Mr. Sameer Khanna, a talented software developer, was thrilled to join a promising startup, “TechLeap Innovations,” in the city of Gyanpur. His appointment letter included a two-year employment bond for a sum of ₹2,00,000, which he signed, anticipating a stable and growing career. For the first six months, everything went smoothly. However, the company soon began facing financial issues, and Sameer’s salary started getting delayed, first by a week, then by a month, and eventually, he had not been paid for over two months.

Stressed and unable to meet his financial obligations, Sameer found a new job opportunity. However, he was worried about the employment bond. He questioned whether he could leave the company without serving the notice period and without being penalized under the bond, given that the company had failed to uphold its primary obligation: paying his salary on time.

Advice in such cases

When an employer fails to pay salary on time, it constitutes a fundamental breach of the employment contract. This gives the employee certain rights. Here is what you should do:

• Document Everything: Keep a record of all employment-related documents, including your appointment letter, the employment bond agreement, salary slips, and bank statements showing the non-receipt or delayed receipt of salary.
• Communicate in Writing: Send formal emails or letters to the HR department and your reporting manager regarding the non-payment of your salary. This creates a paper trail proving that you have raised the issue.
• Formal Resignation: If you decide to leave, submit a formal resignation letter. Clearly state that your resignation is due to the company’s fundamental breach of contract, specifically the non-payment of salary for a specified period. This positions your departure as a consequence of the employer’s actions, not a voluntary breach on your part.
• 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 of 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.

Applicable Sections of Law

This situation is primarily governed by the Indian Contract Act, 1872, and relevant labour laws.

• Indian Contract Act, 1872: An employment bond is a contract. The non-payment of salary is a material breach of this contract by the employer. As per Section 39 of the Act, when one party (the employer) refuses to perform its promise in its entirety, the other party (the employee) may put an end to the contract.
• Section 74 of the Indian Contract Act, 1872: This section deals with compensation for breach of contract. Even if a bond specifies a penalty amount, the court will only award “reasonable compensation” for the actual loss or damage caused by the breach. An employer must prove they incurred specific expenses on your training or development to claim any amount. They cannot claim the entire bond amount as a penalty.
• The Payment of Wages Act, 1936: This Act mandates the timely payment of wages and provides a mechanism for employees to recover unpaid salaries. Unjustified delays are a violation of this Act.

If you are the complainant

If you are the employee whose salary has been withheld and you are being threatened with the employment bond, here are the steps you can take:

• Gather All Evidence: Collect your appointment letter, contract, salary slips, bank statements, and all written communication with the company about the delayed payments.
• Send a Legal Notice: Through a lawyer, you can send a legal notice to the company demanding your unpaid salary and stating that the employment bond is unenforceable due to their breach of contract.
• Approach the Labour Commissioner: You can file a complaint with the office of the Labour Commissioner in your jurisdiction for the recovery of your unpaid wages.
• File a Civil Suit: You can also file a civil suit for the recovery of your dues. If the company sues you for the bond amount, you can file a counter-claim for your unpaid salary and damages.
• 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 of 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.

If you are the victim

As the employee who is the victim of this contractual breach, your focus should be on protecting yourself and asserting your rights.

• Do Not Abscond: Do not simply stop coming to work. Formally resign and clearly state the reason (non-payment of salary) in your resignation letter. This strengthens your legal position.
• Respond to Company Notices: If the company sends you a legal notice demanding the bond money, do not ignore it. Engage a lawyer to send a detailed reply explaining your side and highlighting their breach of contract.
• Preserve Communication: Save all emails, messages, and letters. If discussions happen verbally, follow up with an email summarizing the conversation to create a record.
• 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 of 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.

How the police behave in such cases

Disputes related to employment bonds and unpaid salaries are civil in nature. The police have no jurisdiction in such matters. If you approach the police, they will and should rightly direct you to approach the Labour Court or a Civil Court. This is not a criminal offense, so police intervention is not applicable unless there are elements of criminal intimidation, fraud, or cheating, which must be proven separately.

FAQs people normally have

What evidence is required?

To build a strong case, you will need the following evidence:

• The signed Employment Contract and Appointment Letter.
• The Employment Bond agreement.
• Previous salary slips to establish your monthly salary.
• Bank statements showing the non-credit of salary for the disputed period.
• Emails, letters, or any other written communication sent to HR or management regarding the issue.
• Your resignation letter and any response received from the company.

How long will the investigation take?

Since this is a civil dispute, there is no “investigation” in the criminal sense. The duration of the legal process depends on the path you choose:

• Labour Commissioner: Proceedings here are relatively faster and may be resolved within 6 to 12 months.
• Civil Court: A lawsuit in a civil court is a longer process. It can take anywhere from 2 to 5 years, or even longer, depending on the complexity of the case and the court’s workload.

Often, a strongly worded legal notice from a good lawyer can lead to a settlement without having to go through the entire litigation process.

Advocate Sudhir Rao, Supreme Court of India