Employer Not Paying Your Salary? Here's What To Do

An employer withholding salary isn't just unfair — it's illegal in nearly every form. Indian labour law gives employees multiple routes to recover unpaid wages, and most of them don't require a lawyer to start. Here's the playbook, in the right order.

Salary disputes are one of the most common labour problems in India: end-of-month deferrals stretching into months, "company is going through a phase" excuses, full and final settlements held back after resignation, or notice period dues quietly forgotten. Whatever the framing, the law is clear — wages earned must be paid, and the employer who withholds them faces specific legal consequences.

This guide covers what to do as a regular employee, a contract worker, or someone who has already resigned. The right route depends on who you are and what's owed.

Know which law protects you

India doesn't have a single salary law. Depending on your role and the size of your employer, one or more of these apply:

• Payment of Wages Act 1936 — covers most workers earning up to the notified wage ceiling (currently quite broad). Sets timelines for payment and creates a fast-track recovery procedure via the Labour Commissioner.
• Industrial Disputes Act 1947 — applies if you fall under the definition of "workman" (typically excludes managerial, administrative, supervisory roles above a salary threshold). Section 33C(2) lets you recover dues as a money claim.
• Code on Wages 2019 — consolidates older wage laws into a single code. Rules are being notified state by state. Where notified, it replaces the Payment of Wages Act and other older statutes.
• Shops and Establishments Acts — every state has its own version covering offices, shops, restaurants, and most private establishments. Covers white-collar employees not otherwise protected.
• Indian Contract Act 1872 — your employment contract is enforceable as a contract. A civil suit for breach is always available.
• Insolvency and Bankruptcy Code 2016 — if the employer is a company in financial distress, employee dues for the last 24 months get priority over most creditors.

What the law guarantees on salary timing

The Payment of Wages Act lays down strict timelines:

• Employers with fewer than 1,000 workers must pay before the 7th of the following month.
• Employers with more than 1,000 workers must pay before the 10th of the following month.
• If you're terminated, all dues including final salary must be paid within two working days of termination.
• Resignation: full and final settlement should follow within a reasonable period — most cases are decided within 30–45 days of last working day.

Any delay beyond these is a violation. Unauthorised deductions (Section 7 of the Act) are also illegal — your employer cannot dock pay for "negligence", "loss of company property", or other vague reasons without following the procedure laid down in the Act, including notice and a hearing.

The step-by-step recovery process

1. Send a written reminder, not just a call Email is your friend. Send an email to HR and your manager, clearly stating the months unpaid, the amount due, and a polite but firm request to pay within 7 days. Keep it factual. This becomes evidence.
2. Gather your documents Collect: your appointment letter or contract, salary slips (or salary credit history from your bank statement), Form 16 / 26AS / TDS certificates (which prove the employer treated the salary as paid for tax purposes), and all emails or messages with HR. If you only have bank credits without slips, that's still strong evidence.
3. Send a legal notice Through a lawyer, on a lawyer's letterhead, by Speed Post with acknowledgement. Cost: usually ₹500–2,500 to draft. The notice should specify the amount, period, statutory provisions, and a 15-day deadline. Many employers settle at this stage to avoid escalation.
4. File a complaint with the Labour Commissioner / Assistant Labour Commissioner For workers covered by the Payment of Wages Act, the Inspector or Labour Commissioner can summon the employer, conduct an inquiry, and order payment with up to 10 times the amount as compensation in cases of malicious delay (Section 15 of the Act). Filing is free; you can do it yourself.
5. File under Section 33C(2) of the Industrial Disputes Act If you're a "workman" under the ID Act, file an application before the Labour Court or Industrial Tribunal for recovery as a money claim. This is faster than a civil suit and doesn't require the elaborate process of an industrial dispute reference.
6. Civil suit for recovery For white-collar employees not covered by labour statutes, a civil suit before the appropriate court is the route. You claim the principal, interest, and costs. Suit can be filed in the city where you worked or where the employer's office is. Suits up to a state-specific threshold go to the Small Causes Court (faster); above the threshold, to the District Court.
7. NCLT route — only if the employer is a company in distress If the employer is a company and owes more than ₹1 crore (current threshold under the Insolvency and Bankruptcy Code), you can file as an operational creditor before the National Company Law Tribunal. Below ₹1 crore, this isn't available. Employees rank high in the priority of payments during insolvency proceedings.

Special situations

You resigned and full-and-final settlement is being delayed

Employers often hold back F&F to pressure returning of laptops, ID cards, or "knowledge transfer". Some of that is legitimate; indefinite delay is not. After 45 days, send a legal notice. F&F includes: unpaid salary, leave encashment, gratuity (if eligible — five years' continuous service), notice period pay (if waived), and statutory bonuses. Each has independent legal backing.

You were a contract worker or freelancer

The Payment of Wages Act may not cover you, but the contract you signed (or even an oral agreement evidenced by your work and their payments) is enforceable. Send a legal notice citing the Contract Act, then file a civil suit for breach of contract. For amounts under the state's small causes threshold, the suit is fast and cheap.

The company has shut down or vanished

Check the MCA portal (mca.gov.in) — is the company still active? If yes, file a civil suit or labour complaint. If the company has been struck off, recovery becomes harder but not impossible. You can apply to NCLT to restore the company under Section 252 of the Companies Act 2013, then proceed with recovery. If directors siphoned funds before shutdown, personal liability arguments become available.

Your employer is deducting "loss" or "training cost"

Most such deductions are illegal unless: (a) the contract specifically allows them, (b) the procedure under Section 8 of the Payment of Wages Act was followed (notice, hearing, written order), and (c) the deduction is proportionate. Bond money for training is enforceable only when there's actual proven expense — and even then, courts often strike down disproportionate bond amounts as restraint of trade under Section 27 of the Indian Contract Act.

Time limits

• Payment of Wages Act: 12 months from the date wages became due. The Labour Commissioner can condone delay only on showing sufficient cause.
• Civil suit: Three years from the date payment was due (Article 7 of the Limitation Act).
• Industrial Disputes Act Section 33C(2): No specific limitation, but courts typically apply reasonableness — file within 1 to 2 years.

What you can claim — beyond the salary

You're not limited to the principal amount. Depending on the route, you can also claim:

• Interest — typically 9–12% per annum on the unpaid amount.
• Compensation under the Payment of Wages Act — up to 10 times the amount withheld in deliberate withholding cases.
• Litigation costs.
• Damages for mental harassment in certain cases, particularly where the employer's conduct was malicious.

Frequently asked questions