What to Do If Employer Doesn’t Pay Salary - Actions & Legal Remedies

If your employer hasn't paid your salary on time, or worse, is withholding it altogether, you're facing a serious violation of your rights under labor laws. If you've worked hard and fulfilled your responsibilities, and still your paycheck hasn't arrived. This isn't just frustrating; it's illegal in most cases. 

You need to know exactly what steps to take to protect yourself, recover your wages, and hold your employer accountable. This article will walk you through why employers delay payments, when you should seek legal help, and the concrete actions you can take to ensure you get paid what you're owed. 

Why do Employers Delay or Withhold the Salary? 

There could be multiple reasons for the employer holding the employee’s salary. All employees are entitled to get their salary for the time they have worked in an organization. 

Employers cannot withhold the employee's salary without proper justification. However, there are some situations when an employer could hold the employee’s salary: 

• Written Consent: In some cases, an employee gives written consent to the employer to hold the salary for specific reasons, like agreements tied, bonuses or loans. 
• Financial Difficulties: Companies may experience cash flow problems or financial stress, making it difficult to meet payroll obligations.  
• Administrative Bottlenecks & Payroll Errors: Simple oversights, clerical errors, or issues in the HR and banking departments can cause delays. 
• Disputes & Mismanagement: Disagreements over performance, violations of the code of conduct, or disputes regarding termination can also lead to delayed payments.  
• Legal Compliance: In some situations, legal requirements or an ongoing investigation (e.g., for fraud) might necessitate a salary hold. 
• Notice Period: All employees working in an organisation must serve the notice period before leaving the organization. But, if the employees do not serve the notice period, then the employer could hold part of the salary. 
• Verification process: In some cases, employers could hold the salary of the new employee due to an incomplete verification process. However, this would not impact the salary processing or the amount. 

Holding an employee's salary is possible only in certain conditions, and it should always align with the legal and contractual obligations to make sure employees' rights are respected. 

When to Seek Legal Help If Your Employer Is Not Paying Your Salary? 

There are warning signs that may indicate your employer is violating labor laws, and it's important to seek legal help as soon as these red flags appear, before the situation gets worse

• Occasional delays are understandable, but if your salary remains unpaid for more than 30 days, and it happens several times, then you might need to seek legal help. 
• If the employer refuses to accept the non-payment and says that "we'll pay you soon", it's simply time to escalate the matter. 
• In case you are expected to work despite not being paid, or you are being told that you will get paid later, then you just need to seek advice before agreeing. 
• If you are harassed, demoted, blacklisted, or threatened with job loss if you raise concerns about your unpaid salary, then it's a clear sign that you should look for some legal assistance. 
• There are some occasions when companies shut down or file for bankruptcy; in such cases, you should look for legal guidance to claim your unpaid liquidation or insolvency proceedings. 

What Are the Legal Remedies Available If the Employer Does Not Pay Your Salary?

An employee can legally fight for his rights if his employer holds the employee's salary. Here are the legal steps to recover your salary confidentiality and efficiently: 

1. Document All Communications 

The first step is to make proper communication with the HR or employer about the unpaid salary. While having the communication, try to document all the necessary details like emails, text messages, or any formal letter that is sent to your employer. This process will help you gather relevant evidence when you need to escalate the matter. 

2. Check Your Employment Contract 

Review your employment contract or the terms of your engagement. This will provide insight into your agreed-upon salary, payment dates, and any clauses relating to salary disputes or non-payment. Having a clear understanding of the contractual terms can strengthen your position in case of a dispute. 

3. Send a Formal Reminder or Letter 

The next thing that you should do is to send a formal reminder or letter to your employer. This letter should mention all the important details, like the overdue amount, the original due date and request payment within the specified period. In some cases, a formal letter is enough to push the employer to pay up. 

4. Approach the Labor Department 

If the employer does not pay your salary despite multiple reminders, then the labor department can investigate the issue and intervene on your behalf under the Payment of Wages Act. 

5. File a Complaint with the Labor Commissioner 

In case the issue is still unresolved and your employer continues to disregard your payment request, you can file a complaint with the labor commissioner or the labor court. This labor complaint should include all the relevant information, like employment records, payment records and communication with the employer.  

6. Seek Legal Action Through Court 

If you think that nothing is going in your favour, then the final option that you have is to take legal action. You can file a case in a labor court or civil court, depending on the nature of the dispute. However, this could be a time-consuming process, but it is a more formal way to ensure that you are compensated for your work. 

7. Engage a Lawyer (If Necessary) 

The court cases could seem like a hectic and overwhelming process, and at such times, hiring a lawyer who specialises in labor law can be very effective. A legal expert can guide you through the process, represent your interests, and manage all the complications that arise during the recovery process. 

What Are the Immediate Steps for the Employee to Take for the Non-Payment of Salary?

Here are the immediate steps that all employees should take if the employer does not pay the salary: 

• Carefully review the employment contract to confirm agreed salary dates and terms. 
• Contact the employer or HR department to understand the reason behind the delay and request a payment clearance timeline. 
• Ensure you have all records of the communication, including emails, messages, or formal letters, to maintain a complete record. 
• Send a formal letter or legal notice to demand the overdue salary within a specified time (usually 15 to 30 days). 
• If there is no response or resolution, file a complaint with the Labor Commissioner or approach the appropriate labour authority. 
• You can also file a lawsuit in the Labor Court or the Civil Court, depending on the employment nature and salary amount. 

