depending on the type of employment. However, there are instances where the employees have to suffer non-payment of salary or withholding of salary by their employer.

In this article, we will discuss the responsibility of an employer for the payment of wages as per the Payment of Wages Act, legal remedies for non-payment of salary to the employee, what should you do if your employer withholds your salary, how to file a complaint before the labour court, what documents are required for filing complaint, how long can an employer withhold your salary and can a company legally hold salary of an employee if they resign without giving proper notice.

Every company should have an Employment Agreement to make sure the working relationship between the employer and employee is clearly defined. The Employment Agreement should cover the scope of work, terms, and termination of employment including the notice period that the employer/employee is required to give the employee/company in case of early termination, salary, duties and responsibilities, and such other clauses as may be necessary.

Responsibility of the employer for the payment of wages as per the Payment of Wages Act, 1936

The Payment of Wages Act, 1936 (“Act”) has put forward laws for the payment of wages, deductions, withholding or increments or promotions, fines, penalties, claims arising out of deductions from salaries or delay in payment of wages, and penalty for vexatious or malicious claims.

Section 3 of the Payment of Wages Act, 1936 has authorized the employer to pay all wages required to be paid under the Act to the person employed by them or by any person authorized on his behalf.

As per Section 5 of the Act, the payment should be made before the seventh or tenth of each preceding month. If the employment is terminated by the employer or any person authorized on their behalf, then the payment should be made before the second working day expires or from the date employment is terminated.

Legal remedies for non-payment of salary to the employee

An employee can, not only impose a fine on their employee through legal authorities but also seek redressal for non-payment of salary through the following method –

  • File a suit against their employer as per the applicable employment laws such as the Contract Labour (Regulation and Abolition) Act, Shops, and Establishment Act, Minimum Wages Act, Prevention of Wages Act, and Industrial Disputes Act;
  • Send a legal notice for clearing pending dues or non-payment of salary;
  • File an FIR against the employer for breach of an employment contract.
  • Complaint to the District Magistrate or Registrar of Companies (ROC) regarding the malpractice adopted by the company.
  • Claim the salary along with interest through labour court.

What should you do if your employer withholds your salary?

If the employer withholds your salary you can take the following actions –

Legal Notice – The first step is to send a legal notice within 90 days to the employer stating the grievance along with the time period since your salary is due. If the employer does not respond even after receiving legal notice then approach the labour commission.

Labour Commission – Next if your salary is below Rs. 18,000 then approach the labour commissioner for any non-payment of salary or discrepancy. However, If your salary is more than Rs. 18,000 then you can refer your matter to the civil court under Section 37 of CPC. The labour commissioner will try to reconcile between the employer and employee.

Labour Court – If the matter is not resolved through the labour commissioner, then the employee can refer the matter to the labour court. You can also file a suit under Section 33(c) of the Industrial Dispute Act, 1947 for recovery of salary either by the employee themselves or any person on their behalf within one year from the date it is due. The matter will be decided within 3 months by the labour court.

Civil Court – Likewise, an employee who is holding a managerial or executive post can file a suit for non-payment of salary in a civil court

NCLT – If your unpaid salary is between 1 Lakh to 1 Crore then you can apply to the National Company Law Tribunal (NCLT) for the recovery of unpaid salary. The NCLT may accept or reject the application within 14 days. The process will take around 180 days to be resolved. However, this time can be extended to another 90 days.

How to make a complaint?

An employee can make a complaint in the following manner –

Whenever you face a problem, firstly talk internally to the HR department of your company, and explain your problem. If HR fails to resolve the issue, then approach the higher department of your company. Now, if the higher department fails to resolve the dispute, then you can approach the labour court and file your complaint. While making complaints keep all the documents handy.

What are the documents required for filing the complaint in a labour court in India?

The following documents are required for filing the complaint –

• A copy of the employment contract;
• Joining letter;
• Bank statement for proving non-payment of salary;
• Such other details to prove the wages, bonuses, and benefits offered by the company.

When should a complaint be made in the labour Court?

The labour court does not entertain any petty issues, if you want your issues to be acknowledged by the court, then you should be aware of the labour regulations.
If the company discriminates on the ground of race, caste, religion, gender, etc., then a complaint can be filed for violation of human rights.
If the company indulges in unfair termination or terminates without notice; or
If the company breaches the terms of the employment contract.

What if the company is refusing to pay due to dishonest or deceptive intent?

A company that misrepresents their employee with the intent of deceiving them and gaining advantage from it is called corporate fraud. For example, the company under the pretext of lack of fund withhold the salary of their employee.

Hence, if a company is refusing to pay the employee due to any dishonest or deceptive intent then the company is indulging in corporate fraud. Such a company will be liable for a punishment of six months which may extend to 10 years under Section 447 of the Companies Act for indulging in fraudulent activities.

The employee can also file a criminal case against the company under the IPC for misrepresentation or fraud.

How long can an employer withhold an employee’s salary?

As per the Payment of Wages Act, an employer can withhold an employee’s salary for seven days following the last pay period, if they have 1000 or more employees.
In case of more than 1000 employees, the employer can withhold the salary for ten days following the last pay period.

Can a company legally hold the salary of an employee if they resign without a proper notice period?

The law requires the employer and employee to serve the notice of termination or resignation to the employee or company as the case may be. During this notice period, the employee is entitled to receive payment till the last working day of the employee. The notice period could be one month or three months depending on the employment contract.

If the employee fails to serve notice of resignation to the company. Then the company can take either of the following action –

• Sue the employee for breach of notice term contained in the employment agreement;
• Demand to serve a notice or pay a penalty to the company;
• Ask the employee to hand over the assets or other holdings of the company;
• Deduct the amount from the final salary or any other action depending on the circumstance.


There are many laws to protect the rights and interests of employees. Many employees are not aware of their rights and are often exploited by their employers. Through legal remedies, an employee or their heirs can claim for non-payment of salary along with interest. The employees who do not get paid for the work done can send a legal notice to the employer, a complaint to the labour commission, and if the issue is still not resolved then a complaint to the labour court. An employee whose salary is above Rs. 18,000 then they can file a civil suit.


Leave A Reply