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

Mr. Sameer Verma had been working with a company named ‘Innovate Solutions Pvt. Ltd.’ which is registered in Pune. He decided to resign from his position a few months ago, in March 2024, to pursue a better opportunity. Despite completing all his formalities, his ex-employer has failed to clear his final settlement amount and has not credited his Provident Fund (PF) contributions. After waiting for a reasonable period, Mr. Verma sent a formal legal notice to the company. In response, the company acknowledged the dues but stated they would only be able to clear them by December 2024.

Mr. Verma is currently employed with a new company in Nagpur and his family residence is in Bhopal. He is in a dilemma regarding the jurisdiction for filing a legal case. He is unsure whether he can initiate legal proceedings from Nagpur or Bhopal, or if he is legally obligated to travel to Pune, where his former company’s head office is located, to file the case.

Advice in such cases

Dealing with an ex-employer who is withholding your hard-earned money can be stressful. However, the law provides remedies for such situations. Here are the steps you can take:

• Documentation is Key: Before initiating any action, gather all relevant documents. This includes your appointment letter, resignation acceptance, salary slips, bank statements, and any communication with the employer regarding your unpaid dues.
• Final Reminder: Although a legal notice has been sent, a final email clearly stating your intent to pursue legal action if the dues are not cleared by a specific date can sometimes yield results.
• Approach the Labour Commissioner: You can file a complaint with the Labour Commissioner in the area where you were employed. This office is empowered to conciliate and resolve disputes related to non-payment of wages and other dues.
• File a Civil Suit: A suit for recovery of money can be filed in a civil court. The question of jurisdiction is crucial here, which is explained below.
• PF Authorities: For non-payment of PF, a separate complaint can be lodged with the Employees’ Provident Fund Organisation (EPFO). The EPFO has powers to investigate and recover the dues from the employer.
• 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

Several laws in India protect an employee’s right to receive their salary and other dues on time. Key statutes include:

• The Payment of Wages Act, 1936: This Act regulates the payment of wages to certain classes of employed persons and ensures that employees receive their wages in a timely manner without any unauthorised deductions.
• The Industrial Disputes Act, 1947: An employee can approach the labour court under this act for the recovery of money due from an employer.
• The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952: This Act governs the functioning of the Provident Fund. Non-deposit of PF contributions by the employer is a serious offence under this Act.
• Code of Civil Procedure, 1908 (Section 20): This section is vital as it determines the jurisdiction of the court. It states that a case can be filed where the defendant (the company) resides or carries on business, OR where the cause of action, wholly or in part, arises. In employment cases, the “cause of action” can arise where the employee worked, where the registered office is, or where the employment contract was executed.
• Bharatiya Nyaya Sanhita, 2023 (BNS): In certain cases where there is an element of dishonest intention from the beginning, provisions related to cheating (Section 316 of BNS) or criminal breach of trust (Section 314 of BNS) may be invoked, though this is less common for simple non-payment of dues and requires a higher burden of proof.

If you are the complainant

If you are the one initiating the legal action, you need to be systematic and prepared.

• Organize Your Evidence: Create a file with all your employment documents, communication records, and proof of non-payment. This is the foundation of your case.
• Draft a Clear Complaint: Whether you are writing to the Labour Commissioner or filing a suit, your complaint should be clear, concise, and supported by evidence. Mention all the facts chronologically.
• Determine Jurisdiction Correctly: Based on where you worked and where the company is located, decide on the appropriate location to file your case. An error in jurisdiction can lead to the dismissal of your case at the preliminary stage.
• 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 aggrieved party, it is important to act strategically and not out of emotion.

• Do Not Delay: The law provides specific time limits (limitation periods) for filing cases. Unnecessary delays can weaken your claim or even bar you from seeking a legal remedy.
• Maintain Professional Communication: Keep all communication with your ex-employer professional and documented. Avoid getting into verbal arguments or sending abusive messages.
• Understand Your Rights: Review your appointment letter and the company’s policies to understand the exact terms of your full and final settlement.
• 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

Non-payment of salary is primarily a civil dispute, not a criminal one. Therefore, the police generally do not have a direct role to play. If you approach a police station, they will likely advise you that it is a civil matter and direct you to the Labour Court or a civil court. They will typically not register a First Information Report (FIR) unless you can provide strong evidence of criminal intent like cheating or criminal breach of trust from the very inception, which is often difficult to establish in such cases.

FAQs people normally have

Where can I file the case? In my current city, my hometown, or the company’s city?
As per Section 20 of the Code of Civil Procedure, you have options. You can file the case in Pune, where the company’s registered office is located. Importantly, you can also file the case where the ’cause of action’ arose. This means you can likely file the case in the city where you were employed and rendered your services, as your work and the non-payment of dues related to that work constitute a part of the cause of action. So, if Mr. Verma worked for the Pune-based company from an office in Nagpur, he could potentially file the case in Nagpur. Filing from his hometown (Bhopal) would be difficult unless part of the cause of action (like the offer letter was received and accepted there) occurred there.

Do I have to travel to the company’s city for every hearing?
If you file the case in the company’s city, you or your lawyer will have to attend the hearings there. However, if you file the case in the city where you worked, the company’s representatives will be the ones required to travel for the court proceedings.

Is it expensive to file a case against an employer?
The cost involves court fees, which are a percentage of the amount you are claiming, and the lawyer’s professional fees. Proceedings before the Labour Commissioner are generally less expensive than a full-fledged civil suit.

What evidence is required?

To build a strong case for the recovery of your dues, you will need to provide concrete evidence, including:

• Employment Contract/Appointment Letter: This is the primary document establishing the employer-employee relationship and terms of employment.
• Salary Slips: To prove your last drawn salary and the components of your pay.
• Bank Statements: To show the history of salary credits and the subsequent stoppage of payment.
• Resignation Letter and Acceptance Email/Letter: To prove the official end of your employment.
• All Correspondence: Any emails, letters, or messages exchanged with the HR department or management regarding your dues.
• Legal Notice: The copy of the legal notice you sent and any reply received from the employer.

How long will the investigation take?

The duration of legal proceedings in India can vary significantly. A case before the Labour Commissioner is often resolved faster, potentially within 6 to 12 months, as it follows a summary procedure. A civil suit, on the other hand, is a more lengthy process involving multiple stages like pleadings, evidence, and arguments, and can take anywhere from a year to several years to reach a final decision.

Advocate Sudhir Rao, Supreme Court of India