One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.

Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.

Mr.X worked for XYZ Pvt Ltd, a multinational company that decided to shut down its India operations due to severe cash flow problems. For the past four months, the company had not paid salaries to any employees. Now, the management was asking all employees to submit their resignations by month-end and sign new contractor agreements at reduced compensation rates. The company claimed this was the only way to continue operations and eventually clear pending dues. Mr.X and his colleagues were concerned about losing their employment benefits, provident fund contributions, and legal protections. The company pressured employees by stating that refusal would result in immediate termination without any settlement. This created a coercive situation where employees had no choice but to accept unfavorable terms or lose their jobs entirely.

Advice in Such Cases

Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

• Document all communications from the company regarding salary delays and conversion demands
• Do not resign voluntarily as this may waive your rights to compensation
• File complaints with labor authorities for non-payment of wages immediately

Applicable Sections of Law

Under the Bharatiya Nyaya Sanhita (BNS), Section 316 deals with criminal breach of trust when employers misappropriate employee funds. Section 318 covers cheating by inducing employees to act against their interests. The Bharatiya Nagarik Suraksha Sanhita (BNSS) provides procedures for filing complaints. Additionally, the Payment of Wages Act, Industrial Disputes Act, and Contract Labour Act apply. Companies cannot unilaterally convert employees to contractors without proper procedures and mutual consent.

If You Are the Complainant

• File a criminal complaint for non-payment of wages under relevant labor laws
• Submit application to Labor Commissioner for recovery of unpaid salaries
• Maintain detailed records of all salary delays and company communications
• Gather evidence of coercion regarding forced resignation and contractor conversion
• Join with other affected employees for collective legal action

If You Are the Victim

• Refuse to sign resignation letters under pressure and document the coercion
• Calculate total dues including salary, bonus, PF, and other statutory benefits
• Report the matter to relevant labor authorities and employment tribunals
• Preserve all employment contracts, salary slips, and company correspondence
• Consider filing for constructive dismissal if forced to leave

How the Police Behave in Such Cases

Police often treat employment disputes as civil matters initially. However, when criminal elements like breach of trust or cheating are involved, they must register FIRs. They may suggest approaching labor courts first but cannot refuse complaints involving criminal violations. Police investigations focus on financial irregularities and fraudulent practices by company management.

FAQs People Normally Have

Can company force me to become contractor? No, conversion requires mutual consent and proper legal procedures.

What if I refuse to resign? Company cannot terminate without following due process and paying full compensation.

Can I claim unpaid salaries? Yes, you can file complaints with labor authorities for wage recovery.

Are contractor agreements legally binding? Only if signed voluntarily without coercion or duress.

What Evidence Is Required?

• Original employment contract and appointment letters
• Salary slips and bank statements showing non-payment
• Email communications regarding forced resignation
• Witness statements from other affected employees
• Company notices about entity closure
• Provident fund and insurance contribution records
• Audio recordings of management meetings if legally obtained

How Long Will the Investigation Take?

Labor department investigations typically take 2-3 months for initial resolution. Criminal cases may extend 6-12 months depending on complexity. Civil recovery proceedings through labor courts usually conclude within 6-8 months. Timeline depends on evidence quality and company cooperation with authorities.

Advocate Sudhir Rao, Supreme Court of India