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

Aditya, a young student, took up an internship as a Consultative Sales Intern at a home decor company named ‘Elegant Designs’ in Chandigarh during his break year. The promised stipend was ₹11,000 per month. However, the work environment turned hostile, with the owner constantly harassing him and making personal attacks. Feeling targeted, Aditya eventually agreed to leave the internship when the owner repeatedly suggested it.

After he left, the company withheld his final month’s stipend, which was due on the 10th of the month. They claimed they would deduct the cost of a product Aditya accidentally broke while assisting a customer. The product was poorly balanced and fell with a slight touch. Aditya acknowledges his role in the accident but contests the deduction, especially because he was never shown or asked to sign any employment agreement that mentioned a policy for such deductions. He had only seen a copy of an agreement being given to another employee. The management is now refusing to listen to his side of the story and is adamant about withholding his pay. This situation is not just about the money for Aditya, but about standing up to unfair and unethical treatment by an employer.

Advice in such cases

When faced with a situation involving unpaid wages and a toxic work environment, it’s crucial to act systematically and legally.

• Document Everything: Keep a record of all communication with your employer. This includes emails, text messages, WhatsApp chats, and any letters. Note down dates and times of verbal conversations and what was discussed.
• Gather Proof of Employment: Collect any document that proves your employment, such as an offer letter (even if unsigned by you), emails confirming your role, bank statements showing previous salary/stipend credits, or witness statements from colleagues.
• Send a Formal Demand: Draft a formal letter or email to the employer demanding your unpaid stipend. Clearly state the amount due, the date it was due, and refer to the fact that no agreement for deductions was ever signed by you. State that the deduction is illegal under the Payment of Wages Act.
• 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 case primarily falls under Indian labour and contract laws, not criminal laws like the Bharatiya Nyaya Sanhita (BNS).

• The Payment of Wages Act, 1936: This is the most relevant law. Section 7 of the Act lists the permissible deductions from wages. A deduction for damage to goods (Section 7(2)(c)) is only allowed if the loss is directly attributable to the employee’s neglect or default. Furthermore, the employee must be given a chance to explain, and the deduction cannot exceed the actual value of the damage. Since Aditya never agreed to such a policy and the breakage was accidental, this deduction is likely illegal. Non-payment of wages on time is also a violation of this Act.
• The Indian Contract Act, 1872: An employment relationship is a contract, even if it’s not in writing. However, the terms must be agreed upon by both parties. The employer cannot unilaterally impose a deduction policy that was never part of the initial agreement. Since Aditya never signed or agreed to the deduction clause, it is not binding on him.
• The Industrial Disputes Act, 1947: Depending on the nature of the work and if an intern can be considered a ‘workman’, this act could provide a forum for resolving the dispute concerning the conditions of employment and non-payment of dues.

If you are the complainant

If you are the employer in this situation, it is advisable to handle it professionally to avoid legal complications.

• Review the Contract: Check if the employee or intern ever signed an agreement that clearly outlines the policy for deductions in case of damages. If no such agreement exists, enforcing a deduction is legally risky.
• Follow Due Process: Under the Payment of Wages Act, you must give the employee an opportunity to present their case before making any deduction for damages. The process must be fair and documented.
• Attempt to Mediate: Open a line of communication with the employee. Understand their perspective and try to reach a mutually agreeable settlement. Withholding the entire stipend over a disputed amount is illegal and can lead to penalties.
• 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

If you are the intern or employee whose wages are being unfairly withheld, here are the steps you should take.

• Send a Legal Notice: Your first formal step should be to have a lawyer send a legal notice to the employer. This notice will detail your claim, cite the relevant laws being violated, and demand the payment of your dues within a specific timeframe (e.g., 15 days).
• Approach the Labour Commissioner: You can file a complaint with the office of the Labour Commissioner in your city. They are empowered to hear such cases of non-payment of wages and can direct the employer to pay the amount due, sometimes with a penalty.
• File a Civil Suit: You can file a summary suit or a regular civil suit in a court of appropriate jurisdiction for the recovery of your money.
• 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

The police generally do not intervene in matters of unpaid salary or stipend disputes. This is considered a civil or labour dispute, not a criminal offense. If you go to a police station, they will likely advise you to approach the Labour Commissioner’s office or file a case in a civil court. Police involvement would only be warranted if there were elements of criminal activity, such as criminal intimidation (threatening harm), assault, or cheating as defined under the Bharatiya Nyaya Sanhita (BNS), which does not appear to be the primary issue here.

FAQs people normally have

Can an employer deduct money for damages without my consent?
No. An employer can only make deductions as specified under the Payment of Wages Act, 1936. For damages, there must be a clear policy you agreed to, and you must be given a chance to explain. The deduction cannot be arbitrary.

Is an oral employment agreement valid?
Yes, an oral agreement is legally valid under the Indian Contract Act, 1872. However, proving its specific terms, like a deduction policy, can be difficult for the employer if there is no written record.

Do I need a lawyer to go to the Labour Commissioner?
While it is not mandatory to have a lawyer to file a complaint with the Labour Commissioner, having legal representation can be highly beneficial. A lawyer can ensure your complaint is drafted correctly and can represent you effectively during the proceedings.

What evidence is required?

To build a strong case, you should gather the following evidence:

• Proof of Employment: Offer letter, emails, or any official communication confirming your internship.
• Communication Records: All emails, WhatsApp messages, or text messages exchanged with the employer regarding your work, the harassment, and the unpaid stipend.
• Proof of Work: Any work you produced, timesheets, or attendance records.
• Bank Statements: Statements showing previous stipend payments from the company.
• Witnesses: Colleagues who can testify about your employment, the work environment, or the incident.

How long will the investigation take?

The duration can vary. Proceedings before the Labour Commissioner are generally faster than civil courts and can be resolved within a few months. A civil suit for recovery can be a longer process, potentially taking a year or more, depending on the court’s workload and the complexity of the case. Sending a strong legal notice often resolves the matter much faster, as many employers prefer to settle rather than face legal proceedings.

Advocate Sudhir Rao, Supreme Court of India