If you are stuck in such a situation, here is what to do.

Mr. Sameer found himself in a difficult position after leaving his job at a tech startup, “InnovateNext Solutions,” in the city of Gyanagar. Over his last few months at the company, he was instructed by the CEO, Mr. Vikram, to pay for various official business expenses and subscriptions from his personal account, with the promise of full reimbursement. These expenses accumulated to a significant sum of nearly ₹4 lakh.

Despite repeated follow-ups via email and WhatsApp, Mr. Vikram, who, along with his wife, ran the company, consistently avoided the issue. He would often cite being out of the country or lacking the “bandwidth” to process the payments. This behavior was not new; Mr. Sameer knew that the company had a history of not paying vendors and withholding the final salaries of employees who resigned. Troublingly, there were also instances where the founders had allegedly threatened to file false complaints to intimidate employees asking for their rightful dues. After two months of unanswered requests, Mr. Sameer left the organization but was now faced with the challenge of recovering his hard-earned money.

Advice in such cases

• Document Everything: Keep a meticulous record of all expenses, including invoices, receipts, and bank statements showing the debits from your account. Preserve all communication with your employer regarding these expenses and the reimbursement requests, such as emails, WhatsApp chats, and official communication portal messages.
• Send a Formal Demand: Before escalating the matter, send a final, formal email clearly itemizing the outstanding amount, referencing prior communications, and setting a firm deadline for payment. This creates a clear paper trail.
• Wait for the FnF Settlement Period: Companies typically have a 45 to 60-day period for the Full and Final (FnF) settlement after an employee’s last working day. While you should wait for this period to conclude, do not be solely dependent on it, especially if the employer has a history of non-payment. Use this time to prepare your next steps.
• 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

While this may seem like a simple case of non-payment, it can involve both civil and criminal laws under the new Indian legal framework.

• Indian Contract Act, 1872: Your employment agreement, whether written or verbal, creates a contractual obligation. When your employer instructs you to incur expenses for the company, an implied contract for reimbursement is formed. Their failure to pay is a clear breach of this contract, making you eligible to file a civil suit for recovery of money.
• Section 314 of the Bharatiya Nyaya Sanhita (BNS), 2023 – Criminal Breach of Trust: It can be argued that by instructing you to use your personal funds for company work, the employer entrusted you with the responsibility of making payments on their behalf. Their subsequent refusal to reimburse you could be construed as dishonestly misappropriating the benefit derived from your funds for their own use, which is an offence under this section.
• Section 316 of the Bharatiya Nyaya Sanhita (BNS), 2023 – Cheating: If it can be established that the employer had a dishonest intention from the very beginning—that is, they induced you to spend your money with no intention of ever paying it back—it could amount to cheating. The company’s history of non-payment to others can be used as evidence to suggest a pattern of fraudulent behavior.

If you are the complainant

• Gather All Evidence: Systematically organize all documents: employment letter, bank statements, invoices for the expenses, and all digital communication (emails, chats) where you requested reimbursement and where your employer acknowledged or deflected the request.
• 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.
• Send a Legal Notice: Your lawyer will draft and send a formal Legal Notice to the employer. This is an official warning that you intend to pursue legal action if the dues are not cleared within a specified period (e.g., 15 or 30 days). Many disputes are resolved at this stage to avoid litigation.
• Initiate Legal Proceedings: If the employer doesn’t respond to the legal notice, your lawyer can advise on the best course of action. This could be filing a summary suit for recovery of money in a civil court, which is a faster procedure for undisputed claims, or filing a criminal complaint with the police.

If you are the victim

• Stay Calm and Methodical: Do not let emotions drive your actions. Approach the situation systematically by focusing on collecting evidence and seeking professional advice.
• Avoid Public Confrontation Initially: While it may be tempting to post about the issue on social media, this can sometimes complicate legal proceedings. It is best to follow the formal legal route first.
• Preserve All Communication: Do not delete any emails or chat messages related to the matter. Take screenshots and back up all digital evidence in a secure place.
• 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

Often, the police may initially perceive such a complaint as a “civil dispute” concerning the recovery of money and might be hesitant to file a First Information Report (FIR). They may advise you to approach a civil court directly.

However, a well-drafted complaint prepared by an experienced lawyer, clearly outlining the elements of criminal offences like Cheating (Section 316 BNS) or Criminal Breach of Trust (Section 314 BNS), can persuade the police to register an FIR. The criminal route often exerts significant pressure on the accused to settle the matter quickly. If the police refuse to file an FIR, your lawyer can file a private complaint directly with a Magistrate under Section 175 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, asking the court to direct the police to investigate.

FAQs people normally have

What evidence is required?

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

• Your employment contract or appointment letter.
• Invoices and receipts for all the expenses you paid for.
• Bank account or credit card statements showing the transactions.
• All written communication (emails, WhatsApp, Slack, etc.) where you were asked to incur the expenses and where you requested reimbursement.
• Any communication where the employer acknowledged the dues but failed to pay.
• Your resignation letter and any communication related to your exit and FnF settlement.

How long will the investigation take?

The timeline for resolution can vary significantly:

• Legal Notice: An employer typically has 15 to 30 days to respond to a legal notice. The matter could be settled within this period.
• Civil Suit: A summary suit for recovery can take anywhere from 6 months to a couple of years, depending on the court’s workload.
• Criminal Case: While a criminal trial is a long process, the pressure from an FIR and initial investigation can often lead to a much faster out-of-court settlement, sometimes within a few months.

Advocate Sudhir Rao, Supreme Court of India