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

Mr. Alok Sharma found himself in a difficult position several months after leaving his job at a tech firm, “Innovatech Solutions Pvt. Ltd.,” located in Vidyanagar. Despite having left the company on good terms nearly a year ago, his final settlement and dues remain unpaid. When he followed up with the HR department, they began to raise issues about his notice period. They claimed he was liable to pay for not serving the full contractual notice period.

However, Mr. Sharma had a clear mutual understanding with his reporting manager that he could leave with a short notice of a few days, provided he completed his handover responsibilities. He complied with this agreement, provided the required notice, and has email communications to substantiate his claim. The company even issued him an experience certificate, which implicitly acknowledges a formal and proper exit. Despite this evidence, the company is now using the notice period as a pretext to withhold his rightful dues and has resorted to making threats. This situation has left Mr. Sharma seeking clarity on the legal recourse available to him to recover his hard-earned money.

Advice in such cases

If you are facing a similar issue where a former employer is wrongfully withholding your final salary or dues, here are some steps you can take:

• Gather All Documentation: Collect every piece of relevant paper, including your appointment letter, resignation email, the company’s acceptance of your resignation, any communication about the notice period waiver, previous salary slips, and the experience or relieving letter.
• Send a Legal Notice: The first formal step is to have a lawyer send a detailed legal notice to the company. This notice will outline your claim, mention the lack of payment, refer to the evidence you have, and demand the payment of your dues within a specific timeframe (usually 15 or 30 days). Often, a stern legal notice is enough to prompt the company to settle the matter.
• Approach the Labour Commissioner: If the legal notice does not yield results, you can file a complaint with the Labour Commissioner’s office in your jurisdiction. They have the authority to mediate and pass orders for the recovery of unpaid wages.
• File a Civil Suit: As a final resort, you can file a summary suit or a regular civil suit for the recovery of money in the appropriate civil court. This is a more formal and potentially time-consuming process but is effective for enforcing your rights.
• 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 dues on time. The key legal provisions include:

• The Code on Wages, 2019: This modern code consolidates previous labour laws related to wages, including the Payment of Wages Act, 1936. Section 17 of the Code mandates that the final wages of an employee must be paid within two working days of their removal, dismissal, retrenchment, or resignation.
• The Industrial Disputes Act, 1947: If you fall under the definition of a “workman” as per this Act, you can seek remedies for unfair labour practices. Withholding legitimate dues can be construed as such.
• Indian Contract Act, 1872: Your employment agreement is a contract. If the employer fails to pay your dues as per the terms of employment and your formal exit, it constitutes a breach of contract, for which you can claim damages and recovery of the owed amount.
• Bharatiya Nyaya Sanhita, 2023 (BNS): If the employer’s actions involve elements of deceit or dishonest intention from the beginning, it could potentially attract criminal provisions. For instance, if there is a clear case of fraudulent inducement, provisions related to cheating (Section 318 of BNS) or criminal breach of trust (Section 316 of BNS) could be explored, although non-payment of salary is primarily a civil dispute.

If you are the complainant

As the employee who has been wronged, it is crucial to act methodically:

• Organize Your Evidence: Create a clear timeline of events and arrange all your documents, emails, and messages chronologically. This will be invaluable for your lawyer and for any legal proceedings.
• Do Not Engage in Informal Arguments: Once the company has made its stance clear, avoid getting into heated arguments over the phone or email. Keep all further communication formal and, if possible, route it through your lawyer.
• File a Formal Complaint: Do not just rely on verbal assurances. Initiate the process by sending a legal notice, followed by a complaint to the Labour Office if necessary. A documented trail of your efforts is crucial.
• 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

Being in this situation can be stressful. Here is how you should handle it from a personal standpoint:

• Stay Calm and Professional: Do not let the employer’s threats or delay tactics intimidate you. Your case is strong if you have followed the agreed-upon terms and have evidence to back it up.
• Preserve Every Interaction: Save screenshots of text messages, record calls (after informing the other party, as required by law), and back up all emails. Do not delete any communication, no matter how insignificant it seems.
• Act Promptly: The law prescribes limitation periods for filing cases. Delaying action can sometimes weaken your case or even bar you from seeking a remedy. It is best to seek legal advice and act as soon as you realize the employer is not going to pay amicably.
• 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

Typically, the non-payment of salary is considered a civil dispute, not a criminal one. Therefore, the police will generally not register an FIR for this issue. If you approach a police station, they will likely advise you to seek remedy from the Labour Court or a Civil Court. Police intervention is only warranted if there are clear elements of a criminal offense, such as criminal intimidation (threats to cause harm), cheating, or criminal breach of trust. Even then, the police may be hesitant to intervene in what they perceive as a “master-servant” or employment-related dispute.

FAQs people normally have

• Can my employer legally withhold my final settlement for not serving the notice period?
  An employer can only deduct pay in lieu of the notice period if your employment contract explicitly states this and if you left without serving the required notice without any mutual agreement to waive it. If there was a mutual agreement or if the company condoned your early exit (e.g., by issuing an experience letter), they cannot legally withhold your dues.
• What if the agreement to waive the notice period was only verbal?
  A verbal agreement is harder to prove but not impossible. Your conduct and the employer’s subsequent actions (like issuing an experience letter) can serve as circumstantial evidence of such an agreement. This is why having it in writing, even in an email or text, is always better.
• Is an experience letter proof of a full and final settlement?
  Not necessarily of the financial settlement, but it is strong proof that your exit was considered formal and proper by the company. It weakens their argument that you absconded or left improperly, making their claim of deducting notice period pay less credible.

What evidence is required?

To build a strong case for the recovery of your dues, you will need the following evidence:

• Employment Contract / Appointment Letter: This document outlines the terms of your employment, including salary, benefits, and the notice period clause.
• Resignation Letter/Email: Proof that you formally resigned from your position.
• Communications about Notice Period: Any emails, text messages, or official letters where the waiver or shortening of the notice period was discussed and agreed upon.
• Experience or Relieving Letter: A crucial document showing the company acknowledged your last working day and relieved you of your duties.
• Last Few Salary Slips: To establish your monthly salary and the components of your dues.
• Bank Statements: To prove that the final settlement amount was never credited to your account.

How long will the investigation take?

The timeline for resolving such a dispute can vary significantly based on the path you choose:

• Legal Notice: The company is typically given 15 to 30 days to respond to a legal notice. Many cases are resolved at this stage.
• Labour Commissioner: Proceedings before the Labour Commissioner are relatively faster than courts. It can take anywhere from 3 to 9 months to get an order.
• Civil Court: A civil suit is the longest route. Depending on the court’s workload, it can take anywhere from a year to several years to get a final judgment. However, summary suits, if applicable, can be much faster.

Advocate Sudhir Rao, Supreme Court of India