These steps are important for the employees to ensure their legal rights are protected while attempting an informal resolution first.

What Are the Practical Tips to Strengthen Employee Cases?

There are certain things that every employee should do to claim their salary from the employer: 

1. Employment Contract or Offer Letter 

Make sure you have all the relevant documents with you that ensure the terms of employment, salary agreed upon, work duration, etc. These things will improve your case and play a vital role in showing the employer-employee relationship and salary entitlement. 

2. Salary Slips and Payment Records 

Then also keep the records of the preserved salary slips, bank statements that show the salary credits, and the gaps in payment. It will be very effective to prove the non-payment and the delayed payment of the salary.  

3. Communication Records 

Record all your communication with your employer about salary, it could be emails, messages (WhatsApp, SMS), or a written request to the employer. 

4. Attendance and Work Logs 

While taking any action against your employer, you should have your time cards, attendance records, or project completion reports, which will prove that the employee has fulfilled work obligations contrary to claims of abandonment or poor performance.  

5. Legal Notice Copies 

If a legal notice was sent to the employer demanding payment, keep a hard and soft copy as evidence in court proceedings. 

Although you can do several things to claim your rights, such as filing labor department complaints,  

What Happens If Employers Unlawfully Withhold Salary?

If your employer unlawfully withholds your salary, the law is on your side, and they may have to face serious consequences. Under the Payment of Wages Act, your employer may have to pay penalties and fines for delaying or denying your rightful earnings.  

In many cases, they could also be ordered by the labor authorities or court to not only clear your pending wages but also pay compensation or interest for the delay.  

Suppose it is proven that they acted with fraud or misrepresentation, like deliberately cheating you out of your salary. In that case, they can even face criminal liability, which means legal proceedings and punishment, which is more than just paying the due salary of the employee. 

Where to File an Online Complaint Against an Employer?

There are some online platforms where you can file an online complaint against an employer for matters related to salary: 

• SAMADHAN Portal (Ministry of Labor & Employment): An employee can file a complaint on the official government portal at samadhan.labour.gov.in. This site allows employees to file industrial disputes and salary complaints directly online. The process involves registering, filling out the complaint details, and attaching supporting documents. 
• CPGRAMS (Central Public Grievance Redress and Monitoring System): This central platform at pgportal.gov.in enables employees to submit grievances related to non-payment of salary (among other issues) across various government departments, including the Ministry of Labor. 
• State Labor Department Portals: Some states, such as Haryana, Andaman & Nicobar, have their own complaint panels and online portals for labor grievances (e.g., hrylabour.gov.in, labour.and.nic.in). 
• DigiLawyer (Private ODR Platform): Employees can submit a complaint for unpaid salary online at our platform, which facilitates Online Dispute Resolution (ODR) and legal assistance, including digital mediation and legal notice drafting. 

Key Labor Laws Relevant to Salary Non-Payment 

Here are some important laws that are relevant for employees: 

1. Payment of Wages Act, 1936 

This law ensures that your wages are paid on time and in full if you earn below a certain monthly threshold (which is revised by the government from time to time). Employers must disburse salaries by the 7th or 10th of the following month, depending on the size of the establishment. If your employer delays payment without justification, you can approach the Labor Commissioner, who can direct them to pay wages along with fines and, in some cases, compensation. 

2. Industrial Disputes Act, 1947 

If you fall under the category of a “workmen” (typically, non-managerial roles), any dispute related to your unpaid salary can be taken to the Labor Court or Industrial Tribunal. These bodies have the authority to order payment, resolve wage disputes, and even penalize employers for unfair labor practices. 

However, if you are a senior professional, manager or executive, then your case will be considered under Indian Contract Act, 1872, and not through this act.  

3. Shops and Establishments Acts (State Laws) 

Every state in India has its own Shops and Establishment Act, which governs conditions of employment, including working hours, leave, and most importantly, salary timelines. Usually, states mandate that your salary must be paid before the 7th or 10th of each month. If your employer violates this, you can file a labor complaint to the state labor authority. 

4. Payment of Bonus Act, 1965 

If you are eligible for an annual or performance-related bonus, this law ensures that your employer cannot withhold it unfairly. In salary disputes, if a bonus forms part of your payable amount, you can claim it legally under this Act. 

5. Indian Contract Act, 1872 

In many cases, especially if you’re a white-collar professional or earn above the payment thresholds of labor laws, your employment is treated as a contractual agreement. If your salary is withheld, you can file a civil suit for breach of contract or recovery of dues under this Act. 

6. Insolvency and Bankruptcy Code (IBC), 2016 

If your company has shut down or gone bankrupt, you are not left helpless. Under the IBC, you are classified as an “operational creditor”, which means you can file your claim for unpaid wages during the insolvency resolution process. Your dues are considered when the company’s assets are liquidated. 

Conclusion

No one should have to fight just to be paid for their work, but if you find yourself in that position, you must stand your ground. 

In such a situation, the best thing for you to do is to properly understand your rights, document everything, and follow the right legal path to take control of the situation. 

Whether the delay is due to financial issues, mismanagement, or something more serious, you now know how to respond effectively. Remember, you’re not powerless, and the law is on your side.